A new type of power-generation system (called CLSA), with chemical-looping combustion, air saturation and based on energy-utilization diagrams (EUDs), is proposed. A loop of chemical reactions is substituted for conventional combustion and a process of saturation for air is introduced for the following purposes: (1) to reduce the exergy destruction caused by combustion and heat-exchange processes; (2) to separate CO2 easily from the exhaust gas of a gas turbine; (3) to recover the water used in this system. Exergy analysis of a model system indicates that the expected thermal power-plant efficiency could be as high as 55.1% (LHV). Simultaneously, the proposed system can be used to solve environmental problems by recovering and utilizing CO2 as a by-product.