One of the main tasks of the IEA CHP Collaborative was establishing the potential of CHP in the G8+5 countries, to show policy makers what could be achieved if conditions are right. This potential analysis took a simple "top-down" approach was chosen, rather than a detailed "bottom-up" approach that might, for example, study specific CHP candidate sectors and assign growth rates to each, taking into account national circumstances. The “top-down” approach can be compared with existing CHP potential studies which have been undertaken by some of the countries, using a wide range of different methodologies and approaches. Given the G8 ministers’ charge to enact CHP-friendly policies, the more pressing need is to estimate the potential benefits of expanded CHP use, as a way to guide these future CHP policies.

The level of CHP development in a country depends on heating and cooling demand in the industrial, commercial and residential sectors. This demand was used as the basis for the approach taken to analyse CHP potentials: to estimate, taking into account different national circumstances, the proportions of current and future heating / cooling demand in each of the countries that could be reasonably served by CHP.

The assumption underpinning these estimates was that there exists a pro-CHP policy regime (for example removing barriers to CHP and introducing targeted incentives) that corresponds to rates of CHP development that approach the rates seen over the last three decades in countries like Denmark, the Netherlands and Finland.