To fully implement the principle that 'once fuel is ignited, higher temperature heat should be converted to mechanical power', efforts are needed to introduce the new energy utilization system; i.e. cogeneration. Fundamental concepts and the importance of cogeneration technology are first insisted on based on the second law of thermodynamics. Then, trends for cogeneration in Japan are reviewed based on actual data, together with research activities by the Cogeneration Research Society of Japan. Lastly, institutional problems relating to cogeneration are discussed focusing on the regulation and re–regulation issues necessary to promote the sound development of this system in the near future.