Distributed cogeneration systems fired by natural gas could represent an important means for increasing the energy generation efficiency and reducing greenhouse gas emissions. However, the sustainability of a large diffusion of this kind of systems, above all in urban areas, should be assessed against possible increase of local pollutant emissions. In this paper, general models, indicators and analyses for evaluating the environmental impact due to different cogeneration scenarios and distributed generation penetration levels are presented. Results of numerical analyses are also provided, with equipment available on the market and with reference to the average Italian generation framework. These results can give important hints upon the extent at which the diffusion of distributed thermal prime movers could represent an additional threaten to the population health, or could instead decrease the environmental burden due to the energy generation system.