A two level idealization concept involving the definition of intrinsic and extrinsic exergy destruction is incorporated into exergy analysis, exergoeconomic analysis and exergoeconomic optimization. The intrinsic exergy destruction is caused by the configuration constraints, whereas the extrinsic exergy destruction is caused by the transport rate limitations. For exergy analysis, intrinsic and extrinsic exergy destructions can be quantified for each process operation. For exergoeconomic analysis, the monetary costs associated with these exergy destructions can be determined. For exergoeconornic optimization, the variables associated with process configuration and transport rate limitations can be optimized independently. Methods for analysis as well as optimization are described and demonstrated by two case studies, an ethylene product recovery and separation plant and a benzene-toluene distillation column. Improvements demonstrated from these case studies are significant. (c) 2005 Elsevier Ltd. All rights reserved.