This work presents an evaluation of the development of Stirling engines and the advantages and the main obstacles against their widespread introduction in energy-generation practices. It also shows how the economic, technical and environmental characteristics presented by these engines support their insertion in the energy sector. An economic and environmental evaluation of this technology aiming at introducing it in the Brazilian energy scenario is also presented. Changes in legislation, financing and technology within the next few years must encourage the implementation of alternative generation technologies that present lower environmental impacts. Also, tendencies and economical studies are presented, trying to find the optimal condition for this technology to be feasible. The option regarding the trading of carbon credits when biomass is used as fuel is analyzed as well. (c) 2004 Elsevier Ltd. All rights reserved.