An optimal generation dispatch strategy method while considering CO 2 emissions is presented in this paper. Firstly, different CO 2 equivalent models for fuel generated thermal units are derived. Secondly, the Cost-CO 2 emission Tradeoff Curve (CCTC) and Incremental Cost for CO 2 Reduction (ICCR) curve, are introduced to assess the impact of CO 2 emissions on power generation costs. Incorporating these two indexes, the single-objective and bi-objective programming methods are employed to establish a generation dispatch strategy. The salient feature of the strategy allows the decision-maker to consider both environmental and economic factors at the same time. Since generation dispatch belongs to large-scale non-linear planning problems, this study employs a particle swarm approach with novel coding scheme for generation dispatch solution, which can quickly find an optimal solution with higher probability. Finally, taking the 27-unit system from Taiwan power company as an example, simulation result of the study reveals that the proposed dispatch strategy can effectively take into consideration CO 2 reduction impact on cost during off-peak, half-peak and peak load conditions to achieve environmental protection and economic purpose.