http://en.wikipedia.org/wiki/Exhaust_gas_recirculation
The three reasons given for EGR:
A properly operating EGR can theoretically increase the efficiency of gasoline engines via several mechanisms:
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Reduced throttling losses. The addition of inert exhaust gas into the intake system means that for a given power output, the throttle plate must be opened further, resulting in increased inlet manifold pressure and reduced throttling losses.
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Reduced heat rejection. Lowered peak combustion temperatures not only reduces NOx formation, it also reduces the loss of thermal energy to combustion chamber surfaces, leaving more available for conversion to mechanical work during the expansion stroke.
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Reduced chemical dissociation. The lower peak temperatures result in more of the released energy remaining as sensible energy near TDC, rather than being bound up (early in the expansion stroke) in the dissociation of combustion products. This effect is minor compared to the first two.
It also decreases the efficiency of gasoline engines via at least one more mechanism:
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Reduced specific heat ratio. A lean intake charge has a higher specific heat ratio than an EGR mixture. A reduction of specific heat ratio reduces the amount of energy that can be extracted by the piston.
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