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This paper investigates the feasibility of recycling waste heat from a diesel engine, and also the effects of using ethanol-diesel oil as an alternative fuel. Through thermodynamic analyses, the study reveals that a significant amount of energy is contained in both the exhaust gas and cooling water, and that recycling this energy will reduce emissions, conserve energy, and improve the thermal and exergy efficiency of the diesel engine. The use of ethanol-diesel oil will lead to significantly reduced exhaust emissions without significant impact on the engine's performance parameters.