According to
http://www.autozine.org/technical_school/engine/petrol2.htm, this is what the EGR does:
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Exhaust Gas Recirculation (EGR)Exhaust Gas Recirculation is a proven technique to reduce fuel consumption and emission. It does that by recirculating some of the exhaust gas back to the combustion chamber. Thus the effective engine displacement is reduced and drink less fuel. Inevitably, you may say this also reduce power output, so why not select higher gear and slow down the engine to obtain the same result ?
The answer is: not every one like this kind of cruising. If you drive in a hurry, you don’t like to reduce the engine speed as you want to accelerate as soon as overtaking opportunity comes. If you drive in traffic, which calls for intermittent acceleration and deceleration, you are not likely to select the 4th and 5th gear too. A considerable large portion of our daily driving is spent on the "low gear, high rev" pattern which does not optimize fuel consumption. This makes EGR worthy.
EGR recirculate some of the exhaust gas (probably up to 10%) back to the inlet valve via a recirculation pipe. The amount is determined by engine ECU and controlled by a valve at the recirculation pipe. When the ECU believes the engine is running at light load, it directs the exhaust gas back to the combustion chamber. As the exhaust gas is largely non-ignitable and takes no part in the combustion process, the fuel injection can emit less fuel without worrying failure combustion. As a result, the engine still run at roughly the same speed but power output, fuel consumption and emission are all reduced.
Yet this is only half of the story. Another large portion of the fuel and emission saved is contributed by the reduction of pumping loss. Pumping loss is the power used to pump the fresh air into the cylinder and pump the exhaust gas out, of course the "pump" is the piston. To reduce the power wasted in pumping in fresh air, we can pressurised the input air, that is, using turbocharger, or alternatively add some high-pressure, speedy gas into the input stream. In our case of EGR such gas is the exhaust gas.
To our environment, apart from the emission reduced via consuming less fuel, EGR also reduces NOx emission. How ? as the amount of combustible gas is reduced, temperature in combustion chamber is also reduced.
Because NOx generates at high temperature, NOx emission is also reduced.
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