Abstract: This invention relates to an air conditioning system which utilizes the exhaust air from a conditioned space for the conditioning of the supply air to the conditioned space. The invention comprises a supply air heat exchanger and an exhaust air heat exchanger, where the supply air heat exchanger comprises an air-to-air type exchanger. The exhaust air is conditioned by the exhaust air heat exchanger, which may comprise heating or cooling of the exhaust air using dehumidification or evaporative cooling, for example. The conditioned exhaust air is then passed through the supply air heat exchanger so as to condition the supply air. One advantage of the invention is the indirect heat transfer from the exhaust air to the supply air, where any processes that may effect the quality of the exhaust air is not transferred to the supply air, since all or a majority of the exhaust air is discharged to atmosphere.