Abstract: A heat exchanger is interposed between the exhaust duct of a water boiler and the chimney or flue, and a water conduit, connected to the water return line of the heating system, is disposed within the heat exchanger in heat exchange relationship with the exhaust gases. In this manner, up to 85% of the thermal energy within the exhaust gases is recovered and imparted to the water for pre-heating the same prior to the transmission of the pre-heated water into the boiler for additional heating, or alternatively, directly into the water heating system. A filter assembly is preferably interposed between the heat exchanger and the chimney or flue so as to filter the cooled gases prior to the emission of the same into the atmosphere. As a result, solid particles, and a substantial portion of sulfur dioxide, is removed from the exhaust gases so as to reduce pollution conditions.