This invention relates to a system and a method for generating emulsified fuels for improved fuel efficiency of combustion devices with reduced specific fuel consumption rate and emissions, comprising at least a continuous phase fuel, a dispersed phase component, and an infrared radiation source whose infrared radiation spans at least a portion of 3-16 micrometers wavelength spectrum. In said system the continuous phase fuel and/or dispersed phase component are exposed to said infrared before or during emulsification. The continuous phase fuel may be selected from fossil fuels, biofuels, alcohol fuels, vegetable oils, or any combustible liquid fuels, while the dispersed phase component may be oxygen, hydrogen, nitrogen, carbon monoxide, methane, propane, butane, any petroleum gas, hydrogen peroxide, or water. The emulsified fuels can be used in combustion devices such as internal combustion engines, boilers, burners, or gas turbines.