Introduction

Introduction

The economic activities of production and consumption require the use of energy, and the use of energy affects the environment in the forms of water pollution, air pollution and emission of CO₂ that causes global warming. Furthermore the use of energy from exhaustible resources can create energy shortage in the future. The solutions to the problems of energy and environmental degradation include (1) reducing the use of energy in production and consumption, (2) increasing the use of energy-saving and environmentally friendly methods in production and consumption and (3) promoting technological innovations that will reduce the use of energy per unit of output (reduce energy intensity or increase energy efficiency) or reduce pollution per unit of output to achieve (1) and (2) in the future. To achieve (1) and (2) given the state of technology we can regulate the use of energy by law or by economic incentives to limit the emission of pollutants. 

The last is an example in solving the problem of “externalities” in economics - the undesirable external effects of production or consumption, the cost of which is not born by the producer or consumer responsible. An economic solution to the problem of externalities is to charge the cost to the producer or consumer who is responsible.

In section 2, we describe the energy-environment problems during China’s recent economic development. In section 3, we discuss the laws, government agencies established and the policies introduced by the Chinese government to protect the environment and reduce energy consumption. Section 4 deals with difficulties in implementing China’s environmental policies. Section 5 discusses three most important issues related to the attempts to solve the energy-environment problem. Section 6 concludes.