Environmental consequences of Chinese energy development: solutions for sustainable development.

Summary China consumes more than 60 percent of coal in its energy mix. This dependence has strong environmental consequences, including CO2 and SO2 emissions, for which China is the largest emitter. This already has huge local, regional and global implications. Not only does pollution reduce agricultural productivity (regional) and increase asthma or cancer (local), but now it can change the climate and the conditions in which people live. This thesis aims to describe the environmental impact of China's increasing energy use and, more importantly, to answer the question: what solutions could be implemented to achieve environmentally sustainable development? In this essay, we aim to show that the window of opportunity is not yet closed and that, with negative price elasticity of harmful emissions, a price-based solution could work in China. First, by removing subsidies, the government should allow prices to correct signals to consumers (thereby reducing the amount of fossil fuels consumed) and producers (who would move to better technologies or less polluting fuels). Second, by making producers pay for the externalities they create with a tax, for example, the government could also reduce pollution. Overall, the implementation of this solution should reduce energy intensity, consumption of polluting fuels, carbon and sulfur emissions, and improve public finances.