China’s rapid economic growth over the last two decades has also brought with it several energy-related environmental problems. Environmental pollution from fossil fuel combustion is damaging human health, air and water quality, agriculture, and ultimately the economy. Many of China’s cities are among the most polluted in the world. China is the world’s second-largest source of carbon dioxide emissions behind the United States. EIA forecasts predict that China will experience the largest growth in carbon dioxide emissions between now and the year 2030 (for more information, please see the International Energy Outlook 2006 , Table A10 ).

China is a non-Annex I country under the United Nations Framework Convention on Climate Change, meaning that it is not bound to any GHG emissions reduction targets set under the Kyoto Protocol. The Chinese government has taken several steps to improve environmental conditions in the country. Chief among these is the new Law on Renewable Energy, which took effect on January 1, 2006. The new law seeks to promote cleaner energy technologies, with a stated goal of increasing the use of renewable energy to 10 percent of the country’s electricity consumption by 2010 (up from roughly 3 percent in 2003).