**5. Environmental implications**

Would a more efficient use of energy resources reduce the environmental burden of economic activity? This question has become prominent in recent years as governments across the world have implemented energy efficiency program. The environmental impacts of energy use vary depending upon how energy is produced and used, and the related energy regulatory actions and pricing structures. Gaseous emissions and particulates from the burning of fossil fuels pollute the atmosphere and cause poor local air quality and regional acidification.

Energy use has a variety of impacts. Energy extraction and processing always involves some forms of environmental degradation. As all human activities require energy use, in fact all human impacts on the environment could be seen as the consequences of energy use. In this way energy use is sometimes seen as a proxy for environmental impact of human activity. Principal issues related to the environmental dimension include global climate change, air pollution, water pollution, wastes, land degradation and deforestation. The consideration of global environmental issues such as the greenhouse effect and the 'resulting' climate change problem has led to the development of numerous theoretical models and empirical studies that making it hard to distinguish between environment and energy models (Faucheaux and Levarlet, 1999: 1123).

The impacts of climatic problems associated with the increased accumulation of pollution on the world economy have been assessed intensively by researchers since 1990s. Greenhouse gas emissions are directly related to the use of energy, which is an essential factor in the world economy, both for production and consumption. Therefore, the relationship between greenhouse gas emissions and economic growth has important implications for an appropriate joint economic and environmental policy. It is confirmed that in both poor and rich countries, economic development is not in a sufficient condition to reduce emissions. In nearly all industrial countries there is a permanent discussion on policies to reduce greenhouse gas (GHG) emissions and secure energy supply. A shift from lower to higher quality energy sources not only reduces the total energy required to produce a unit of GDP but also may reduce the environmental impact of the energy use. An obvious example would be a shift from coal use to natural gas use. However, we need to consider that kinds of fuels with higher quality necessarily do not have less environmental impacts.

In addition to energy conserving of technological change, it may also change the environmental impact of energy use over time. So that it reduces the emissions of various pollutants or other environmental impacts associated with each energy source. Therefore, despite the strong connections between energy use and economic growth there are several pathways through which the environmental impact of growth can be reduced. However, if there are limits to substitution of other kinds of energy and technological change then the potential reduction in the environmental intensity of economic production is eventually limited.

There is a hypothesis that states an inverted U-shape relation between various indicators of environmental degradation and income per capita. It is named EKC hypothesis in which pollution or other forms of degradation rises in the early stages of economic development and falls in the later stages.

The production of energy (fossil fuel production and power generation) consumes a significant amount of energy and produces much of GHG emissions. These emissions can be reduced, through the adoption of more sustainable forms of energy production, such as community energy systems. Transportation contributes to GHG emissions, partly because the energy used to power vehicles is usually generated from fossil fuels. Regarding the supply side, the identified priority area is to diversify the energy mix, while promoting sustainable development, mainly by increasing the use of renewable energy resources. Comprehensive utilization of energy saving potential can be the main Strategy.
