Energy is an important component of the economy and is a fundamental factor of production. In general we expect is use to grow in some relation to growth in economic activity. Empirically we see a closer relationship (higher E/GDP elasticity) in emerging economies where the energy intensive stage of development is still in process. Traditional fossil energy sources remain the least cost source of providing many or most energy services but present an environmental challenge. Managing the growth of energy use and its impact on the environment is a central challenge of "green growth." Examples of the interactions of energy development in China are used to provide a deeper understanding of these links.
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