The generation and use of electricity affects the environment we live in. The most common example is the burning of fossil fuels - coal, oil or natural gas - to create steam which then is used in an electric generator. The smoke and gas from burning fossil fuels pollutes the air we breathe. Another example is a hydro-electric facility, which uses the force of water to turn the turbines in the generator, but which also disrupts the natural flow of a river with possible negative effects on fish and water plants. Wind generators are sometimes criticized for the way they look and because they might kill birds.

Using energy more efficiently through more efficient end-uses or through more efficient generation, such as combined heat and power, reduces the amount of fuel required to produce a unit of energy output and reduces the corresponding emissions of pollutants and greenhouse gases. Electricity from renewable resources such as solar, geothermal, and wind technologies generally does not contribute to climate change or local air pollution since no fuels are combusted in these processes.