This report is one of a series prepared by the National Research Council for the U.S. Environmental Protection Agency. This report takes a critical look at the relationship of energy and the environment and focuses on three main policy questions: (1) Do environmental regulations make too great a demand on scarce resources of energy and the economy; (2) Are our current pollution control measures cost-effective and how can we improve them; and (3) What are the major trade-offs involved in environmental regulations? Chapter titles include: (1) Background, Objectives, and Methodology; (2) Effects of Energy Systems on Health and the Environment; (3) Major Energy-Environment Issues; and (4) Challenges to Management. The executive summary lists six key recommendations from the report. Each chapter has a list of references. The appendices include: (1) a review of energy systems, fuel cycles, residuals, and effects; (2) the energy/environment matrix; and (3) energy conversion factors. (MR)