If we closely look, both energy & environment are linked very deeply. The energy we consume, is captured by the environment around us. Once we have consumed it, energy returns back into the environment again as a harmless waste product and then recycled by the nature. However, sometimes these emissions are harmful and can degrade the natural quality of the biosphere.
The interlink between energy & environment is very well explained by a concept as ‘externalities’ which is a widely used term in economics. Externalities can be defined as the indirect cost, which is lined with the economic activity we do or a transaction of a good or a service. Because in this case the burden of the cost falls on the person who took no part in the activity or the transaction, so this isn’t reflected in the market price by the seller or the buyer.
To explain this, the price an individual pays for petrol does not show the entire costs of carbon emissions from the burning of that petrol on the whole society in the form of global warming and health issues like breathing problems, irritation in the eyes etc.
The relationship between both energy & environment can be shown by the material balance model in which the environment provides energy for various economic purposes & activities and then after consumption the energy is returned back again to the nature to be recycled to be used again. This process goes on continuously and indefinitely. Thus to protect the natural quality of the environment we must use clean energy so that it can be reused and recycled.