To better understand the reductions in local air pollution that will result from the implementation of current Chinese energy policy, as well as the co-benefit for greenhouse-gas emission reductions, a Shanghai case study was conducted. The MARKAL model was used to forecast energy consumption and emissions of local air pollutants under different energy policy scenarios and also to analyze the associated reductions in CO2 emissions. The results show that energy policies in Shanghai will significantly reduce SO2 and PM10 emissions and will also achieve the co-benefit of mitigating the increase of CO2 emissions. In energy policy scenarios, SO2 emissions during the period 2000-2020 will maintain the same level as in 2000; and the annual rate of increase of CO2 emissions will be reduced to 1.1-1.2%, compared with 2.7% under a business-as-usual scenario. The problem for the future will be NOx emissions. which are projected to increase by 60-70% by 2020, due to expansion of the transportation system. (c) 2004 Elsevier Ltd. All rights reserved.