With the fast economic development in China, the situation of environmental protection becomes more and more serious. Most of the pollutants are produced by burning coal, especially in heating period. To achieve tile aim of environmental protection, some clean energy resources and clean techniques should be wildly promoted. This paper explores the policy, environmental and economic aspects of co-generation of heat and power using natural gas in China. Also, the arresting factors in developing tile GT co-generation system and proposals of the countermeasures are discussed. All the discussions show that natural gas-fired GT co-generation system can be a quite suitable technique in China.