China plans to significantly increase its use and development of Coal Bed Methane (CBM) and Coal Mine Methane (CMM) to meet the growing demand for primary energy sources, improve the safety of coal mining operations, and significantly reduce China’s Greenhouse Gas (GHG) emissions. In order to meet its goals, the government must improve the administrative framework for energy resource management. New government policies aimed at reducing GHG emissions from coal mines will in turn result in safety improvements and greater use of CBM and CMM for energy purposes. To minimize GHG emissions and maximize the use and destruction of CH4, this paper recommends flaring surplus drained gas rather than venting it into the atmosphere, levying higher taxes on certified emission reductions from flaring to compensate for the lower mitigation cost of flaring compared to utilization, and establishing fiscal incentives for all GHG mitigation schemes. In regards to coal mine safety, standards requiring drained gas to be of a specified minimum purity (at least 30 percent) for utilization need to be enforced. This paper, financed by the Government of the Netherlands through the Bank-Netherlands Partnership Program (BNPP), aims to provide the Chinese government with recommendations to meet their goals for CBM and CMM development and utilization by 2010.