China once again promises to manage energy consumption and peak CO₂ emission around 2030 in Paris Agreement in 2016 that expresses her ambition of mitigating emission. Using renewable energy to optimize energy structure is recognized as effective countermeasure to reduce GHG emission. Additionally, it is inevitable that improving energy efficiency is still core issue in energy usage. Smart Grid (SG) and renewable energy are collectively introduced in this research. Power supply and demand model is constructed to analyze the effect of SG and renewable energy on energy usage. Input-Output (I-O) simulation model is applied to make dynamic analysis based on extended I-O framework. Comprehensive model is constructed to evaluate the impact of SG and renewable energy on economic growth, energy usage and environmental improvement under different emission limitation. The proper policies covering carbon tax and subsidy are proposed to mitigate GHG emission, improve energy usage and optimize economic structure. Trade-off among economic growth, energy conversation and environmental improvement is realized in the study area.