All energy systems have adverse as well as beneficial impacts on the environment. They vary in quality, quantity, in time and in space. Environmentally sensitive energy management tries to minimize the adverse impacts in an equitable manner between different groups, in the most cost-effective ways. Many of the environmental impacts of energy continue to be externalized. Consequently, those energy systems which can externalize their impacts more easily are favoured, while others remain relatively expensive. The lack of full integration of environmental factors into energy policy and planning is the overriding problem to be resolved before a transition towards sustainable energy futures can take place. The most pressing problem in the developing countries relates to the unsustainable and inefficient use of biomass resources, while in the industrialized countries, the major energy-environment problems arise out of the continued intensive use of fossil fuel resources. Both of these resource issues have their role to play in climate change. Although there has been considerable improvement in pollution control in a number of situations, most of the adverse impacts will undoubtedly increase in the future. Population growth will lead to increased demand, and there will also be greater use of lower grade fuels. Climate change and the crisis in the biomass resource base in the developing countries are the most critical energy-environment issues to be resolved in the immediate future. In both cases, international cooperation is an essential requirement for successful resolution.