This paper reviews the physical impacts of fossil fuel use on the environment and climate system. Such an analysis involves the assessment of the future world fossil fuel resources and their relative share in a future global energy mix. The specific environmental impacts are shown for conventional and unconventional coal, oil and gas production and combustion. The impact on climate is demonstrated for the release of heat, particles and CO 2. The future impact of CO 2 on climate, which may be quite serious and potentionally irreversible, cannot be predicted with confidence at this time. Rough estimates based on a world energy model, a carbon cycle model and a climate model show that for a variety of energy supply scenarios the global average temperature change above the present level around 2030 may fall between 0·5 and 4°C with the most probable value near to 1°C—and this would not be negligible. Autothermal synthetic fuel production may result in significant CO 2 increases, whereas allothermal methods may result in substantial CO 2 reductions. There are no CO 2 emissions if hydrogen is used as a direct energy carrier. In the face of the present uncertainties a flexible low-risk energy-CO 2-climate policy is suggested which would: 1. (a) encourage the more efficient end use of energy; 2. (b) promote the expeditious development of energy sources that add little or no CO 2 to the atmosphere, thereby permitting one to keep the global fossil fuel use, and hence CO 2 emission, at the present level.