The current century-an era of environmental awareness-requires energy resources to satisfy the world's future energy demands. We can use current energy use scenarios to help us to understand how energy systems could change. Such scenarios are not an exercise in prophecy; rather they are designed to challenge our thinking in order to make better decisions today. The conventional modeling approach tends to extrapolate changes in energy consumption from historical trends; however, technology innovation sometimes causes drastic reforms in energy systems in the industrial, commercial, residential and transportation sectors. The economic aspects are another key issue to be considered in order to understand future changes in energy systems. The quantity of the energy supply is set to meet the price of the energy demand of end users. This occurs on the condition that the price of the energy supply equates with the price on the demand side under the market mechanism. This paper reviews the various issues associated with the energy-economic model and its application to national energy policies, renewable energy systems, and the global environment. (C) 2004 Elsevier Ltd. All rights reserved.