This paper estimates and analyzes the historical and future trends of energy demand and environmental emissions from passenger transportation of the Kathmandu Valley covering CO2, CO, HC, NOx, SO2, total suspended particles (TSP) and lead (Pb). It uses the Long-range Energy Alternatives Planning System framework for constructing future scenarios up to year 2020 and analyzing their implications; these scenarios mainly deal with the traffic improvement measures, promotion of public transportation and electric vehicles. The results estimate over a four-fold increase in energy demand in 1988-2000. TSP increase of 4.5 times in this period is the major concern since high particulate concentration is already above World Health Organization guidelines. Under the non-intervention scenario, energy demand in 2020 is estimated to be 2.7 times that in the year 2000. Similarly, 2.5 times increase of TSP in 2020 from the year 2000 is estimated that would further increase the TSP concentrations. The scenario analyses suggest that increasing vehicle speed, promoting public transportation and promoting electric vehicles could reduce energy demand by 28%, 28% and 18%, respectively, while promoting a reasonably comfortable condition on overcrowded public transportation could increase energy demand by 10% from non-intervention scenario. For TSP, any future measures would not be enough unless the attention is not paid to in-use vehicle stock. A mix of all the policies mentioned above has potentials to cut down CO2 emissions to over 60% from the non-intervention case in 2020. (C) 2003 Elsevier Science Ltd. All rights reserved.