The Fuel Diversification Strategy was incorporated into the Malaysian National Energy Policy in order to achieve a more balanced consumption of fuel, namely gas, hydro, coal and petroleum. The objective of this paper is to evaluate changes in CO(2), SO(2) and NO(x) emission due to changes in the fuel mix specified in the Fuel Diversification Strategy. Using the environmental extended Leontief's input-output framework it was found that the fuel mix as envisioned by the Fuel Diversification Strategy generates higher CO(2) SO(2) and NO(x) emissions. As such, to ensure a sustainable energy policy, the proposed fuel mix must be accompanied by efficiency gain so that the negative impact on the environment could be mitigated. (c) 2007 Elsevier Ltd. All rights reserved.