Many suggest that the environmental impact of energy resource use and the achievement of increased efficiency are best addressed by considering the thermodynamic property exergy. This paper reports on the use of the principles of thermodynamics via exergy to evaluate energy systems and technologies as well as environmental impact. Exergy is described and its use as a tool to improve efficiency illustrated. The environmental implications of exergy are discussed, and the ties between exergy and economics described. It is concluded that thermodynamics, and particularly exergy, has a significant role to play in evaluating energy technologies and environmental impact. The results indicate that exergy methods should prove useful to engineers and scientists, as well as decision and policy makers. To increase the acceptance of exergy, further research is needed to better define its role in the area of environmental impact.