Integration of New Member States to the European Union has created a new situation in the frame of implementation of the Lisbon strategy and EU Sustainable Development. The closure of Ignalina NPP is the biggest challenge to the energy sector development of the Baltic States. The Baltic States have quite limited own energy resources and in the Accession agreement with the EU Lithuania, Latvia and Estonia have verified their targets to increase the share of electricity produced from renewable energy sources (RES-E) by the year 2010. A wider use of renewable energy and increase of energy efficiency can make a valuable contribution to meeting the targets of sustainable development. The article presents a detailed overview of the present policies and measures implemented. in the Baltic States, aiming to support the use of RES and the increase of energy efficiency. The review of possibilities to use the EU Structural Funds (SF) for the implementation of sustainable energy projects in the Baltic States was performed. The use of regional social-economic-environmental indicators is the main key to integrate sustainable energy development at the program deployment level. The indicators to be used should describe the contribution of energy programs to the sustainable development, medium-and long-term trends and interrelationship between them and the typical energy indicators (saved toe, improved energy efficiency, percentage of RES). Municipalities may play a considerable role by promoting sustainable energy since local authorities are fulfilling their functions in the energy sector via a number of roles. The Netherlands' example shows that municipalities may act as facilitators by implementing national environmental policy and increasing energy efficiency in an integral part of these activities. The guidelines for Lithuanian local sustainable energy development using the SF co-financing have been presented. (c) 2006 Elsevier Ltd. All rights reserved.