The Gippsland Basin is unique in Australia in that it is a major resource based industry centre within a sensitive and special environmental context supplying Melbourne, a major urban/industrial environment with most of its energy ‘on-line’. The environmental effects of the supply systems are generally local and mostly affect only those who are directly or indirectly dependent on the upstream systems. The major urban metropolis which is served remains largely unaware of the environmental impacts of the system upon which it is dependent, except when specific attention is drawn to them as in the case of the Latrobe Valley Outfall, algal blooms in the Gippsland Lakes, etc. This paper discusses the environmental context within which the energy industries operate, the environmental legislative framework which applies, the likely environmental impacts and some solutions. The energy resources of the Gippsland Basin occur in an area where the physical environment exhibits a wide variety of inherent energy states in its physical and biological regimes. The off-shore regions of the oil and gas platforms has to be able to withstand the wind and wave energy generated in a shallow sea in a confined waterway lying athwart the main current and climatic stream. The coastline includes the delicately balanced quiescent environments of Corner Inlet with its ‘wilderness’ tourism industry and the powerful surf and long shore drift and dunes of Ninety Mile Beach.