In this paper, projection of energy demand and GHGs emission were done for the next thirty years, taking the 2000 Ethiopian energy system as a base year. This has been determined with the help of the Long Range Energy Alternative Planning system (LEAP). LEAP forecasts energy consumption and GHG emissions by sector and national total by summing up sectoral energy consumption and GHG emissions. All available energy consumption activities and socio-economic data have been collected and input in to the model to develop scenarios. Scenarios are self-consistent story-lines of future energy system and will show how energy might evolve over time in a particular socio-economic setting and under a particular set of policy conditions. Initially, a reference scenario was created based on the current energy situation. This uses the base year situation and the expected future changes based on the likely plans and growth trajectories. It is “Business-asusual” scenario with implementation of anticipated and likely to be carried out projects and policies. Then mitigation scenario that simulates new policy measure was developed to meet the energy demand and reduce GHGs emission. The household sector energy demand was assumed to be driven by population growth. The energy demand for industry and commercial was assumed to be driven by their GDP while in the agriculture is by their tons of out put. On the other hand, energy demand for the transportation sector was assumed to be driven by respective growth in passenger-km and ton-km for passengers and freight sub-sector.