One of the major challenges of urban planning is achieving a more sustainable urban development. The compact city strategy is based on several arguments. The dominant argument has been related to energy conservation. This chapter focuses on the contradictions between the compact city and the quality of the urban environment. It comprises a general discussion of the relation between the compact city and the quality of the urban environment and a case study on the urban environmental consequences of the current densification of a central Copenhagen district. Quality open space is a crucial component in the vision of the compact city. The compact city strategy is based on several arguments. The dominant argument has been related to energy conservation. Research has demonstrated a close correlation between high urban density and low energy use for transport, and between high urban density or compact urban form and a low energy consumption for space heating.