The Importance of Energy Efficiency

It’s hot outside. And, every year, it’s likely to get hotter unless we do start making some significant changes to the way we live. Breaking our addiction to fossil fuels by investing in alternative energies is a good first. A better first step, though, is to just stop consuming so much energy. This reality is difficult to hear when all you want to do is turn your up your air conditioner. But, as long as we keep wasting energy, regardless of the source, we won’t make the meaningful changes we need to stop the worst consequences of climate change.

Energy efficiency play an important role in our overall energy policy and is something that is close to Secretary Chu’s heart. He has recently been working on a project that highlights the economic benefits of energy efficiency. Chu's project shows that energy efficiency standards do not have to increase the purchasing price of appliances. Traditional thinking was that while there may be an increase in price for energy efficient appliances, the energy savings over the long-term would offset the cost increase. Chu’s research shows that, in fact, there is no cost bump and well-designed standards spur technological innovations that have caused the price of energy efficient appliances to continuously fall.

The economic benefits of energy and resource efficiency are so clear that the world’s largest private employer is attempting to fully incorporate it into all aspects of its operations. Walmart’s Sustainability 360 approach aims to, among other thing, design its new store prototype to be 25 to 30 percent more efficient by the end of 2009. The 2011 Global Responsibility Report indicates that this goal was met and a viable store prototype was designed and opened that is up to 25-30 percent more efficient.

Though it’s widely known that Walmart is a large operation, the numbers behind it show just how massive it is. It is the biggest private user of electricity in the U.S. -- each supercenter uses an average of 1.5 million kilowatts annually. It has the second-largest fleet of trucks, travelling a billion miles each year. It employs 2.2 million people and serves 176 million customers every week. Any change in either its own operations or the operations of its suppliers has significant impact. For instance, by eliminating excessive packaging on its private-label line of toys, Walmart could save $2.4 million a year in shopping costs, 3,800 trees, and one million barrels of oil.

Yet, while the efficiency efforts are a step in the right direction, at the heart of it, Walmart can never be a truly sustainable company because its business model is fundamentally flawed. The relentless drive for lower prices creates high levels of overconsumption and waste. By driving prices lower, it encourages shoppers to purchase more and more products, many of which are poorly made and last just a short while, which then requires another round of purchasing.

Walmart virtually mandates that suppliers use the cheapest processes possible to supply goods at low prices. Yet, environmentally sound practices cost money. It’s much cheaper to just dump waste water into an open channel than to treat it before it is released. True, efficiency measures mean that less resources are consumed and wasted, but as long as there is a net loss of resources or overall negative environmental impact, Walmart’s business model can never be sustainable.

Walmart is not alone in creating a negative environmental footprint. Indeed, the very nature of American capitalism requires that the top priority is profit maximization, whatever the cost to the environment or to wages. But, the sheer size of Walmart and the impact that it could have if it did the right thing makes them unique. It has the rare opportunity to lead by example and create meaningful change. Whether it will choose to do so, however, is another matter.