BUSINESS

Walmart's CEO doubles down on the company's aggressive bet on renewable energy

To every environmentalist who ever bad-mouthed Walmart for its big-box blandness and gigantic impervious parking lots, here's some news:

The retail behemoth is throwing its full economic muscle behind energy sustainability. Local utilities that don't get on board with Walmart's green energy programs could be left behind like an old, worn-out shopping center.

The company's new energy policy, announced this week at its Global Sustainability Milestone Meeting, calls for Walmart to produce or procure 7 billion kilowatt-hours of renewable energy globally by the end of the decade, a 600 percent increase over 2010 levels.

At the same time, the retailer will make deep cuts to its energy consumption by shaving 20 percent from 2010 levels the amount of electricity required to power a square foot of a Walmart store or warehouse.

The new commitments put much sharper teeth into Walmart's existing clean energy program, which calls for the retailer to become 100 percent powered by renewable energy by midcentury. But that goal was considered more aspirational than real, given the company's expansive geographic footprint -- 10,500 stores in 27 countries -- and the complexity of electricity markets across the many regions and states where Walmart operates.

In a statement, Mike Duke, Walmart's president and chief executive officer, made clear that the retailer was doubling down on its energy commitments and that it intends to make good on those promises much faster than originally anticipated.

"More than ever, we know that our goal to be supplied 100 percent by renewable energy is the right goal and that marrying up renewables with energy efficiency is especially powerful," Duke said. "The math adds up pretty quickly -- when we use less energy, that's less energy we have to buy, and that means less waste and more savings. These new commitments will make us a stronger business, and they're great for our communities and the environment."

If you can deliver, we'll buy it

Walmart's expanded clean energy ambitions also served to put electric utilities and independent power producers on notice that they have a ready buyer for power that is not derived from coal, oil and natural gas.

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Companies that meet Walmart's green energy criteria can expect the Arkansas-based retailer to seek long-term power purchase agreements "that bring a reliable revenue stream to renewables developers, helping them secure financing," the company said in a fact sheet detailing its energy sustainability program.

"We will send strong market signals through wholesale green power purchases with our utility and other energy suppliers," it added.

The company said that its sixfold increase in renewable energy consumption should offset the electricity output of two fossil-fuel-based power plants and that the increased use of renewables, along with ambitious efficiency measures, should result in a $1 billion annual savings on energy bills.

The program will also reduce greenhouse gases by 9 million metric tons and in effect halt the growth of such emissions from the company's most energy-consumptive activity, powering buildings, the company said, even as Walmart continues to expand its operations worldwide.

Duke noted that energy costs are projected to rise at a much faster rate than Walmart's planned rate of growth, so finding ways to reduce electricity costs is consistent with the company's low-cost business model and should translate into savings for customers over the long term.

"Our leadership in this area is something our customers can feel good about because the result is a cleaner environment. And savings we can pass on to them," he said.

'Powerful example' for other firms to follow

In fact, Walmart already claims credit as a clean energy leader, both within the U.S. retail sector and among the ranks of the global green corporate elite. Since 2005, the company has installed more than 200 rooftop solar arrays on its U.S. stores, resulting in an estimated $2 million in energy savings. It has also worked to make its stores more energy efficient through LED lighting retrofits; high-efficiency heating, cooling and refrigeration systems; and programs to reduce solid waste.

Walmart further estimates that its buildings consume 1.1 billion kWh of renewable energy today, enough to meet 21 percent of electricity demand and 17 percent of total energy use.

By 2020, Walmart said, it hopes to install an additional 800 solar arrays on store rooftops and facilities, and it will work to develop or buy electricity from projects using wind, fuel cells, hydro and geothermal technologies.

Walmart also ranks among the best performers in U.S. EPA's Green Power Partnership program. According to the latest EPA figures released yesterday, Walmart placed fifth among the top 50 U.S. companies relying on clean energy sources, ranking it alongside technology stalwarts Intel, Microsoft and Apple and other green-minded firms like Whole Foods Market, Starbucks and Kohl's department stores.

Andrew Steer, president and CEO of the World Resources Institute, which has advised Walmart on sustainability issues, said in a statement that the retailer's green energy commitments offer a pathway for other firms to follow and "set a powerful example for businesses and government officials alike who are looking to move to a more sustainable and low-carbon future."

Walmart's efforts to green its energy supply will also extend beyond the United States to other major markets like Mexico, where the company expects to produce or buy 400 million kWh of renewable energy to power more than 720 Mexico Walmart stores by the end of this year. Clean energy purchases and efficiency measures in Mexican stores should save the company $20 million this year, the company said.

In the United Kingdom, Walmart's British-branded stores, known as Asda, have reduced energy costs by $64 million through efficiency programs implemented since 2007, and slashed carbon emissions from stores and distribution centers by more than 33 percent, the company said.

Efforts are also underway to expand clean energy programs at Walmart stores in China and India, officials said.

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