The $405-billion a year retailer has worked hard since 2005 to save energy, reduce waste and sell more sustainable products.

But it resisted pressures to reduce or hold steady its own greenhouse gas emissions. In fact, its carbon emissions have grown, as the middle graphic below shows. (There’s a cleaner version in WMT’s responsibility report, here.) When it comes to global warming, Walmart would appear to be doing more harm now than it was three or five years ago.

Today, Walmart made its first major commitment to reduce greenhouse gases–although, in typical WMT fashion, rather than set a tough goal that might affect its own growth curve, the company plans to turn up the pressure on its thousands of suppliers to reduce their emissions.

Here’s how a press release from Walmart and its lead environmental partner, Environmental Defense Fund, explained it:

Walmart today announced a goal to eliminate 20 million metric tons of greenhouse gas (GHG) emissions from its global supply chain by the end of 2015. This represents one and a half times the company’s estimated global carbon footprint growth over the next five years and is the equivalent of taking more than 3.8 million cars off the road for a year.

The footprint of Walmart’s global supply chain is many times larger than its operational footprint and represents a more impactful opportunity to reduce emissions.

You can think of this as the biggest carbon offset in global history, and I’m being only partly facetious when I say that.

Walmart wants to grow–the company is expanding in the U.S., and elsewhere in the world–and it will likely grow its own carbon footprint, directly and indirectly, as it sells more stuff and builds new stores, most in suburbs and rural areas, surrounding by acres of parking.  But the companies that supply WMT–that is, Procter & Gamble, Unilever, Clorox, Coca-Cola, PepsiCo, Kraft, General Mills, Sony, Apple, HP, Dell and hundreds more, all of whom must be wondering about their carbon emissions right now–will be asked to make things more efficiently, use less energy, buy more recycled content and the like.

As Leslie Dach, a top Wal-Mart executive, put: “It is really a Wal-Mart approach to solving a problem…The size and scale of this company can be put to use to make a real difference in the world.”

That’s no doubt a good thing. Better, as one of my sources told me, to improve practices at 10,000 factories around the world than simply to make WMT’s operations more efficient.  “Sensational” was how Fred Krupp, the president of Environmental Defense Fund, described it, during a lovefest with Walmart CEO Mike Duke, which was webcast on Treehugger, of all places.

Duke praised EDF, saying: “Our NGO partners have pushed us and been patient with us.”

Krupp returned the favor. EDF has planted two staffers in Bentonville, Arkansas, to work closely with WMT, and he said: “I don’t think there’s any better money we are spending anywhere.”

Specifics about how the carbon reduction effort would work were few, understandably so since it is new.  “This is uncharted waters,” said Elizabeth Sturcken of EDF. (Here is her excellent analysis, with some detail on initiatives in packaging and around dairy products.) Right now, there’s little data available to measure the carbon impacts of the products that Wal-Mart sells, particularly if you want to include how they are made, shipped, used and thrown away, as WMT does.

Walmart said it would start with the products that have the most “embedded carbon” and seek GHG reductions thatn are “economically viable.” The company has already had success getting suppliers to use smaller packages, from concentrated detergents to lighter-weight DVD cases.

Walmart itself, though, wants to get bigger. Duke was straightforward about this. “We are a growth company,” he said. “We want to add square footage. That’s the reality of our business.”

Critics are unsatisfied. Here’s reaction from Stacy Mitchell, a senior researcher with the New Rules Project, a program of the Institute for Local Self-Reliance:

By focusing on suppliers, Wal-Mart continues to deflect attention from the enormous greenhouse gas implications of its own business model. Wal-Mart is rapidly expanding in China, Mexico, and other countries, where it is destroying neighborhood businesses and replacing them with an auto-oriented form of big-box shopping that is highly polluting. Under Wal-Mart, local and regional systems of economic production and distribution are giving way to global supply chains, which almost invariably means longer distances and greater fuel consumption.

She’s got a point, but the story is more complicated, for a couple of reasons. (Warning: geeky analysis ahead.) First, look at the graphic on the far right, above. Walmart is reducing its GHG emissions per unit of sales, meaning that it’s more efficient. So, if its competitors are not doing as well in terms of efficiency, and if it takes market share away, then it’s possible that WMT can sell more stuff and the planet will be better off. For example, if Walmart sells lots of Fair Trade coffee, and the locally-owned convenience store around the corner sells less conventional coffee, that’s a good thing. Local isn’t necessarily better.

Second, and paradoxically, Walmart is actually becoming more local. For example, Walmart has made a concerted effort to buy more from local farmers. Corby Kummer has a terrific article about this in the current Atlantic, in which he asks: Will Walmart and not Whole Foods save the Small Farm and Make America Healthy? The company, he reports, “wants to revive local economies and communities that lost out when agriculture became centralized in large states.” Best quote in the story is from Michelle Harvey of EDF who says: “It’s getting harder and harder to hate Walmart.”

True enough. Nevertheless, in my ideal world, Walmart would set a cap on its own emissions, sell used goods as well as new, nudge people to buy vegetables instead of meat, and share profits with its workers.  In today’s world, Walmart will try to grow (profits) and shrink (pollution) at the same time. That’s about all we can ask of a big company until we, collectively, can find a way to decouple economic growth from environmental harm. That’s a job too big even for Walmart.

But if you can’t avoid cancer, chemotherapy may be your best option. And, if it becomes evident that the earth can’t avoid the catastrophic impacts of climate change, it is not merely possible that governments will turn to geoengineering.

Some people believe that it is all but certain.

Geoengineering, as you probably know, is the deliberate large-scale manipulation of the planet to counter global warming. It can take a number of forms, as the graphic below shows, some perhaps still to be discovered. Long a taboo subject, geoengineering is being talked about openly these days by scientists, environmentalists and policy thinkers.

The National Academy of Sciences held a workshop on geoengineering in June. Influential books including SuperFreakonomics and Whole Earth Discipline, by longtime environmentalist Stewart Brand, argue that it’s time to take geoengineering seriously. A congressional subcommittee held its second hearing on geoengineering just last week.

Among those testifying was Keith, who directs the energy and environmental systems group at the University of Calgary and, interestingly, also leads a team of engineers who are developing a technology to capture CO2 from ambient air. I heard him speak a week ago during a six-hour workshop on geoengineering organized by the Environmental Defense Fund, a nonprofit known for its pragmatism. EDF invited me to attend, on the condition that I seek permission from the scientists before quoting them.

Geoengineering is not a new idea — it was mentioned in a 1965 report on the environment delivered to President Lyndon Johnson. But until recently, environmentalists have avoided talking about it because they worry that a focus on geoengineering will divert attention and resources from their attempts to get governments and business to curb carbon emissions–attempts which, it must be said, have had limited success so far.

Nor is geoengineering entirely unproven. Experts say solar radiation management (SRM), the form of geoengineering that has drawn the most attention lately, can be achieved by adding light-scattering aerosols to the upper atmosphere or increasing the reflectivity of clouds below.

What makes scientists think it will work? When the Mount Pinatubo volcano in the Philippines erupted in 1991, spewing fine particles of sulfur dioxide into the stratosphere, enough sunlight was reflected back into space that the earth was cooled by about 0.5 degrees C, at least for a time.

The trouble is, solar radiation management surely will have  other consequences as well. Some are known—less precipitation and less evaporation, which is bound to affect agriculture—and others are not.

“The concerns, really, are the unknown unknowns,” says Keith.

The EDF workshop was itself a sign that geoengineering is moving closer to the mainstream. It was organized for EDF’s  trustees and senior staff during a board meeting at Cavallo Point in Sausalito, Ca.; the organization hasn’t decided yet whether to support further research into geoengineering but, to its credit, it is open-minded about the idea. Listening to the presentations, I found myself appalled at times and thrilled at others. This is a fascinating subject, one that raises many more questions than there are answers.

One useful way to think about geoengineering in general and SRM  in particular is to compare them to mitigation, the current approach to climate change. Mitigation means reducing carbon emissions, most importantly by replacing the burning of fossil fuels (coal and oil) with low-carbon energy sources such as wind, solar, nuclear power, so-called cleaner coal and biofuels–on a vast scale. Mitigation requires enormous expenditures of capital and takes a very long time to work because CO2 emitted today persists in the atmosphere for decades. Even if we could arrange for an international agreement to curb emissions, which we cannot, it will take decades to reverse the rising concentrations of carbon in the atmosphere.

David Keith

By contrast, solar radiation management is arguably “fast, cheap and imperfect,” said Keith–particularly if it is done crudely and without proper governance, oversight and testing. As little as $5 to $10 billion a year could pay for a short-term program, scientists estimate. By email, Keith put it this way: “The raw cost of implementation is less than 10% and probably less than 1% of the cost of cutting emissions when you average costs over 100 years.” Most of the technology required is within reach.

“It’s pretty clear that you could do it if you wanted to, and you could do it now,” Keith said. “If we put a lot of reflective aerosols in the upper atmosphere, it gets colder and it gets colder quickly.”

What the best way to block the sun’s rays? That’s to be determined. Keith explained that high-flying planes could scatter sulfate particles in the stratosphere, although little is known about how the aerosols would be formed into particles and therefore how long they would stay in the air.  Stephen Salter, an emeritus professor of engineering design at the University of Edinburgh, said a fleet of about 500 self-driven sailing ships could be designed to spray salt water into the air that would increase the reflexivity of clouds, thereby blocking sunlight.

SuperFreakonomics, meanwhile. put a spotlight on Intellectual Ventures Lab, a Seattle-based company led by former Microsoft chief technology officer Nathan Myrhvold that is researching geoengineering. Here’s a four-minute video about an Intellectual Ventures’ invention called the StratoShield, essentially a giant hose held up by helium ballo0ns that would inject  a fine mist of aerosolized sulfur dioxide 18 miles above the earth.

You can be sure that if research money is made available to study geoengineering, new ideas for tinkering with the earth on a global scale will arise. Two years ago, I wrote a cnnmoney.com column about a startup called Climos that is exploring techniques for removing carbon dioxide from the air by sprinkling iron dust on oceans. (For what it’s worth, the scientists at EDF’s event told me that will never work.)

In any event, the very fact the crude geoengineering can be done inexpensively and easily is one reason why it’s worrisome. “It is cheap enough so that small countries could act alone,” Keith said. In theory, a wealthy island nation that felt threatened by rising sea levels could try geoengineering. Countries have done dumb things before.

Surprisingly little research has been done on geoengineering. A article by David Victor et al called The Geoengineering Option, published last spring in Foreign Affairs, said:

Nearly the entire community of geoengineering scientists could fit comfortably in a single university seminar room, and the entire scientific literature on the subject could be read during the course of a transatlantic flight.

Nor is it clear how geoengineering can be tested, and how useful any tests would be. Writing in the Jan. 29 issue of Science, Alan Robock et al tackles this subject and says that “stratospheric geoengineering cannot be tested in the atmosphere without full-scale deployment.” (Here’s a link to their story and here’s one to Keith’s work.)

David Victor, a professor at the University of California, San Diego, and an author of the Foreign Affairs article, told the EDF gathering:  “The odds of deploying a bad geoengineering system are greater today than the odds of responsible nations coming together and deploying something that is well-designed.”

This is why it’s not just the science of geoengineering that demands further study; policy and governance issues are equally important, if not more so. Imagine, for example, a scenario in which injecting aerosols into the atmosphere would cool the earth and slow down a rise in sea levels that threatened one country, while reducing the amount of rainfall in a neighboring country that was struggling to feed its people.

As Alan Robock, an environmental scientist at Rutgers, put it:

What temperature do we want the planet to be? Whose hand is going to be on the thermostat? What if Russia and Canada decide it’s fine to get a little warmer, but India wants it cooler?

Stewart Brand

There’s lots more to say about all this, obviously. I’m going to devote a future blogpost to the ideas of Scott Barrett, an economist who has an interesting analysis of the economic incentives that drive both climate change mitigation and geoengineering. If you want to know why Stewart Brand supports geoengineering research, you can sign up for a free webinar on February 18 at The Energy Collective where I’ll be talking with Stewart. I’m also going to try to organize a conversation about geoengineering at Brainstorm Green, FORTUNE’s conference on business and the environment, that will be held April 12-14 in Laguna Beach, CA.

A final thought on why the chemotherapy analogy is imperfect. With cancer, you can reduce but not eliminate your risk of getting the disease. By contrast, we know what to do to curb global warming.

So the question is, can we summon the collective will to stop burning fossil fuels? If you ask me, the alternatives–including geoengineering–are pretty darn scary.

To see which of the company’s 65 drivers were racking up the most idle time, McKenna ranked them, based on data from onboard computers. “All we did was talk to them about it, and put a list up in the break room,” he told me. “Human nature, no one wants to be at the bottom of the list.” To sweeten the deal, the 10 drivers with the lowest idling time got a gift card for fuel they could use for their own cars.

The results were dramatic. Idle time dropped from 1,400 hours in February 2007 to 1000 hours in February 2008 to just 380 hours in February 2009. Depending on fuel costs, cutting idle time has saved the company thousands of dollars a year—roughly $20,000 during 2008, for example.

There are two lessons here. First, as I wrote recently about OPower, changing behavior is a powerful and low-cost way to curb climate change. Second, small changes can add up to big impacts, as the Environmental Defense Fund makes clear in this cool video from its Innovation Exchange website.

As EDF notes, fleet vehicles are driven hard, averaging nearly double the mileage, fuel consumption and emissions of personal vehicles. Currently, EDF says there are more 3 million corporate fleet vehicles in the United States emitting 45 million metric tons of carbon dioxide per year.

I spoke with Chris McKenna last summer while helping EDF write a series of case studies on greening fleets. (The case studies are available here.) I also spoke with fleet managers at Carrier, the global manufacturing firm that’s part of United Technologies, and at health-care firm Novo Nordisk.

At all three companies, dedicated fleet managers came up with simple, win-win strategies that saved their companies money and reduced GHG emissions. Carrier took unnecessary parts and tools out of its repair vans, reducing weight. At Novo Nordisk, Donna Bibbo, manager of fleet and travel, made small changes to the list of company cars made available to sales people; those who wanted an SUV or minivan could still get one, but they needed approval from a supervisor. “For the whole year, I don’t think I ordered 25 minivans,” Bibbo says. In past years, she would order 300 to 350. Behavioral economists Cass Sunstein and Richard Thaler called this choice architecture.

EDF and Jason Mathers, who oversees its work on fleets, is now spreading the word, and providing other companies with step-by-step plans to reduce costs and green their fleets. This isn’t glamorous work. But it matters.

In the latest sign that China takes the threat of global warming seriously, Chinese business executives with close ties to the government have launched a voluntary market in Beijing to buy and sell carbon credits.

Just don’t call it cap-and-trade, which is the regulatory approach embodied in the climate legislation pending in the U.S. Congress. The “cap” part of cap-and-trade remains anathema in China. As a developing country where billions of people earn less than $3,000 a year, China simply won’t accept mandatory limits on its emissions of greenhouse gases.

David Yarnold, Environmental Defense Fund

But the Chinese have enlisted western partners to build a market that will, as they put it, “limit and incentivize.” The theory is that a voluntary market in carbon credits will limit emissions by providing financial incentives to Chinese companies to develop renewable energy, promote energy efficiency and, above all, find environmentally-friendly ways to burn coal. Some of that money would come from outside China and would would come from within.

This could lay the groundwork for a mandatory market in the not-too-distant future.

That, at least, was my takeaway from a Low Carbon Conference held today in New York that brought together leaders of the world’s big stock exchanges, energy industry executives, environmentalists and experts in carbon finance. [Disclosure: I hosted the event for BlueNext, a French company that recently announced a partnership with the China Beijing Environmental Exchange to develop carbon trading in China.] Not surprisingly, the Chinese are looking for money from the west, specifically from companies and governments looking to offset their emissions. They argue that they can reduce emissions faster and cheaper than the U.S. or the EU. But they also expect to raise money from businesses and individuals in China that care about climate change.

One company represented at the event, the Tianping Insurance Company, has said it will become China’s first carbon neutral business, in part by buying credits. It bought its first credits last month.

David Yarnold, the executive director of the Environmental Defense Fund, which has worked with the Chinese to develop a carbon market, put things in perspective nicely:

This new partnership between Wall Street and the Great Wall flies in the face of conventional wisdom.

Today, you will witness tired conventional wisdom drawing its last breath. You will learn that China is no laggard in the race to develop clean energy and reduce global warming pollution. In fact, it is moving ahead.

Just five years ago, who would have thought that the New York Stock Exchange would be hosting a meeting on carbon trading? Who would have thought that China would have an environmental exchange?

Of course, it’s no surprise that Yarnold and business-friendly EDF, which pioneered emissions trading in the U.S. during the first Bush administration, would endorse a market-based solution to climate change. As he put it:

Many believe markets are the source of environmental problems.  They think that the relentless search for profit that leads to the sacrifice of the environment and that money is the root of all environmental evil.  In contrast, here we are, convening to assess how markets can be put to the service of environmental protection, how markets can be the engine of innovation that will support the growth of the new low carbon economy.

What was striking was to hear Chinese executives like Xiong Yan, chairman of the China Beijing Environmental Exchange, who has impeccable Communist Party credentials, wholeheartedly agree that banks like Merrill Lynch and Citi and utilities like Duke Energy need to help solve the climate crisis. Merrill, Citi and Duke were all invited to speak by the Chinese, who shaped the agenda for the event.

While there was lots of talk about wind, solar and efficiency, the conversation – like so many conversations about climate – inevitably kept coming back to the question of coal. China gets about 80% of its electricity from coal. The U.S. gets about 50%.

Jim Rogers, Duke Energy

“Coal binds the U.S. and China together,” said Jim Rogers, CEO of Duke Energy, a major coal-burning utility as well as a supporter of a mandatory U.S. carbon cap. “Our challenge is to find a way to use coal in a low carbon world.”

Duke is betting on the technology of carbon capture and sequestration. By contrast, a Chinese coal executive touted the virtues of using algae to absorb CO2 emissions. Whatever technology proves to be most effective–assuming clean coal is more than a distant chimera–ought to be shared quickly and widely, U.S. and Chinese execs said.

For more on China’s role this week in New York, where President Hu Jintao addressed the United Nations, see Is China Turning Into the Climate Good Guy? by Time’s Bryan Walsh and Are Chinese Emissions Pledges a Game Changer for Senate Action? at Joe Romm’s Climate Progress.

That’s because, as anyone who has driven a Toyota Prius knows, the stopping and starting, braking and accelerating required in traffic is ideal for hybrid-electric engines, which capture energy from brakes and turn it into electric power.

President Obama checks out a hybrid truck

So Eaton, which has been developing electrical and hybrid power systems for trucks and buses for more than 20 years, is now building a nice business around selling hybrid power systems for commercial vehicles. On a California trip last spring, President Obama got a sneak peak at a plug-in hybrid electric utility truck with a power system developed by  Eaton.

According to Alexander M. “Sandy” Cutler, Eaton’s chairman and CEO, the hybrid truck industry—while much smaller, and not nearly as visible as the hybrid car business—is finally taking off.

“It’s ramping quickly, and that’s encouraging,” Cutler told me in a recent telephone interview, largely because the technology, economics and policy are coming together. Delivery trucks are the early adopters, but others will follow, he says: “If you think about a truck that’s going make to hundreds of stops a day, they’re going through the acceleration and deceleration process. That’s right when hybrids hit their sweet spots.”

Customers include FedEx, UPS, Coca-Cola Enterprises, PepsiCo and Wal-Mart, all of whom own and manage big truck fleets.

What’s interesting about this story is that its impact goes well beyond a single company going “green.” If hybrid-electric power systems for trucks and buses achieve economies of scale, they could transform an industry—replacing thousands of diesel-powered vehicles, dramatically reducing fuel consumption and curbing greenhouse gas emissions and other pollutants. It’s this kind of industry transformation that’s needed to address the dangers of global warming.

By itself, Eaton can’t change the industry, of course. But the company has had help selling its hybrids from a key customer, FedEx, and from the nonprofit, business-friendly Environmental Defense Fund.

Back in 2000, EDF and FedEx formed a partnership to promote hybrid-electric trucks. The idea was to use FedEx’s purchasing power to encourage truck manufacturers to produce the vehicles. Eaton was selected as the first supplier of the power trains, and a couple of prototype trucks were put into service in 2004 in Sacramento, with kudos from California Gov. Arnold Schwarzenegger. After FedEx took the lead, UPS, which has made its own substantial investments in alternative fuel vehicles, got into the game in a hurry.

Today, Eaton makes three distinct hybrid platforms, each of which delivers fuel efficiency and environmental benefits. They are:

Hybrid electric. These are the systems used by FedEx and UPS, and they are now available as a factory-built option at four major U.S. truck makers. Truck and bus manufacturers in Europe and Asia are selling them as well.

Hydraulic Launch Assist systems. The HLA system is designed for heavy vehicles, like garbage trucks, which make lots of stops and starts. Waste Management is an early customer. These engines are quieter as well as cleaner—a welcome development for anyone who’s heard a garbage truck screeching on the street.

Series hydraulic hybrid systems. Eaton’s getting subsidies from U.S. EPA and the U.S. Army to develop an “infinitely variable hydraulic drivetrain” which will improve fuel economy by 50 to 70%.

I don’t claim to understand these technologies—if you want to know more, here’s an explanation from Eaton’s website—but the particulars are less interesting than the idea that sustainability, broadly defined, can be an engine of innovation.

To be sure, Eaton was driven by economics, above all. “We started with the base conviction that we live in a world where fuel economy is increasingly important, and where carbon footprint is increasingly important,” Cutler says. So were customers like FedEx and UPS. But the Environmental Defense Fund and Schwarzenegger got involved because the hybrid trucks deliver substantial environmental benefits, too.

“As fuel prices continue to rise, fuel-efficient trucks are an investment every company should be making,” EDF’s Gwen Ruta says. “And since hybrids also reduce air pollution, oil dependency and climate change, they’re not only good for business but good for America.” (EDF tells the story here. Disclosure: I’ve done research and writing for EDF.)

As with hybrid cars, hybrid trucks cost more up front than conventional diesel-powered trucks. “Probably the payback is two to two and half, maybe three years longer than it would be on a traditional truck,” Cutler says. That depends on the cost of diesel fuel, of course.

Eaton makes the hybrid power trains at factories in Michigan and North Carolina, but Cutler says “a lot of competitors are developing around the world.” He says U.S. industry’s annual production of hybrid platforms is still below 2,000; it probably needs to get to 10,000 to achieve economies of scale. “The U.S. currently has the lead in commercial vehicle power trains,” Cutler says, in contrast to cars, where Japanese automakers are setting the pace. His hope, of course, is that American companies and particularly Eaton will stay out in front.

To listen to a podcast or read a transcript of my interview with Sandy Cutler, visit Greenbiz.com.

In Washington, it’s a popular climate conundrum everyone talks about: Even if the U.S. lowers its greenhouse gas emissions, China and India are on track to dwarf the entire Western World’s as they build enormous coal-fired power plants. Politicians regularly say we must get China and India to use less coal, the dirtiest of fossil fuels, to power their emerging economies.

But who do you think is financing all these new coal plants in the developing world?

Try the World Bank, the Asian Development Bank and other international public financial institutions supported by the world’s wealthiest nations.

That’s right. While the industrialized world is struggling to cut emissions, and gearing up to negotiate an international climate treaty in Copenhagen, it is bankrolling the construction of thousands upon thousands of megawatts of new coal-fired power in developing countries.

A new study by Bruce Rich, formerly of Environmental Defense Fund (EDF), shows that international public financial institutions have provided $37 billion to finance the construction of at least 88 new coal plants in the developing world since 1994. What’s more, that $37 billion in direct financing secured another $60 billion or so from private and local sources, bringing total investment in new coal plants in developing nations to over $100 billion.

Even worse, the World Bank classifies these coal plants as “low carbon” financing projects if they are the so-called supercritical type with marginally better CO2 emissions rates.

Collectively those 88 coal plants will pump out 792 million tons of CO2 a year — essentially negating pollution reductions the Waxman-Markey climate bill hopes to achieve over the next decade.

Bear in mind that 88 is a minimum number because most export credit agencies do not release detailed information on transactions and only plants for which the financing could be verified were included in EDF’s study.

If you’re wondering why 1994 is the baseline, it’s the year the United Nations Convention on Climate Change took effect, committing industrialized nations to provide funds and technology to mitigate climate change in poorer nations. Instead, the wealthier nations have been locking into place a carbon-intensive energy infrastructure, one that will endure for decades since coal plants typically operate for 40 to 50 years.

Sure, these public international lenders have committed $6 billion over the past 15 years to help the world’s most vulnerable citizens adapt to a warming planet — but it’s a fraction of the $100 billion spent on new coal plants.

Some would call that shooting yourself in the foot.

And it’s not as though the World Bank is unaware of the dangers of continued reliance on coal. It commissioned a three-year independent study on the future role of the World Bank Group in supporting coal, oil and gas. But when that study recommended decisive action away from fossil fuel lending, the World Bank refused to endorse its findings — even at the urging of six Nobel Peace Laureates and the European Parliament.

The World Bank also knows that the poorest countries will suffer the worst effects of global warming. In 2003 it published Poverty and Climate Change: Reducing the Vulnerability of the Poor through Adaptation, which stated “climate change is a serious risk to poverty reduction and threatens to undo decades of development efforts.”

Why then does it finance coal? Here’s what the World Bank’s Chief Economist has to say: “Because coal is often cheap and abundant, and the need for electricity is so great, coal plants are going to be built with or without our support. Without our support, it is the cheaper, dirtier type of coal plants that will proliferate.”

Not true, says the Center for Global Development. It says most new coal plants that are built without World Bank funds, at least in India, ARE the cleaner, so-called “supercritical” type because the operating and fuel costs of the supercritical coal plants are cheaper.

More to the point, supercritical coal plants are only slightly cleaner, producing about 15 percent less C02 than traditional coal plants, according to EDF. They are still not as clean as even a natural gas-fired plant.

Which leads me to alternatives. Clearly, bringing electricity to the world’s poor is a worthy goal, but there’s a better way to achieve it: Renewables, energy efficiency and grid modernization. International financial institutions should be scaling up their support for these rather than financing coal.

Today the Bank spends twice as much on fossil fuel projects as new renewable energy and energy efficiency projects combined and five times as much as new renewables alone.

That’s a missed opportunity when large-scale renewables are so feasible in the developing world. Take Gujarat State in India, where a monstrous 4,000-megawatt coal-fired plant, the Tata Mundra, is being built with World Bank support. More than 7,000 megawatts of renewable energy are also in the works there — with no help from international development banks. AES, a US based energy company, is constructing a $1.2 billion 1,000 megawatt solar thermal array as part of that plan.

Think how many more renewable energy projects could be built if public international financial institutions changed their lending priorities.

Equally important, international financial institutions must also tighten the definition of “low carbon.” Supercritical coal plants now meet that feeble standard, which gives the World Bank’s claim that 40 percent of its energy lending is “low carbon” a hollow ring.

These reforms are imperative, for if we do not slow the rise of CO2 emissions from coal in the developing world, no amount of emissions cuts in industrialized nations will make a difference.

When it comes to climate change–the defining environmental issue of of our era—Wal-Mart is moving in the wrong direction.

As Gwen Ruta of the Environmental Defense Fund, a Wal-Mart partner, writes in her frank assessment of the company’s 2009 sustainability report, the problem is that all the good things that Wal-Mart is doing–increasing its use of renewable energy, driving efficiency in individual stores, improving its fleet operations and pushing up its recycling rate–are offset by the fact that the company is adding more stores and selling more stuff.

So although WMT’s greenhouse gas emissions per unit of sales is decreasing (the bars on the right), its overall carbon footprint is growing (the bars in the middle).


Wal-Mart executives have a sophisticated response to this; they’ve told me that if the company takes market share away from other, less efficient retailers, it could actually be increasing its own emissions while reducing emissions in the aggregate because people are buying less stuff from its competitors. Certainly that’s possible.

If the earth’s atmosphere could speak, it would tell us that it doesn’t care about efficiency or renewables or recyling–or market share. It cares about absolute emissions of the greenhouse gases that cause global warming.

The trouble is, Wal-Mart hasn’t figured out how to get bigger and smaller at the same time. Bigger: more revenues and profits. Smaller: a reduced environmental footprint.

This a fundamental problem facing not just Wal-Mart, but all of corporate America. Until we solve it, we’re in trouble.

You almost surely don’t know, and you may not care, but brands and retailers are digging deep into their supply chains to better understand the environmental and social impact of the things they make and sell. This is an emerging trend in business that goes by the name of  traceability or supply chain transparency. It requires companies to understand the full depths of their supply chains much better than most do. Companies getting serious about traceability include Patagonia, Wal-Mart, Tesco and Gap. More are sure to follow.

“If you don’t know where your stuff is coming from. how can you have a sustainability program?” asks Tim Wilson, the CEO of a British company called Historic Futures that specializes in traceability.

Tim talked about traceability on a panel that I moderated at FORTUNE’s Brainstorm Green conference about business and the environment. He was joined by Mike Kowalski, the CEO of Tiffany & Co., Kathy Abusow of the Sustainable Forestry Initiative, Jill Dumain of Patagonia, Arlin Wasserman of Sodexo and Jeremy Moon, the CEO of Icebreaker. Icebreaker is a fascinating company that makes clothing from New Zealand merino wool and invites customers to trace their garments back to the farmers who raised the sheep that made it—using a (Get it?)  Baacode. Very cool, and here’s the Icebreaker story.

From the composition of that panel, you can see that traceability crosses diverse industries—jewelry, wood and paper, food and clothing. In every case, the goal is to de-commoditize commodities—that is, to distinguish between gold mined under safe conditions in the U.S. and gold mined by children in Africa, or between wood that is harvested sustainably and wood that has been illegally logged. Fortune.com just published a brief story that I did about traceability. Here’s how it begins:

Laguna Niguel, Calif. –  Where was the cotton in your shirt grown? Who mined the gold in your wedding ring? What forest produced the paper in the magazine you are reading?

You almost surely don’t know, but a growing number of brands and retailers want to dig deep into their supply chains to better understand the roots (sometimes literally) of the products they sell. Their goal: to avoid risks and enhance their reputation as “green” business leaders, says Tim Wilson, the 41-year-old CEO of Historic Futures, a little British company that is riding a big idea in sustainability, known as traceability.

Using Internet-based systems and RFID tags, Historic Futures tracks such commodities as cotton and gold through the long and previously opaque supply chains of Wal-Mart, Gap, and Patagonia, among others.

Patagonia has done a terrific job of explaining traceability to the public on a website called The Footprint Chronicles. (That’s a graphic from the site below.) The Environmental Defense Fund spotlighted the work done by Patagonia in its 2009 Innovations Review, which I helped EDF to write. EDF also highlighted Wal-Mart’s Love, Earth line of jewelry—which promises customers that the gold and silver jewelry they buy has been mine and produced responsibly.

Here is a link to the EDF report about traceability, headlined Shining a Spotlight on the Supply Chain. Here’s a link to EDF’s account explaining how Wal-Mart created its Love, Earth line of jewelry, with the help of Historic Futures. Another example of traceability: Wal-Mart and Tesco have vowed not to buy clothing made with cotton farmed in Uzbekhistan, where child labor is rampant, requiring them to ask all their suppliers to know where their cotton is sourced.

Traceability isn’t a new idea, of course. We couldn’t have organic food or Fair Trade coffee or salmon certified by the Marine Stewardship Council without transparent supply chains that track goods from the store shelf back to the farm or fishery. But judging from the crowd at our Brainstorm Green panel on traceability, you’ll be hearing more about it in the years ahead.

As best as I understand the issue (which is not very well), there’s little or no danger that the world as a whole will run short of water, which makes water different from other natural resources like oil, gas or precious metals. Using water wisely is important, nevertheless, because more than 800 million people around the world lack access to clean drinking water and 2.5 billion don’t have access to a safe toilet, according to the Global Water Challenge. Water is also a big environmental issue because it takes enormous amounts of energy to move water around. According to US EPA,

An estimated 3% of national energy consumption, equivalent to approximately 56 billion kilowatt hours (kWh), is used for drinking water and wastewater services. Assuming the average mix of energy sources in the country, this equates to adding approximately 45 million tons of greenhouse gas to the atmosphere.

Far more energy—I couldn’t find the numbers—is used to move water around for agriculture and landscaping. So if we can learn to use water more efficiently, we can save a lot of energy.

Given that, here’s a surprising and mildly disturbing fact: There are about 60 million automatic irrigation systems across the U.S., operated by governments, real estate developers, suburban office parks and retailers, and most of them operate on timers. That is, they water the grass or plants every few days for a set number of minutes, regardless of whether it has been raining or not. So here in the Washington, D.C., area, even on this drizzly afternoon, we can assume that some automated sprinklers are sprinkling.

“This current technology makes about as much sense as having a timer instead of a thermostat in your house,” says Chris Spain, the founder of a company called Hydropoint, which offers smart irrigation systems.

I interviewed Chris while helping the Environmental Defense Fund research and writing its 2009 Innovations Review, a report on innovations that are good for business and for the environment. We met last month at FORTUNE’s Brainstorm Green, where Chris spoke about water.

Founded in 2002 and headquartered in Petaluma, CA, Hydropoint helps its customers save water. They include eBay, Lockheed Martin, Cisco, McDonald’s, Wal-Mart, Amazon and Advanced Micro Devices, as well as big real estate developers and municipalities.

Hydropoint downloads weather data from about 40,000 weather stations across the U.S., asks customers to fill out a detailed questionnaire about their soil, plantings, sun and shade conditions, then calculates how much water is needed and when. Once Hydropoint has gathered data, it installs controllers on the customer irrigation systems and transmits instructions wirelessly to the systems.

Spain, an enterpreneur who worked in software, new media and television production before getting into the water-saving business, has become a self-educated expert on H2O. He told me that landscaping consumes about 58% of urban water, and that landscapes are typically overwatered by 30 to 300%.

The Hydropoint website also says:

Four million watt hours of power are expended and 5,360 pounds of CO2 are emitted into the atmosphere with every one million gallons of water consumed.

The city of Newport Beach, Ca., an early Hydropoint customer, says it reduced landscape runoff (and associated pollution) to its popular beaches by 70%. Independent research studies which governments need before buying the Hydropoint system confirm dramatic savings in water usage.

By the way, farmers don’t do much better when it comes to water use. Another company highlighted in EDF’s review is PureSense, which provides smart irrigation systems so that farmers can reduce their water usage.

Two things worth noting about these companies. First, they help repair market failures. farmers and landscape owners are wasting lots of water, and paying for it, because it’s easy to see when the ground needs water (grass turns brown) and harder to know the ground is getting too much water. Second, because Hydropoint and PureSense rely on wireless technology and weather data, they show how information technology will play a vital role in solving environmental problems.

Because most customers end up saving water, Spain says, the payback period for the initial investment in Hydropoint equipment is about 18 to 24 months.

The business is growing fast. “We’ve just scratched the surface in terms of market opportunity,” Spain says. “We address an area of profound waste.”

Now if we could only do something about those rainouts.

Last week at FORTUNE’s Brainstorm Green conference, the Environmental Defense Fund released its 2009 Innovations Review—a collection of new ideas, products and services that are good for business and good for the environment. EDF asked me to help write the review, and what struck me is how many of the innovations were relatively easy to put into place.

You can read the report here, and I’ll be blogging about several innovations in the days ahead. I want to begin by telling you about an agricultural innovation called “adaptive nutrient management” which I prefer to describe as social networking for farmers.

You know about social networks like Facebook, Twitter and MySpace. The Iowa Soybean Association has learned that when you get farmers networking—in their case, face to face, usually after the growing season is over—they learn to use fertilizer a lot more efficiently.

This matters because excess nitrogen fertilizer runs off fields into water supplies. And while the impact of nitrogen runoff on distant bodies of water is hard to measure precisely, it’s a serious environmental problem.

According to Tom Morris, associate professor of soil fertility at the University of Connecticut:

Agriculture is estimated to contribute 40% of the nitrogen pollution to the Chesapeake Bay, which is estimated to be 60,000 tons of nitrogen (annually) from agriculture. The amount of nitrogen contributed by agriculture to the Gulf of Mexico is estimated to be about 50% of the total, or about 825,000 tons from agriculture.

So-called dead zones where aquatic life cannot flourish are caused by this excess nitrogen, scientists say.

Of course, no farmer deliberately wastes fertilizer, especially since the costs of have been climbing—the price is now about 60 cents a pound–and corn and soybean farmers apply as much as 140 pounds per acre. The trouble is, farmers don’t know exactly how much fertilizer to use.

What’s more, while using a little extra fertilizer adds to their expenses, not using enough can depress yields and dramatically depress farm incomes.

Tracy Blackmer, director of research for the Iowa Soybean Association, told me: “The penalty, traditionally, has been larger if you were short than if you over-fertilized.”

In theory, the market should solve a problem like this, because no one wants to waste money on fertilizer. But markets don’t operate in theory.

What solves the problem is networking. Groups of farmers, typically neighbors farming similar soils in similar weather conditions, share information from their own on-farm studies. Together, they develop strategies for how and when to apply the least amount of nitrogen for the best economic and environmental results. Then they compare results, and further refine the process.

“The most important component of adaptive nutrient management is the winter meetings the farmers and their advisors attend to discuss their individual data and the data from their group,” says Morris, who is working on a similar effort with Pennsylvania farmers whose land is part of the watershed that flows into the Chesapeake Bay.

Instead of top-down lectures from experts, collaboration is key. “We have often, in agriculture, provided information to farmers,” Morris says. But when farmers themselves organize the conversation, “you get rapid learning and rapid adoption of ideas.”

“It is an iterative process,” agrees Blackmer. “It guides where the next round of testing goes.”

On average, Iowa corn and soy growers who joined in the program have reduced nitrogen use by about 30%, or about 30 pounds of nitrogen per acre, without reducing their profit per acre.

Information is power. Simple.