Energy use remains one of the largest contributors to REI's climate impact. Comprehensive data analysis across our facilities provides us the best insight to better understand our usage and identify financial opportunities and strategic investment opportunities. The energy choices we make today will have business impacts for decades to come.

RESULTS

Electricity equates to 26 percent of our overall greenhouse gas footprint, or 28,485 tons of CO2 and 59,539 mWh. However, we used 2.4 percent less energy throughout our facilities in 2010 as compared with 2009. We added new facilities that consume energy – four new stores, and the relocation of two retail locations to larger spaces – we only experienced a 1.8 percent increase in our climate impact from the energy we consumed. This increase is attributed to discontinuing one green power contract that supplied electricity to a number of our stores.

Our natural gas usage was slightly reduced at 3,918 tons of CO2, compared with 3,924 tons of CO2 in 2009. Further, spending on energy to power our facilities has remained essentially flat for the past three years. We recognize this is partially due to energy rates not increasing the past two years during the challenging economy across in the country.

We utilized the U.S. Environmental Protection Agency's Energy Star Benchmarking Tool to compare our facilities against thousands of other buildings across the country, including the retail industry. Our insights have helped REI identify opportunities that would be best to focus our time and resources, sometimes against our intuition. For example, it could be more advantageous for REI to focus on adjusting one store entirely rather than spreading investments across a few retail locations.

Retail

Despite adding four new retail stores in 2010 and relocating two additional stores to larger footprints formats, the company used 2.4 percent less energy in our facilities in 2010 than we did in 2009. The primary driver of this performance was a 1.3 percent drop in our retail energy use via our ongoing commitment to efficiency investments such as spotlight retrofits and higher performing HVAC units. This drop complements our 2.2 percent decrease in retail usage in 2009.

Self generation, or solar power, remained at 11 of our retail locations, generating more than 1.146 mWh of green energy, a decrease of 3.1 percent over 2009.

At the end of 2010, 21 stores were 100 percent powered from green energy sources. We also discontinued a contract with a green power provider in Colorado that no longer met our green power procurement criteria.

Distribution Centers

Our Bedford, Penn. distribution center experienced a 4.8 percent increase in energy usage over 2009, primarily due to expanded operating hours as a result of adding a second full shift. However, energy use at the Sumner, Wash. distribution center decreased by 5 percent from 2009 because of some energy efficiency updates and a milder winter then the previous year.

Headquarters

We continued our efficiency efforts within our data center through server virtualization, thus reducing the overall physical footprint of our server needs while maintaining service to our stores and customers. We also installed electricity sub-metering to track our consumption and better understand our baseline and how improvements can positively impact our usage.

We completed a significant lighting retrofit in our fixture shop in late 2009, resulting in a reduction in electricity usage by 37 percent in 2010 -- the most significant drop of the past three years.

LOOKING AHEAD

As we look to 2010 and beyond, REI will remain focused on increasing energy efficiency and green building features in our new construction and building retrofits. We will also continue to seek long-term contracts for renewable energy and strategies that provide long-term cost stability.

We intend to expand our on-site energy production through additional retail store solar systems in 2011. This investment makes great sense for the co-op because it reduces greenhouse gas emissions, reduces operating costs, and mitigates our exposure to the volatile energy markets.

REI is also in the process of opening a co-location data center in Nevada in one of the most efficiently designed sites in the country. This move will lead to large reductions in energy use as we transfer our computing load to that facility.

Starting in 2011, our energy use will become a performance indicator across the company. The 2011 budget is to be flat to 2010, or 268,238,092 kBtu, regardless of our growth.