The rapidly increasing energy consumption by computing and communications equipment is a significant economic and environmental problem that needs to be addressed. Ethernet network interface controllers (NICs) in the US alone consume hundreds of millions of US dollars in electricity per year. Most Ethernet links are underutilized and link energy consumption can be reduced by operating at a lower data rate. In this paper, we investigate adaptive link rate (ALR) as a means of reducing the energy consumption of a typical Ethernet link by adaptively varying the link data rate in response to utilization. Policies to determine when to change the link data rate are studied. Simple policies that use output buffer queue length thresholds and fine-grain utilization monitoring are shown to be effective. A Markov model of a state-dependent service rate queue with rate transitions only at service completion is used to evaluate the performance of ALR with respect to the mean packet delay, the time spent in an energy-saving low link data rate, and the oscillation of link data rates. Simulation experiments using actual and synthetic traffic traces show that an Ethernet link with ALR can operate at a lower data rate for over 80 percent of the time, yielding significant energy savings with only a very small increase in packet delay.