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Ethernet is the dominant wireline communications technology for LANs with over 1 billion interfaces installed in the U.S. and over 3 billion worldwide. In 2006 the IEEE 802.3 Working Group started an effort to improve the energy efficiency of Ethernet. This effort became IEEE P802.3az Energy Efficient Ethernet (EEE) resulting in IEEE Std 802.3az-2010, which was approved September 30, 2010. EEE uses a Low Power Idle mode to reduce the energy consumption of a link when no packets are being sent. In this article, we describe the development of the EEE standard and how energy savings resulting from the adoption of EEE may exceed $400 million per year in the U.S. alone (and over $1 billion worldwide). We also present results from a simulation-based performance evaluation showing how packet coalescing can be used to improve the energy efficiency of EEE. Our results show that packet coalescing can significantly improve energy efficiency while keeping absolute packet delays to tolerable bounds. We are aware that coalescing may cause packet loss in downstream buffers, especially when using TCP/IP. We explore the effects of coalescing on TCP/IP flows with an ns-2 simulation, note that coalescing is already used to reduce packet processing load on the system CPU, and suggest open questions for future work. This article will help clarify what can be expected when EEE is deployed.