Environmental problems associated with energy utilization span a growing spectrum of environmental quality and natural ecosystem. The second law of thermodynamics is considered to be instrumental in providing insights into environmental impact. In conjunction with this, exergy appears to be an effective measure of the potential of a substance to impact the environment. This article discusses the relations between environmental impact and thermodynamics in general, and the thermodynamic property exergy in particular. Historical and modern examples demonstrate these concepts. Three main relations between exergy and environmental impact are identified: (1) order destruction (chaos creation), (2) resource degradation, and (3) waste exergy emissions. An apparent paradox is described between the usefulness of a high-exergy quantity and the simultaneous potential for environmental disruption it possesses. It is concluded that the potential usefulness of exergy analysis in addressing and solving environmental problems is substantial.