I've always been fascinated with the rotation of the earth as a source of energy. There is a lot of energy stored there that we could use. Of course the environmental impact, eventually, could be quite huge. I did a back-of-the-envelope calculation one time and there was indeed an immense amount of energy to be had if you only slowed the earth enough to extend the length of a year by one second! The earth is already running that much slower than our standard time as illustrated by the leap seconds we now have to add sometimes twice a year!
The easiest way to use the earth's rotation as a source of energy is based on tides. Tidal forces extend the water surface of the earth into an oblong, extended shape which in cross-section looks like a big cam. Let something float up and down on that cam to drive a generator and you're done!
Most real-life approaches more efficiently use the in- and out-flow of water during tides. The New York Times has a video of a recent installation of such generators. Wikipedia also covers tidal generators quite well.
I'm still curious about the details of the energy transfer here. During normal tides (see the Wikipedia article) energy is transferred from the earth's rotation to the moon's orbit. The moon slowly moves to a higher, longer-period orbit and the earth slows down. So the earth is already slowing.
Thus the question is, when we steal tidal energy, where does it come from? Are we slowing down the earth more than normal, or are we just stealing some of the energy that would have been transferred to the moon. I suspect it's a combination of both.
If we are just stealing the energy that would have been transferred to the moon, then I think the environmental impact is inconsequential. Who cares if the moon's orbit doesn't get larger! If that's an important natural process, then I suspect no human has discovered what it is yet.
If we are slowing the earth down more, then that's a different matter and my opinion is that we just use caution and don't get carried away to the point that we end up with a 48-hour day. That might be a problem.
Figuring out where tidal energy comes from is an interesting problem to think about. I'll have to dedicate some cycles to it from time to time.
Where does the energy we use end up?
I suspect that most of the energy that we “use” ends up being radiated into space as electromagnetic energy of one form or other. Some of it goes into chemical changes on earth, including, unfortunately, in the atmosphere in some cases (but with questionable significance).
We increase the entropy of the universe in this way, particularly since much of that energy is thermal in nature.
However, as has been pointed out, the entropy of the universe is already nearly maximum due the cosmic microwave background. These other changes are insignificant, tiny steps closer to the max.
(The illustration above was drawn by me using Windows Paint).