Opportunities & Risk

AEP’s Position On Climate Change

AEP believes that moving too quickly with climate change initiatives could impair an already struggling economy even further. Any plan for CO2 emissions must be rational in terms of timing, scope and reduction targets to accommodate continued growth of the economy, mitigate costs to customers and achieve the environmental benefits desired.

Even though the United States lacks a national climate policy, energy-related CO2 emissions have declined since 2007. According to the Edison Electric Institute (EEI),

“preliminary U.S. Energy Information Administration data indicate the U.S. power sector CO2 emissions for 2012 will be around 2 billion metric tons. If 2012 trends are confirmed by final data, power sector emissions would be at their lowest levels since 1996, and would be approximately 17 percent below 2005 levels. This would continue the trend of declining CO2 emissions from the power sector.”

Excerpt from letter from EEI to Congressman Henry Waxman and U.S. Senator Sheldon Whitehouse.

Emissions in the U.S. have decreased in recent years due to several factors: slower-than-expected economic growth from the 2008-2009 recession; fuel switching from coal to cheaper, cleaner burning natural gas; increased deployment of renewable resources and energy efficiency projects; and increased motor vehicle fuel economy regulations.

In the interim, alternative legislative approaches are being discussed. These include:

  • A carbon tax resurfaced in late 2012 in part due to a need for additional government revenue to fill the budget deficit. The tax would place a fee on the use of fossil fuels such as coal, oil and gas, giving an economic incentive to reducing their use and resulting CO2 emissions. While a potential source of revenue, its disadvantages for the economy and uncertainty of the environmental benefits kept it from becoming a reasonable solution.
  • The Clean Energy Standard Act of 2012, a Clean Energy Standard (CES), was proposed in the Senate in an attempt to push large retail utilities to generate or use electricity from cleaner resources. While the CES moves beyond renewables to include other sources such as natural gas, nuclear power, hydropower, carbon capture and storage and waste-to-energy, we do not foresee much progress on this bill over the next few years mainly due to political gridlock.

Although the U.S. appears to be making strides toward reducing its CO2 emissions and meeting President Obama’s pledge to reduce U.S. greenhouse gas emissions by 17 percent below 2005 levels by 2020, our position on global climate change remains the same: We believe it is a global issue that requires a global solution. According to some projections by the Electric Power Research Institute, non-OECD (Organisation for Economic Co-operation and Development) countries, such as China and India, will account for approximately two-thirds of energy-related CO2 emissions by 2020. Emission reductions in these countries will be critical in making real progress on climate change.

AEP’s Transmission Strategy

AEP’s transmission strategy is supporting economic development and job growth, while bringing us closer to our supply line.

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