As noted, it is extremely difficult for regulated utilities to take on voluntary programs to reduce greenhouse gas emissions in the absence of federal climate legislation. Our voluntary tree planting and agricultural methane capture efforts are difficult to justify when we aren’t getting any return on them for our shareholders or assurances of credit toward future compliance obligations. 

Structured voluntary efforts, such as the EPA’s Climate Leaders program and the Chicago Climate Exchange’s emissions trading program, also were affected by the lack of momentum on Capitol Hill. In the case of Climate Leaders, which AEP joined in 2003, EPA’s decision to end the program was deliberate as it implemented GHG regulations. The Chicago Climate Exchange (CCX), which AEP joined as a founding member in 2003, announced in November that it would suspend its emissions credit trading program at the end of 2010.

AEP expects to reduce GHG emissions by an additional 10 percent by 2020 from 2010 levels. In 2010, AEP emitted 134 million metric tons of GHGs from its power plants. This will result in a total reduction of approximately 25 percent from 2003 levels, the first year of our CCX commitment.

Through our involvement with CCX, we made a voluntary but legally binding commitment to reduce our GHG emissions. We reduced or offset GHGs by a cumulative 95 million metric tons – almost twice our commitment of 48 million metric tons – during our eight-year membership. That represents about 15 percent below 2003 levels. Richard Sandor, the founder and former chairman of CCX, is a member of the AEP Board of Directors.

We will, however, achieve additional GHG reductions as we retire older, less efficient coal units and replace them with new natural gas and/or renewable generation, where supported. Under the EPA’s proposed Transport, Coal Combustion Residuals and Hazardous Air Pollutant rules and 316(b) water rules, AEP would likely be forced to prematurely retire a significant amount of coal-fired generation during the next several years. The industry as a whole may retire between 50 gigawatts and 100 gigawatts. Some of that generation most likely will be replaced with natural gas plants, which emit about half the carbon dioxide of coal combustion plants.

The Wyandot Solar Project, which began commercial operation in 2010 near Upper Sandusky, Ohio, provides 10 MW of renewable energy to AEP Ohio customers.