June 14, 2007

AEP Gets Carbon Credits From Cows

American Electric Power, a utility based in Columbus, Ohio, and the biggest coal burner in the U.S., is paying Environmental Credit Corp., of State College, Pa., to put plastic tarps over lagoons holding livestock waste on farms to block methane from reaching the atmosphere, The Wall Street Journal reports. The AEP project, which is set to include about 200 farms, would be far bigger than any other effort to turn cow dung to carbon credits in the U.S.

The emission reduction will translate into carbon credits that AEP might be able to use to offset its obligation to clean up its power plants if, as AEP and much of industry expects, Congress imposes a carbon cap in the next few years.

AEP won’t say what it has agreed to pay for each methane-capture credit. But such credits, which are being sold elsewhere in the world as a result of the Kyoto Protocol, typically go for between $5 and $8 per so-called CO2-equivalent ton.

Not only is that a fraction of the cost of new coal-plant technology, but it is also less than most people expect credits to cost on a U.S. market, according to the article, so snapping up as many credits as possible before a mandate is imposed and begins to push prices up is “very important” in minimizing the cost to AEP, says Michael Morris, the utility’s chief executive.

AEP is contracting to buy at least 600,000 CO2 credits annually through the dung deal.

AEP released a corporate responsibility report last month.

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