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AEP Aims for 10% GHG Reduction

AEP expects to reduce greenhouse gas (GHG) emissions by ten percent by 2020, from 2010 levels – even as it warns that it cannot afford to take on voluntary carbon reduction initiatives.

In its 2011 Corporate Accountability Report, AEP said that it emitted 134 million metric tons of GHGs from its power plants in 2010, up from 129.7 million in 2009. The ten percent reduction target would take carbon to 120.6 million metric tons in 2020, a 25 percent drop from 2003 levels.

AEP, which serves 5.3 million electricity customers through utilities such as Ohio Power, Columbus Southern Power and Appalachian Power Co., says it is one of the largest coal consumers in the western hemisphere. Coal accounts for about 80 percent of the energy AEP generates.

The company says it will achieve GHG reductions as it retires older, less efficient coal units and replaces them, in some cases, with new natural gas or renewable generation. The company says it may be forced to retire a significant number of such older generating units in the next several years, under the Environmental Protection Agency’s (EPA) proposed Transport, Coal Combustion Residuals and Hazardous Air Pollutant rules.

Those rules could force the industry as a whole to retire between 50 and 100 GW (50,000 and 100,000 MW) of coal plants, AEP said.

The company said without federal legislation to address climate change, it cannot justify significant investment aimed at reducing its carbon footprint.

“Our challenge is that without a legislative requirement to reduce greenhouse gases (GHGs), the state regulators who set our rates have been sending us clear signals that they will not approve rate increases to recover our climate-related project expenses. Without a market for carbon allowances, we cannot obtain early-action credit toward future emission mandates. We remain open to consid­ering all options, but – especially in light of the continuing economic challenges we face – we are not likely to commit to new projects,” the report said.

AEP said that only federal legislation, not EPA regulation, can provide the certainty it needs to pursue more aggressive carbon-reduction strategies. “Without that certainty, it is impossible to justify expenditures in the billions of dollars that might otherwise put the company and its shareholders at risk,” the report said. “Unfortunately, such legislation appears unlikely in this Congress.”

In other 2010 results from the report, AEP’s number of environmental incidents tied to compensation rose to 15 last year, from nine in 2009, exceeding the company’s target of ten.

SO2 emissions were down in 2010, as they have been for every year since 2005. But NOx emissions rose, from 121,000 tons in 2009 to 125,000 tons in 2010.

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