Carbon and Climate

Climate change and the role of carbon continue to be at the forefront of public discourse both globally and locally. We have had many discussions with investors, environmental groups and other stakeholders about this issue. AEP’s plan to reduce carbon emissions remains on course as we continue to move toward a cleaner energy future. We also believe that regardless of the outcome of legal challenges to the Clean Power Plan (CPP), it is likely there will be some form of carbon regulation in the future.

The future disposition of generating units and increases in use of renewables and other clean energy resources will continue to shrink our carbon footprint.

We strongly believe that any carbon policy or regulation must be rational in terms of timing, scope and reduction targets. Additionally, any climate action framework should be built on a rational approach and take into account the regional differences in the role of carbon within our economy to ensure that there is not undue economic harm. Our position on climate change has always been that it should be addressed at the federal level and it must be economy-wide.

For more than a decade we have taken steps to reduce our carbon footprint. We proactively addressed carbon emissions through voluntary actions as a member of the former Chicago Climate Exchange and through our resource planning process and investment decisions. AEP is already less carbon-intensive than a decade ago. The future disposition of generating units and increases in use of renewables and other clean energy resources will continue to shrink our carbon footprint. Our integrated resource plans reflect this diversification and incorporate a price for carbon as a proxy for potential future carbon regulations.

AEP CEO Nick Akins responds to U.S. withdrawal from Paris Climate Accord and what it means for AEP.

Clean Power Plan

The U.S. Environmental Protection Agency (EPA) finalized the Clean Power Plan (CPP) in October 2015, using an existing section of the Clean Air Act. The CPP would require states to develop state-level compliance plans. AEP began discussions with our states, urging them to develop state implementation plans, rather than be forced to comply with a federal implementation plan that would not account for each state’s unique energy and economic needs.

The final rule raised legal concerns and was subsequently challenged in the D.C. Circuit Court by a number of stakeholders, including the Utility Air Regulatory Group, of which AEP is a member.

In February 2016, the rule was subject to a stay order from the U.S. Supreme Court to allow for the appropriate legal review of the rule. This was followed by President Trump’s executive order instructing the EPA to review and, if appropriate, publish for notice and comment proposed rules suspending, revising or rescinding the CPP in March 2017. Subsequently, the U.S. Circuit Court of Appeals for the District of Columbia granted a request from the Justice Department to put a hold on further action; the court agreed in late April to put the proceedings on hold for 60 days. Without resolution of the ongoing litigation or final EPA action, the future of the CPP remains unclear.

We continue to advocate that any plan to reduce greenhouse gas emissions be accompanied by a thorough assessment of the impact on grid reliability, allow adequate time for implementation, respect the authority of states and other federal agencies, and preserve a balanced, diverse mix of energy resources for electricity generation.

President Trump’s executive order doesn’t change AEP’s focus on generating and delivering electricity in ways that meet the needs and expectations of our customers. That includes diversifying our resource mix and investing in renewable generation and other innovations that increase efficiency and reduce emissions. Regardless of the outcome of the CPP, AEP will continue its long-term commitment to serving our customers in cost effective and environmentally responsible ways.