AEP wants a federal energy policy that addresses the future energy needs and energy security of the United States and
a separate climate change policy that addresses greenhouse gas (GHG) reductions through a federal cap-and-trade system. While we believe that climate and energy policy need to be addressed at the same time, some of our stakeholders prefer that energy issues be addressed as part of a climate bill. We agree with some of our stakeholders that climate change is best addressed through legislative action and not regulated through the existing Clean Air Act.
The United States needs an interstate extra-high voltage (EHV) transmission system that is more efficient and can facilitate the delivery of clean energy from where it is generated to where it is needed. Today’s transmission system is built around the location of power plants. In a carbon-constrained world, we need to integrate substantial new renewable and other resources into the grid. Renewable resources, such as solar and wind, often are located in remote areas. A new EHV transmission system must be built to bring this energy to the more populated areas where it is needed. The grid is not configured to handle a substantial shift to more diverse fuels and must be improved if we are to maximize those resources.
We support adoption of an economy-wide cap-and-trade GHG reduction program that allows us to provide reliable, reasonably priced electricity to our customers while fostering international participation to address climate change. This program should include:
- A cap that applies to all sectors of the economy and covers all GHGs;
- A framework to maximize flexibility and minimize cost;
- Targets for reducing emissions that match available technology and could decline over time as technology becomes available and can be deployed;
- Unrestricted use of real and verifiable domestic and international emissions offsets, such as methane capture from agriculture or landfills;
- Allowance allocations to local electric distribution companies and other
sources based on historical emissions and retail sales;
- Incentives for early voluntary actions or investments to reduce emissions;
- Long-term public and private funding to develop commercially viable technologies, such as carbon capture and storage;
- Elimination of legal and regulatory barriers to the use of low- or no-carbon technology processes (e.g., carbon capture, nuclear, wind);
- Regulatory approval of simultaneous cost recovery for effective energy efficiency and demand response programs. We believe this is a key part of the climate solution;
- A price ceiling (safety valve) on CO2 allowances to limit the economic burden on emitters and on the economy
as a whole; and
- An appropriate trade measure to equalize the conditions of global trade should other countries fail to reduce their GHGs.
