Although greenhouse gases are not regulated in the United States, AEP is undertaking voluntary initiatives to reduce emissions of greenhouse gases from its operations. The company is doing so with the intent of building a base of operational experience with greenhouse gas emission reduction techniques and technologies, demonstrating viable public policy instruments to promote flexibility and cost-effectiveness, and exemplifying AEP’s commitment to going beyond compliance.

AEP is a founding member of the Chicago Climate Exchange (CCX), the first voluntary, legally binding greenhouse gas emissions reduction and trading program in North America. Through this affiliation, AEP committed beginning in 2003 to reduce or offset its greenhouse gas emissions from an established baseline each year through 2010. With this new commitment, AEP expects to reduce or offset approximately 46 million metric tons of carbon dioxide (CO2) equivalent emissions between 2003 and 2010 and has already achieved 31 million metric tons in reductions.

In November 2003, American Electric Power joined Climate Leaders, the U.S. Environmental Protection Agency’s voluntary government/industry partnership to address climate change. AEP's previously announced voluntary commitment to reduce or offset its greenhouse gas emissions four percent by 2006 served as the company's reduction goal in the US EPA Climate Leaders program. The company will work with U.S. EPA to develop a post-2006 emissions control commitment.

Climate Leaders is an EPA industry-government partnership that works with companies to develop long-term comprehensive climate change strategies. Partners set a corporate-wide greenhouse gas (GHG) reduction goal and inventory their emissions to measure progress. By reporting inventory data to EPA, partners create a lasting record of their accomplishments. Partners also identify themselves as corporate environmental leaders and strategically position themselves as climate change policy continues to unfold.

AEP’s Mountaineer Plant in New Haven, W.Va., is the site of a $4.2 million carbon sequestration research project funded by the U.S. Department of Energy, the Ohio Coal Development Office, and a consortium of public and private sector participants. Scientists from Battelle Memorial Institute lead this climate change mitigation research project, which is designed to obtain data required to better understand and test the capability of deep saline aquifers for storage of carbon dioxide emissions from power plants.

AEP is a member of a consortium that is proposing to enter into an agreement with the Department of Energy to build “FutureGen,” a $1 billion project that will lead to the world’s first nearly emission-free plant to produce electricity and hydrogen from coal while capturing and disposing of carbon dioxide in geologic formations.

Additionally, AEP funds research coordinated by the Massachusetts Institute of Technology Energy Laboratory and the Electric Power Research Institute that is evaluating the environmental impacts, technological approaches, and economic issues associated with carbon sequestration. The MIT research focuses specifically on efforts to better understand and reduce the cost of carbon separation and sequestration.

AEP is implementing “Energy Efficiency Plans” to offset ten percent of the annual energy demand growth in its Texas service territory. In 2003 alone, AEP invested more than $8 million to achieve over 47 million kilowatt-hours of reductions from installation of energy-efficiency measures in customers’ homes and businesses. Total investments for the four-year program will exceed $43 million, achieving more than 247 million KWH of energy efficiency gains.

Annual savings of tons of CO2 continue to accrue from AEP’s lighting upgrades in all of its facilities in the 1990s under EPA’s Green Lights Program. EPA named AEP its "Utility Ally of the Year" in 1998 for making the upgrades and promoting energy efficiency to its customers.