AEP’s EmissionReduction Strategy

AEP’s EmissionReduction Strategy

Presented by:

John McManus, Vice President

Environmental Services

APP Site Visit

October 30 – November 4, 2006

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U.S. Emissions vs. Production

Sources: EEI

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Environmental Drivers

• New Regulations for Existing Plants– Clean Air Interstate Rule – SO2, NOx– Clean Air Mercury Rule - Hg– Clean Air Visibility Rule – SO2

– Clean Water Act Sec. 316(b)• More Stringent Air Quality Standards• Siting and Permitting for New Plants• Climate Change – CO2, other GHGs

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1

AEP Coal-Fired Emissions

System-Wide

1.46

1.000.92

0.40

0.53

0.39

0.27

0.11

0.00

0.20

0.40

0.60

0.80

1.00

1.20

1.40

1.60

1994 2000 2005 2010

mil

lio

ns

of

sho

rt t

on

s SOxNOx

Projected 73% reduction in SOx emissions and 77% reduction in NOxemissions from 1994 to 2010

AEP Coal Fired Emissions

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NOx Emissions• AEP has been operating SCR (Selective Catalytic Reduction)

systems since 2001 • Nearly $1.3 billion invested in equipment retrofits• Performing better than the design 90% reduction

– Achieving reductions of 92 to 94%• Currently SCR systems installed on

– 11 Generating Units – 10,015 MW

• Other units control NOx with combustion control technologies– Low-NOx burners– Over-fire Air– Water Injection

• Additional SCR retrofits by 2010 – 3 generating units – 2,380 MW

AEP's emission control equipment performs better than designed to reduce ozone season NOx emissions

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SO2 Emissions • AEP has been operating FGD (Flue Gas Desulfurization)

systems since the 1970s • More than $1 billion invested in retrofits since the 1990s• Currently FGD systems installed on

– 6 generating units – 4715 MW

• Other units control SO2 with– Low Sulfur coal

• Additional Retrofits by 2010 – 12 generating units – 9795 MW

• An added benefit of FGD/SCR systems is a reduction of mercury emissions

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AEP - CO2 Production

In 2005, AEP: Burned 75 million tons of coal (68 million metric tons (mmt)) Generated 187 million MWh (includes sources in addition to

coal) Produced 160 million tons CO2 (145 mmt)

2005 AEP System CO2 Production Rate: 0.86 ton CO2/MWh generated (0.78 metric tons/MWh)

2.1 tons CO2/ton Coal Burned (2.1 metric tons CO2 /metric ton Coal Burned)

Muskingum River Plant

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AEP CO2 AvoidedSince 1990

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

1,600,000

1,800,000

2,000,000

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

To

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of

CO

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CO2 Emissions Reductions (Tons)

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CO2 Emission Reduction

Strategies

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AEP’s Climate Program

• Participant in DOE’s Climate Challenge Program since mid-90s

• Founding member of Chicago Climate Exchange• Numerous domestic and international programs

for carbon sequestration (forestry and geologic)• Founding member of FutureGen• Utility industry leader in Asia Pacific Partnership

program with Administration

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Chicago Climate Exchange (CCX)

• Organization of volunteer members to establish model for CO2 trading program

• AEP Membership– Socially-responsible investment & opportunity to set

public policy precedents – Learning Opportunity for Market-based approach– Experience incorporating greenhouse gas risks in

capital and operating decisions (through a price for carbon)

• Central part of overall climate change strategy to meet the President’s Voluntary Plan

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CO2 Emission Reduction Strategies

Numerous Generation-based CO2 emission reduction strategies exist, including efficiency improvements for existing plants.

Categories of potential opportunities:

Equipment Upgrades

Maintenance Activities

Operations Activities

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