OPINION EDITORIAL
A Common Sense Approach to Climate Change
Dr. E. Linn Draper, Jr.
Chairman of the Board, President & Chief Executive Officer
American Electric Power Company, Inc.
Everyday businesses both large and small — face numerous challenges, all with competing interests. Like Members of Congress who are forced to weigh the positions of diverse constituents, business leaders have to balance the demands of the marketplace, investors, employees and other stakeholders.
Climate change is a challenge facing both business and policymakers. At American Electric Power (AEP), we believe that enough is known about the potential environmental impacts of climate change for us to take actions to address the issue now.
Congress has a unique opportunity to encourage voluntary responses to the climate change challenge by the private sector. Establishing a legal framework to track emission reductions — also known as early action — will provide an effective incentive for companies to take steps to reduce emissions, while ensuring that companies are not penalized under any future domestic control program. Companies, such as AEP, should not have to worry that the voluntary actions we take today will disadvantage us tomorrow.
At AEP we are already "acting early." After an exhaustive search, we identified a broad array of activities across our operations to limit greenhouse gas emissions. These ranged from taking steps to improve the efficiency of coal and hydroelectric power plants, to customer-based conservation efforts, to increasing the production from our nuclear plant, to planting 15 million trees on 20,000 acres of company-owned land.
In 1996, we joined with The Nature Conservancy and a Bolivian conservation organization to propose the largest forest carbon sequestration joint implementation project in the world. This initiative, which will preserve 4 million acres of threatened tropical forests for 30 years, was approved by the U.S. and Bolivian governments in December 1996. The cumulative effect of our domestic and international actions will be to avoid approximately 10 million tons of carbon dioxide emissions in 2000. Most of the actions taken will continue to return dividends for many years to come.
And AEP is not alone. Many other companies, including those AEP works with on the Business Leadership Council of the Pew Center on Global Climate Change, are also taking similar steps. The problem that we at AEP and others now face is that the next increment of greenhouse gas emission abatement will come at a significantly higher cost. This is why a legal framework to provide credit to companies that take voluntary actions to reduce greenhouse gas emissions, with that credit reserved for the future when emission controls may be mandated by law, is so important for the Congress to establish. Otherwise, companies such as ours may not be able to justify undertaking more costly measures to reduce, avoid or sequester emissions. Other effective incentives for voluntary early action would include tax credits or regulatory relief tied to specific measures.
The economies of the world are inextricably linked today with the availability of low-cost energy supplies, primarily fossil fuels. To effectively arrest the growth in emissions and ultimately stabilize atmospheric concentrations of greenhouse gases at a level that would prevent dangerous human-induced interference with the global climate system will require a revolutionary new approach to satisfying the world's hunger for energy. There is considerable merit to beginning this process now, not only as a climate change insurance policy, but also to propel our economy to greater heights.
With this nation's robust economy, powered largely by fossil fuels, greenhouse gas emissions will continue to rise at a rapid rate. U.S. greenhouse gas emissions are nearly 12 percent higher than 1990 levels today and are expected to rise to 30 percent above 1990 levels by 2010 under a business-as-usual scenario. With proper incentives, the private sector can partner with the public sector to develop the technologies and other measures needed to lower emissions and lead the world in addressing this important environmental and economic challenge.
Climate change is a complex global problem that will take several decades to effectively address. Legislation on early action represents a common-sense approach that can begin the process of lowering emissions along a gradual, cost-effective glide-path.