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Different routes to climate action -- Unlike FPL, AEP has little faith in wind to cut emissions

Two of the nation's largest owners and developers of electric generation have signed on to the Bush Administration's Climate Leaders program and volunteered to cut carbon dioxide (CO2) emissions from their portfolio of generating plants by 18%. But that's where the similarities between American Electric Power (AEP) and FPL Group end.

AEP says it will cut the current CO2 output at plants it already owns through carbon sequestration projects, energy efficiency and purchased green credits from the Chicago Climate Exchange, a voluntary cap-and-trade program of which AEP is a founding member (Windpower Monthly, February 2003). Left out of its CO2 reduction strategy is non-polluting wind generation because, as AEP says, it has problems with the resource.

Travelling another path, FPL Group, the parent company of FPL Energy, says it will increase the size of its generating portfolio, but it will reduce overall emissions from that portfolio on a per kilowatt hour basis and that adding more wind generation will play a role in its strategy.

For both companies and for the Bush administration, the key to greenhouse gas reductions is to voluntarily balance environmental strategies with the needs of the US economy. "Our environment is fragile, and to preserve it for future generations, we must find ways to continually improve our operations," says Lew Hay, CEO of FPL Group. "At the same time, the American economy requires reliable and affordable power and FPL Group and others are focused on providing that in an environmentally responsible way."

After President George Bush rejected the Kyoto Protocol's use of regulation as a way to reduce greenhouse gases, the US Environmental Protection Agency (EPA) initiated in February 2002 its voluntary Climate Leaders program calling for an 18% reduction in CO2 intensity. It now has 48 industrial participants.

Inadequate

Environmentalists, however, say the program is inadequate because the reduction by 18% in greenhouse gas intensity is tied to economic expansion and allows measures that businesses already may have initiated. In addition, they say, the final outcome could still result in increased emissions over 2001 levels. Twelve US states apparently agree. They filed a lawsuit in October insisting that the EPA regulate greenhouse gas emissions under the federal Clean Air Act, rather than ask for voluntary compliance.

Because the voluntary reduction in CO2 emissions is tied to economic growth, the absolute reduction for AEP amounts to only 4% by 2008, says AEP's Melissa Henry. With 42,000 MW of generation worldwide, 38,000 MW of which is in the US, AEP is the largest generator in the US and the largest burner of coal in the Western hemisphere. The 4% reduction will amount to 16.5 million metric tons of CO2, based on the average of the company's baseline CO2 output during the years 1998-2000 of 105 million metric tons. It already is investing in carbon sequestration projects in South America and in Louisiana and it announced in October its participation in the Bush Administration's FutureGen program, a zero-emissions coal research project.

Although AEP ranks fourth among US utilities owning wind projects, at 310 MW, Henry says the company believes wind still has challenges. She cites what the company believes to be wind's high cost, its intermittent nature, which makes it difficult to meet base loads, and the lack of a reliable production tax credit (PTC) as reasons it is not at this time considering more wind generation.

Nuclear and wind

FPL's 28,000 MW of generation comes from a combination of coal, natural gas, renewables and nuclear. It says purchases of wind and natural gas generators over the past ten years has already reduced its CO2 emissions by 12%, in addition to reductions in SO2 by 28% and NOx by 41%. Although a large part of FPL's CO2 reduction will come from a 6.7% increase in output at the company's recently purchased Seabrook Nuclear facility in New Hampshire, it is also sticking to its plans to continue to be a leader in wind generation development.

"Certainly, wind is a part of the equation," says FPL Energy's Steve Stengel. "We want to maintain our leadership position in wind and will continue to develop wind projects."

FPL now has about 2700 MW of wind generation and, after a banner year in which new wind projects will total 811 MW, the company says it is planning to develop 400 MW more in 2004. Although that figure could rise, groundbreaking is not likely to occur until later in the year due to the Congressional delay in extending the PTC, says Stengel. That delay and the resulting uncertainty it causes, he says, "has an influence on our customers and that impacts our development."

Even for FPL, the total amount of CO2 emissions could go up by 2008 because the company will add generation -- mostly natural gas plants -- to its portfolio, but emissions will decline on a per kWh basis, Stengel says. During the 2001 baseline year, FPL's power plants emitted 1.05 pounds of carbon dioxide per kWh. That will drop to 0.86 pounds/kWh by the end of 2008.

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