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As AEP prepares to retire its coal fleet in the years to come, we will support our employees and communities through the transition. |
Technology Chairman’s Message Introduction and TCFD Framework Transition Analysis Just Transition. |
Physical Risks and Opportunities |
The deep freeze in Texas severely hampered the electric grid this winter and was a sobering reminder of the importance of having modern and resilient energy infrastructure. |
87 AEP’s Climate Impact Analysis. |
Although there is still much more work ahead to gain greater clarity on the path forward to net-zero, this climate scenario work has delivered on our five objectives. We are already integrating climate change risks and opportunities into our strategic planning, which informs our capital investment and regulatory strategies. We are having robust Board-level discussions on these issues, and, in light of what we learned, we have revised our carbon reduction goals to include a net-zero carbon target for 2050. |
This initiative was a first step. We will continue to model different scenarios and learn more about technologies and resources as they mature. We also will be active partners with our local communities, working with them and others to help ensure they can successfully transition to a clean energy future. |
Technology Chairman’s Message Introduction and TCFD Framework Transition Analysis Just Transition. |
Physical Risks and Opportunities |
MESSAGE FROM THE CHAIRMAN — CLIMATE REPORT 3. |
Executive Summary 5. |
REPORT INTRODUCTION 9. |
Climate Scenario Analysis 10. |
Climate Change Governance 12. |
Strategy 13. |
Public Policy & Climate 16. |
Managing and Mitigating Risk 17. |
Metrics and Targets 21. |
TRANSITION RISK 23. |
Transition Scenario Analysis 24. |
Load Forecasting 27. |
Scenario Results 34. |
Carbon Goals 37. |
TECHNOLOGY 38. |
Achieving Zero Carbon: The Role of Technology 39. |
Technologies 40. |
Industry-led Low-Carbon Initiatives 45. |
Down-Stream Technologies 46. |
REFERENCES 88 AEP’s Climate Impact Analysis. |
AEP CCR and ELG Compliance Plans Will Remove Additional 1,633 MW of Coal-Fueled Generation from Company Fleet. (2020, November 5). [Press release]. https://www.aep.com/news/releases/read/5846/AEP-CCRand-ELG-Compliance-Plans-Will-Remove-Additional-1633-MW-of-CoalFueledGeneration-from-Company-Fleet. |
American Electric Power. (2020, September 28). AEP to switch 100% of cars and light-duty truck fleet to electric vehicles by 2030 [Press release]. https://www.aep.com/news/releases/read/5793/AEP-to-Switch-100- of-Cars-and-LightDuty-Truck-Fleet-to-Electric-Vehicles-by-2030. |
American Electric Power. (2018). AEP Underground Network Monitoring Project. https://aeic.org/wp-content/uploads/2019/10/American-ElectricPower-Underground-Network-Monitoring-Project.pdf. |
ArcGIS Map: 100 Year Floodplain Data across all states of AEP’s service territory (compiled data from FEMA’s National Flood Hazard Layer and Flood Rate Insurance Maps). |
ARC’s Power Initiative. (n.d.). Appalachian Regional Commission. https://www.arc.gov/arcs-power-initiative/ |
Canada’s Task Force on Just Transition for Canadian Coal Power Workers and Communities. (2018, December). Final Report by the Task Force on Just Transition for Canadian Coal Power Workers and Communities. Government of Canada. https://www.canada.ca/en/environment-climate-change/services/ climate-change/task-force-just-transition/final-report.html. |
CLIMOD. (n.d.). Southern Regional Climate Center — Louisiana State University. Retrieved Feb. 15, 2021 from https://climdata.srcc.lsu.edu/. (Source of precipitation data for Huntington, WV and Longview, TX graphics). |
Consumer Reports. (2020, September 24). Electric vehicle owners spending half as much on maintenance compared to gas-powered vehicle owners, finds new CR analysis [Press release]. https://advocacy.consumerreports. org/press_release/electric-vehicle-owners-spending-half-as-much-onmaintenance-compared-to-gas-powered-vehicle-owners-finds-new-cr-analysis/ |
Destination: Zero Carbon. (n.d.). Environment Virginia. https://environmentvirginia.org/feature/vae/destination-zero-carbon. |
Edison Electric Institute. (n.d.). Issues and Policy — Electric Transportation. https://www.eei.org/issuesandpolicy/electrictransportation/Pages/default.aspx. |
Electric Power Research Institute, Low-Carbon Resource Initiative, & Gas Technology Institute. (2020, December). An introduction to low-carbon fuels. EPRI. https://www.epri.com/research/products/000000003002020041. |
Executive Order on tackling the climate crisis at home and abroad. (2021, January 27). The White House. https://www.whitehouse.gov/briefingroom/presidential-actions/2021/01/27/executive-order-on-tackling-theclimate-crisis-at-home-and-abroad/ |
Global Monitoring Laboratory. (2020). Global Monitoring Laboratory — Carbon Cycle Greenhouse Gases. https://www.esrl.noaa.gov/gmd/ccgg/trends/. |
Hayhurst, L.C. L.T. (2020, August 16). County’s first industrial park will sit on former AEP Conesville site. Coshocton Tribune. https://eu.coshoctontribune. com/story/news/local/2020/08/16/countys-first-industrial-park-sit-formeraep-conesville-site/3355059001/. |
Hershfield, D.M. Rainfall Frequency Atlas of the United States for Durations from 30 Minutes to 24 Hours and Return Periods from 1 to 100 Years. Soil Conservation Service, USDA, May 1961. |
House Select Committee on the Climate Crisis. (2020, June 30). Select Committee Democrats Release “Solving the Climate Crisis,” A Congressional Roadmap for Ambitious Climate Action [Press release]. https://climatecrisis. house.gov/news/press-releases/climate-plan-press-release. |
IEA. (2020, September 22). A rapid rise in battery innovation is playing key role in clean energy transitions [Press release]. https://www.iea.org/news/a-rapidrise-in-battery-innovation-is-playing-a-key-role-in-clean-energy-transitions. |
Introduction to the water-energy nexus. (2020, March 23). IEA. https://www.iea.org/articles/introduction-to-the-water-energy-nexus. |
Just Transition. (2020, July 27). Climate Justice Alliance. https:// climatejusticealliance.org/just-transition/. |
Just Transition Fund. (2020). Just Transition Fund. https://www. justtransitionfund.org/. |
Kentucky Power Company Integrated Resource Plan (IRP), p.52. https://psc.ky.gov/Case/ViewCaseFilings/2019-00443/ |
Lucon O., D. Urge-Vorsatz, A. Zain Ahmed, H. Akbari, P. Bertoldi, L.F. Cabeza, N. Eyre, A. Gadgil, L.D.D. Harvey, Y. Jiang, E. Liphoto, S. Mirasgedis, S. Murakami, J. Parikh C. Pyke, and M.V. Vilarino, 2014: Buildings. In: Cliate Change 2014: Mitigation of Climate Change. Contribution of Working Group III to the Fifth Assessment of the Intergovernmental Panel on Climate Change.[Edenhofer, O., R. Pichs-Madruga, Y. Sokona, E. Farahani, S. Kadner, K. Seyboth, A. Adler, I. Baum, S. Bunner, P. Eickemeier, B. Kriemann, J. Savolainen, S. Schlomer, C. von Stechow, T. Zwickel and J.C. Minx (eds.)]. Cambridge University Press, Cambridge, United Kingdom and New York, NY, USA. |
Map of the Conterminous United States. https://pubs.usgs.gov/pp/p1183/ plate1.html. |
MPSC – MPSC approves DTE Electric rate increase as company works to modernize infrastructure, boost reliability. (2020, May 8). [Press release]. https://www. michigan.gov/mpsc/0,9535,7-395-93307_93313_17280-528575-,00.html. |
National Ocean Service. (2021, February 26). Is sea level rising? Yes, sea level is rising at an increasing rate. National Oceanic and Atmospheric Administration. https://oceanservice.noaa.gov/facts/sealevel.html. |
Technology Chairman’s Message Introduction and TCFD Framework Transition Analysis Just Transition. |
Physical Risks and Opportunities |
89 AEP’s Climate Impact Analysis. |
National Weather Service. (2017). Major Hurricane Harvey — August 25 – 29, 2017. Major Hurricane Harvey — August 25-29, 2017. https://www.weather. gov/crp/hurricane_harvey. |
Nielsen-Gammon, J. W., Banner, J. L., Cook, B. I., Tremaine, D. M., Wong, C. I., Mace, R. E., et al. (2020). Unprecedented drought challenges for Texas water resources in a changing climate: What do researchers and stakeholders need to know? Earth’s Future, 8, e2020EF001552. https://doi. org/10.1029/2020EF001552. |
Ohio Opportunity Zones. (2020). Ohio opportunity zones — where Ohio communities and investors prosper. https://opportunityzones.ohio.gov/wps/ portal/gov/ooz/about-ooz. |
Potential Water-Related Risks to the Electric Power Industry Associated with Changing Surface Water Conditions. EPRI, Palo Alto, CA: 2020. 3002017809. |
Public Utility Commission of Texas. (2010, July 13). Electric Substantive Rules — Chapter 25 – 25.95 — Electric Utility Infrastructure Storm Hardening. Electric Utility Infrastructure Storm Hardening. https://www.puc.texas.gov/ agency/rulesnlaws/subrules/electric/25.95/25.95ei.aspx. |
Randall, K. (2020, July 8). Texas A&M Study: Texas Will Face Driest Conditions Of The Last 1,000 Years. Texas A&M Today. https://today.tamu. edu/2020/07/08/texas-am-study-texas-will-face-driest-conditions-of-the- last-1000-years/. |
Report Ranks 10 States Most at Risk for Natural Disasters. (2020, June 11). 2020-06-10 | Security Magazine. https://www.securitymagazine.com/ articles/92572-report-ranks-10-states-most-at-risk-for-natural-disasters. |
Rose, S. and Scott, M, 2018. Grounding decisions: A scientific foundation for companies considering global climate scenarios and greenhouse gas goals (#3002014510, www.epri.com). |
Select Committee Democrats Release “Solving The Climate Crisis”, A Congressional Roadmap For Ambitious Climate Action. (2020, July 31). [Press release]. |
Smart Columbus. (2021, February). Impact Report: AEP Ohio’s Role in Quadrupling EV Charging Infrastructure in Columbus. https://smart.columbus.gov/playbook-assets/impact-report-aep-ohio-role-inquadrupling-ev-charging-infrastructure-columbus. |
Solar Insolation (1 Month). (2020). NASA Earth Observations. https://neo.sci.gsfc.nasa.gov/view.php?datasetId=CERES_INSOL_M. |
The Weather Channel. (2018, August 22). “We’ve Never Forecast This Much Before”: Hurricane Harvey’s Ominous Forecast and How Meteorologists Reacted a Year Ago | The Weather Channel — Articles from The Weather Channel | weather.com. https://weather.com/storms/hurricane/news/2018- 08-22-hurricane-harvey-diary-meteorologists-reactions. |
Trends in atmospheric carbon dioxide. (n.d.). Earth System Research Laboratories. https://www.esrl.noaa.gov/gmd/ccgg/trends/ |
U.S. Department of Energy, Office of Nuclear Energy. (n.d.). The History of Nuclear Energy. Energy.Gov. https://www.energy.gov/ne/downloads/ history-nuclear-energy. |
U.S. Department of Interior, U.S. Geological Survey. (2016, December 1). Landslide Overview Map of the Conterminous United States. https://pubs.usgs.gov/pp/p1183/plate1.html. |
U.S. Energy Information Administration. (n.d.). Annual Projections to 2050. U.S. Energy and Information Administration. https://www.eia.gov/ analysis/projection-data.php#annualproj. |
U.S. Energy Information Administration. (2020, February). Capital Cost and Performance Characteristic Estimates for Utility Scale Electric Power Generating Technologies. https://www.google.com. url?sa=t&rct= j&q=&esrc=s&source=web&cd=&ved=2ahUKEwjl1tWoiKTvAhWKZs 0KHTm3DeoQFjABegQIAhAD&url=https%3A%2F%2Fwww.eia.gov%2 Fanalysis%2Fstudies%2Fpowerplants%2Fcapitalcost%2Fpdf%2Fcapital_ cost_AEO2020.pdf&usg=AOvVaw3zcjjqD4mUUPXIGVfx6x1f. |
USGCRP, 2017: Climate Science Special Report: Fourth National Climate Assessment, Volume I [Wuebbles, D.J., D.W. Fahey, K.A. Hibbard, D.J. Dokken, B.C. Stewart, and T.K. Maycock (eds.)]. U.S. Global Change Research Program, Washington, DC, USA, 470 pp, doi: 10.7930/J0J964J6. |
USGCRP, 2018: Impacts, Risks, and Adaptation in the United States: Fourth National Climate Assessment, Volume II [Reidmiller, D.R., C.W. Avery, D.R. Easterling, K.E. Kunkel, K.L.M. Lewis, T.K. Maycock, and B.C. Stewart (eds.)]. U.S. Global Change Research Program, Washington, DC, USA, 1515 pp. doi: 10.7930/NCA4.2018. |
Water Rights. (1977, September 1). Texas Water Code. Section 11.1271. https://statutes.capitol.texas.gov/Docs/WA/htm/WA.11.htm. |
Why the building sector? (n.d.). Architecture 2030. https:// architecture2030.org/buildings_problem_why/ |
World Resources Institute. (n.d.). Aqueduct Water Risk Atlas. https:// www.wri.org/resources/maps/aqueduct-water-risk-atlas. |
In addition to these resources, we relied on resource planning models (identified in the report) and other company reports and data. We also benchmarked with peers and conducted interviews with employees (past and present). |
REFERENCES. |
Technology Chairman’s Message Introduction and TCFD Framework Transition Analysis Just Transition. |
Physical Risks and Opportunities |
Introduction. |
Climate change has emerged as one of the most pressing systemic risks of our time, with far reaching, global, ecological and socio-economic impacts and resulting investment implications. Climate change has been a key ESG focus area for AIMCo since 2015. We issued our ‘Strategic Position on Climate Change’ shortly after COP 21, and publicly endorsed G-7 and G-20 investor statements calling for policy action on climate change. We closely followed the work of the FSB Task Force on Climate-related Financial Disclosures (TCFD), contributed to TCFD consultations and publicly supported their recommendations. |
Far reaching global and country commitments to address climate change have resulted in a complex regulatory environment requiring concerted action from market participants. As 194 countries attempt to deliver on their respective COP 21 commitments to reduce greenhouse gas emissions, AIMCo is doing our part to evaluate climate risks and opportunities, so as to protect and enhance investment returns for our clients and their beneficiaries— all Albertans. |
TASK FORCE ON CLIMATE-RELATED FINANCIAL DISCLOSURES. |
Governance. |
Strategy. |
Risk Management. |
Metrics and Targets. |
TCFD BACKGROUND “The TCFD recommendations are designed to solicit consistent, decision-useful, forward-looking information on the material financial impacts of climate-related risks and opportunities, including those related to the global transition to a lower-carbon economy” (TCFD) |
We encourage companies to disclose their GHG emissions and to begin the process of adopting the TCFD recommendations. This will serve to inform "internal business processes and provide quality, relevant disclosure to investors. |
1 AIMCo's TCFD REPORT 2019 |
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