Power company to purchase carbon credits from farms

COLUMBUS – American Electric Power signed an agreement June 14 with an affiliate of Environmental Credit Corp. to purchase approximately 4.6 million carbon credits between 2010 and 2017 generated from capturing methane on livestock farms.
One carbon credit is equal to one ton of carbon dioxide reduction.
The agreement is part of the first large-scale livestock methane offset program established in the United States that will capture and destroy methane from approximately 400,000 head of livestock on as many as 200 U.S. farms.
Cost of the credits is not being disclosed due to confidentiality agreements.
Strategy. “The methane offset program is one piece of a comprehensive strategy to address our greenhouse gas emissions,” said Michael Morris, AEP chairman, president and chief executive officer.
Morris also said AEP is fully committed to making on-system reductions in emissions from its fleet – including building the next generation of clean, coal-gasification plants, validating technology to capture and store carbon from existing coal plants, and investing in new renewable generation.
Farm benefit. But the company also recognizes offset programs as an important part of a complete carbon strategy.
“Methane capture programs from livestock farms offer significant benefits. Not only do they reduce the impact of a highly potent greenhouse gas, but they also reduce odor and pest issues and provide a new source of income for farmers who often struggle with razor-thin margins.”
Morris said a farm with 2,000 head of livestock could receive $105,000 or more during the 10-year agreement.
The company is also requiring that more than half of the credits that it purchases come from projects on farms located within the 11 states AEP services.
AEP’s service area includes Ohio and West Virginia, along with Arkansas, Indiana, Kentucky, Louisiana, Michigan, Oklahoma, Tennessee, Texas and Virginia.
Making a difference. “By sponsoring the reduction of emissions on farms throughout the country, AEP can make a significant, measurable difference in overall greenhouse gas emissions quickly and efficiently, while continuing its work on internal reduction projects,” said Ed Heslop, chief executive officer of Environmental Credit Corp.
Heslop also acknowledged the program will have implications that reach well beyond the 11 states served by AEP. He called the partnership a reflection of an ongoing pledge to foster projects that mitigate greenhouse gases.
Because of AEP’s commitment to the project, ECC is investing more than $25 million in services and materials to bring the 200 farms online with emission reduction.
“This has the added benefit of bringing revenue to the farms very early in the project,” Heslop said.
Why an issue. Methane from livestock manure accounts for 6.6 percent of total greenhouse gas emissions in the United States.
Methane is 21 times more potent than carbon dioxide in trapping heat in the atmosphere and is released into the air through common manure-handling practices.
Through the methane-capture program, ECC will install covers on manure storage lagoons to capture and burn off methane, converting it to carbon dioxide, a much less-potent greenhouse gas.
Capturing and burning off the methane from manure lagoons significantly reduces the greenhouse gases, as well as odors, emitted from livestock farms.
It also helps prevent issues with pests, rainfall and dust.
Terms. According to the terms of the agreement, AEP will purchase up to 600,000 carbon credits per year between 2010 and 2017 at a fixed price from ECC.
ECC will work with farmers to design and provide lagoon cover systems, including gas meters and flares, at no cost to participating farmers.
ECC also will provide data monitoring, reporting, independent verification, certification and registration of the carbon credits with the Chicago Climate Exchange, the world’s first and North America’s only voluntary, legally binding greenhouse gas emissions reduction and trading program.
AEP is a founding member of CCX and, as a member, is committed to gradually reduce, avoid or offset its greenhouse gas emissions to 6 percent below the average of its 1998 to 2001 emission levels by 2010.
Through this commitment, AEP will reduce or offset approximately 46 million metric tons of greenhouse gas emissions by the end of the decade.
Other actions. AEP is achieving its commitment through a broad portfolio of actions, including power plant efficiency improvements, renewable generation such as wind and biomass co-firing, off-system greenhouse gas reduction projects, reforestation projects and the potential purchase of emission credits through CCX.
Earlier this year, AEP announced an expanded strategy to capture, reduce, avoid or offset 5 million tons of greenhouse gas emissions per year post 2010.
Those plans included the addition of 1,000 megawatts of nameplate-rated wind capacity and to install carbon capture on two existing coal-fired power plants, the first commercial use of technologies to significantly reduce carbon dioxide emissions from existing plants.