• How do I contribute to CO₂ emissions?
• How is it possible to neutralize emissions?
• What is a carbon credit?
• Where does my money go?
• Where do these carbon reductions come from?
• How exactly are the emissions reduction credits generated?
• Do your offsets result from specific projects?
• How do you demonstrate that the projects in your portfolio would not have happened without the GHG offset market?
• Have your offsets been validated against a third-party standard by a credible source?
• Do you sell offsets that will actually accrue in the future? If so, how long into the future, and can you explain why you need to “forward sell” the offsets?
• Can you demonstrate that your offsets are not sold to multiple buyers?
• What is the Chicago Climate Exchange?
• What is AEP’s relationship with the CCX?
• What is AEP’s GHG reduction commitment to CCX?
• What is AEP doing to manage its own vehicle emissions?
• But if AEP brings new plants online as proposed, won’t our emissions go up? If so, how do we stay on track with our commitment?
• What are the benefits for AEP to be a member of CCX?
• Why would a major corporation voluntarily reduce its emissions?
• How do I know companies will do what they say?
• Can I buy credits directly from the Chicago Climate Exchange?
• If I choose to purchase an offset from the CCX for either my personal vehicle or for travel, will this harm or benefit AEP?
• What is LiveNeutral doing to educate buyers about climate change issues?
• Does LiveNeutral’s nonprofit status mean there is some tax deduction available?

Q How do I contribute to CO₂ emissions?
A Every person has a carbon footprint that is unique, based upon personal day-to-day activities. Carbon dioxide (CO₂) is the main GHG attributed to climate change. How you travel, use electricity, and even how you eat are all contributing factors. For instance, how much packaging your food comes in, and how far it traveled to reach you, add to the carbon footprint of your meal and thus to your emissions.

Q How is it possible to neutralize emissions?
A You neutralize your emissions by helping to fund large-scale emissions reductions that are taking place elsewhere in amounts equal to the emissions you generate. For example, if your car emitted 12,000 lbs. of CO2 last year, your donation will support the purchase of carbon reduction credits for 12,000 lbs. pounds of verified, CO2 reductions today.

However, the first step should always be to avoid or reduce your emissions before buying carbon offsets. Think about what you can do to reduce the emissions from your car, for example. See Smart Tips to learn more.

Q What is a carbon credit?
A Carbon credits are generated when a company achieves GHG reductions above and beyond those reductions they are required to achieve as a member of the Chicago Climate Exchange. Generally these credits are sold to other CCX members who did not meet their reduction commitments. A small portion of carbon credits are also generated by offset projects such as reforestation and fuel switching projects.

Q Where does my money go?
A The money from purchasing carbon credits as offsets goes to the entity that produced the GHG reduction. This could be a CCX member company such as Eastman Kodak Company, University of Minnesota, Interface Inc, or the City of Oakland.

Q Where do these carbon reductions come from?
A When you buy a carbon-neutral certification from LiveNeutral, we buy and retire third-party-verified and legally accountable emissions reduction credits on your behalf through the Chicago Climate Exchange (CCX). These reduction credits then function as an offset for your emissions. Many companies and organizations besides LiveNeutral also purchase from the CCX, but they purchase offset project credits rather than the reduction credits we purchase.

Q How exactly are the emissions reduction credits generated?
A Most reductions are achieved through increased energy efficiency in member companies’ operations. For example, improving the efficiency of a power plant can reduce its emissions profile. About 10% of the reduction goals are achieved through the support of specific offset projects, such as methane destruction at farms and landfills, reforestation and forest conservation projects, low carbon farm tilling and displacing high carbon energy in the grid with clean, renewable energy.

Q Do your offsets result from specific projects?
A Our offsets are primarily derived from CCX members who overachieved in reducing their GHG emissions. These credits are not actually called offsets until they are sold to someone else to account for that entity’s emissions. Most other commonly sold “offsets” come from projects such as tree planting that sequester existing GHG emissions or from renewable energy development that prevents the growth of emissions producing electricity generation. Most of our credits on the other hand come directly from companies, cities, and other organizations, that are reducing their emissions below specific levels. No amount of tree planting or new renewable energy could reduce emissions enough to prevent climate change without direct reductions occurring as well.

Q How do you demonstrate that the projects in your portfolio would not have happened without the GHG offset market?
A The purpose of the GHG cap-and-trade market is to put a price tag on carbon and a value on reducing GHG emissions. This is what the Chicago Climate Exchange does. It helps determine a price signal through a transparent platform that connects buyers and sellers. As the demand for carbon credits and offsets increases, the price increases, and new emissions-reducing projects are developed. Many of these would not have been possible without the revenue derived from the cap-and-trade markets. While some of these projects may have been possible without the cap-and-trade-market, they would not have been able to realize value from the emissions reductions themselves. CCX is committed to helping realize this value and drive the market forward toward further emissions reductions.

Q Have your offsets been validated against a third-party standard by a credible source?
A Yes. All carbon credits and offset credits sold on the CCX are reviewed by CCX-approved third-party experts. In addition, the entire CCX platform is annually audited and reviewed by the Financial Industry Regulatory Association (FINRA – successor to The National Association of Securities Dealers (NASD)).

Q Do you sell offsets that will actually accrue in the future? If so, how long into the future, and can you explain why you need to “forward sell” the offsets?
A We do not sell reduction credits that are planned to occur in the future. All carbon credits we purchase come from the same 12-month period in which they are sold. If you purchase your offset in 2007, your footprint is offset from a 2007 reduction credit.

Q Can you demonstrate that your offsets are not sold to multiple buyers?
A Yes. This is what the Financial Industry Regulatory Association (FINRA) does when it annually reviews and audits the CCX.

Q What is the Chicago Climate Exchange?
A Founded in 2003, the Chicago Climate Exchange functions as a kind of stock market for the reduction of greenhouse gas emissions. Its 200+ members include companies such as DuPont, Bayer, IBM, and American Electric Power, the states of Illinois and New Mexico, and municipalities such as Chicago and Oakland. Membership is voluntary, but members are legally bound to comply with reductions once they join. Upon joining, members calculate their average greenhouse gas emissions between 1998 and 2001. Each year, they aim to reduce emissions 6% below their annual baseline by 2010.

The CCX is North America’s only, and the world’s first global marketplace for integrating voluntary yet legally binding emissions reductions with emissions trading and offsets for all six greenhouse gases. CCX is a self-regulatory, rules-based Exchange designed and governed by CCX members. Members make a voluntary but legally binding commitment to reduce GHG emissions. The Phase I (program years 2003-2006) emission reduction target for each Member was 4% below baseline by 2006. The Phase II (program years 2007-2010) emission reduction target will require all Members to reduce 6% below baseline by 2010.

Q What is AEP’s relationship with the CCX?
A AEP was a founding member of the Chicago Climate Exchange and continues to be actively involved with CCX. CCX CEO Richard Sandor is a member of the AEP Board of Directors. AEP Strategic Policy Analysis Vice President Bruce Braine serves as a member of the CCX Board of Directors.

Our commitment to CCX extends beyond the trading floor. Dozens of people across AEP have been instrumental in helping CCX establish the rules and architecture of the system and ensuring AEP complies with its carbon reduction commitment. For example, Bruce Braine, vice president of Strategic Policy Analysis, is on the CCX board of directors; Dan Francis, manager of Policy Analysis, is AEP’s representative on the CCX offset committee; and Senior Engineer Greg McCall, under the direction of Environmental Services Vice President John McManus, manages our compliance and accounting of the CO2 reductions we committed. Other groups actively engaged in CCX activities include Fuel, Emissions and Logistics and Commercial Operations. Many others in our power plants, transmission group and at corporate headquarters have had a role in taking the actions that will allow AEP to meet its commitment, such as improving the efficiency of existing power plants and reducing the leakage rate of sulfur hexafluoride (SF6), a potent GHG, from transformers by approximately 90 percent. These actions are ongoing across the company.

Q What is AEP’s GHG reduction commitment to CCX?
A AEP was the first and largest U.S. utility to join CCX and, as a member, 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. Today, AEP’s adjusted carbon emissions baseline is 155 million metric tons. Through 2006 the company reduced its GHG emissions by approximately 39 million metric tons, or 85 percent of its commitment, so we are well on our way to reaching our target.

Q What is AEP doing to manage its own vehicle emissions?
A AEP has committed, as part of its climate strategy, to offset all of its corporate automotive and aircraft fleet emissions. We are doing this through the CCX. In addition, we are planning to increase the number of hybrid vehicles in our fleet in 2008, including adding new hybrid bucket trucks. We will add 29 new passenger hybrid vehicles to the fleet; the number of new hybrid bucket trucks to be added is still to be determined. Currently, there are four hybrid buckets and eight passenger hybrid electric vehicles in the system.

Q But if AEP brings new plants online as proposed, won’t our emissions go up? If so, how do we stay on track with our commitment?
A Yes, that is true and AEP has a number of initiatives in progress to stay on track with our CCX commitment. In early 2007, AEP announced an expanded strategy to capture, reduce, avoid or offset 5 million tons of greenhouse gas emissions per year post 2010, including plans to add 1,000 megawatts of nameplate-rated wind capacity – including the company’s first wind energy in its eastern states – and to install carbon capture on two existing coal-fired power plants, the first commercial use of technologies to significantly reduce CO2 emissions from existing plants. Technologies being advanced by AEP’s plan include both post-combustion and pre-combustion solutions to carbon dioxide emissions from coal-fired generation. The company also is continuing existing – and exploring new – initiatives for both demand-side and supply-side efficiency. This plan also calls for tripling our investment in forestry and offsetting all of our emissions from our corporate automotive fleet and aircraft.

Q What are the benefits for AEP to be a member of CCX?
A The greatest benefit of being part of CCX is our commitment to a process that is helping us to reduce our GHG emissions cost-effectively. It allows us to capture gains and manage risks in the growing carbon market and demonstrates our leadership in taking early, credible and voluntary actions to address climate change. Managing this risk is good for our shareholders and customers and to the financial health of our company.

Q Why would a major corporation voluntarily reduce its emissions?
A Many companies want to do it voluntarily because it makes good business sense and because there is a financial incentive. Companies that reduce more emissions than required can trade offsets with companies that didn’t meet their goals. As demand for credits increases, so does their price. In addition, it has become increasingly apparent that climate legislation is looming in the U.S. Congress and major corporations are likely to be affected. Thus companies who are building expertise now through CCX membership could have an advantage if future legislation takes the form of a cap-and-trade market to address carbon emissions.

Q How do I know companies will do what they say?
A Qualified, independent experts verify all CCX member companies and offset project’s reduction claims for authenticity and accuracy. In addition, the entire CCX platform is annually audited by the Financial Industry Regulatory Association (FINRA – successor to The National Association of Securities Dealers (NASD)). No other United States emission reduction credits program has this level of enforceability and accountability.

Q Can I buy credits directly from the Chicago Climate Exchange?
A No. Only CCX members can buy and trade credits on the Exchange. That’s where LiveNeutral comes in. Our parent organization, the Presidio School of Management, is a CCX associate member. We like to think of it as an experiment in democracy, opening the market to public participation.

Q If I choose to purchase an offset from the CCX for either my personal vehicle or for travel, will this harm or benefit AEP?
A This will not harm or benefit AEP. LiveNeutral might purchase a carbon credit that AEP has sold on the market through CCX. But that information is not made public to buyers and sellers so we would never know if that were the case. In addition, LiveNeutral would never buy so many credits that it would shift the market in AEP’s favor or in favor of any other participant. Again, the CCX market is “blind” to participants; no one ever knows who sold or bought which credits or offsets.

Q What is LiveNeutral doing to educate buyers about climate change issues?
A LiveNeutral is not a policy organization but, as demonstrated by our commitment to the cap and trade platform, we are dedicated to a policy that allows for market forces to help us reduce GHG emissions. LiveNeutral educates our members through engaging them directly in the market as it emerges and through our Smart Tips pages. We also share very valuable resources on our What is Climate Change page. LiveNeutral’s commitment is to help organizations and individuals reduce the impact that they have on climate change through introducing them to a portfolio of emissions-reducing choices.

Q Does LiveNeutral’s nonprofit status mean there is some tax deduction available?
A Yes. LiveNeutral has 501c3 status through the Presidio School of Management and your entire purchase cost is tax deductible.