Exelon 2014 Annual Report Download - page 32

In addition, Generation, ComEd, PECO and BGE may be required to make significant additional expenditures not presently
determinable for other environmental remediation costs.
See Notes 3—Regulatory Matters and 22—Commitments and Contingencies of the Combined Notes to Consolidated Financial
Statements for additional information regarding the Registrants’ environmental remediation efforts and related impacts to the
Registrants’ results of operations, cash flows and financial positions.
Global Climate Change
Exelon believes the evidence of global climate change is compelling and that the energy industry, though not alone, is a significant
contributor to the human-caused emissions of GHGs that many in the scientific community believe contribute to global climate
change, and as reported by the Intergovernmental Panel on Climate Change in their Fifth Assessment Report Summary for Policy
Makers issued in September 2013. Exelon, as a producer of electricity from predominantly low-carbon generating facilities (such as
nuclear, hydroelectric, wind and solar photovoltaic), has a relatively small GHG emission profile, or carbon footprint, compared to
other domestic generators of electricity. By virtue of its significant investment in low-carbon intensity assets, Generation’s emission
intensity, or rate of carbon dioxide equivalent (CO2e) emitted per unit of electricity generated, is among the lowest in the industry.
Exelon does produce GHG emissions, primarily at its fossil fuel-fired generating plants; CO2, methane and nitrous oxide are all
emitted in this process, with CO2 representing the largest portion of these GHG emissions. GHG emissions from combustion of
fossil fuels represent the majority of Exelon’s direct GHG emissions in 2014, although only a small portion of Exelon’s electric supply
is from fossil generating plants. Other GHG emission sources at Exelon include natural gas (methane) leakage on the natural gas
systems, sulfur hexafluoride (SF6) leakage in its electric transmission and distribution operations and refrigerant leakage from its
chilling and cooling equipment as well as fossil fuel combustion in its motor vehicles and usage of electricity at its facilities. Despite
its focus on low-carbon generation, Exelon believes its operations could be significantly affected by the possible physical risks of
climate change and by mandatory programs to reduce GHG emissions. See ITEM 1A. RISK FACTORS for information regarding the
market and financial, regulatory and legislative, and operational risks associated with climate change.
Climate Change Regulation. Exelon is, or may become, subject to climate change regulation or legislation at the Federal, regional
and state levels.
International Climate Change Regulation. At the international level, the United States has not yet ratified the United Nations Kyoto
Protocol, which was extended at the 2012 meeting of the United Nations Framework on Climate Change Conference of the Parties
(COP 18). The Kyoto Protocol now requires participating developed countries to cap GHG emissions at certain levels until 2020,
when the new global agreement on emissions reduction is scheduled to become effective. This new global agreement for GHG
emissions reductions was agreed to only in concept during the COP18, with a timeline for establishing the global targets by 2015. On
November 22, 2013, at the 2013 COP 19 held in Warsaw, Poland, participating countries further agreed to provide their “intended
nationally determined contributions” by the first quarter of 2015 in preparation for formally setting global target in 2015. At COP 20
held in Lima, Peru, in December 2014, participating countries outlined the universal GHG reduction agreement to be finalized in
2015 at COP 21 in Paris. On November 11, 2014, President Obama and President Xi Jinping of China jointly announced their
respective “intended nationally determined contributions” for post 2020 greenhouse gas emission reductions. The US announced net
greenhouse gas emission reductions of 26-28 percent below 2005 levels by 2025, while China announced targets to peak CO2
emissions around 2030, and to increase the non-fossil fuel share of all energy to around 20 percent by 2030. Together, the U.S. and
China account for over one–third of global greenhouse gas emissions.
Federal Climate Change Legislation and Regulation. Various stakeholders, including Exelon, legislators and regulators, shareholders
and non-governmental organizations, as well as other companies in many business sectors are considering ways to address the
climate change issue, including the enactment of federal climate change legislation. It is highly uncertain whether Federal legislation
to reduce GHG emissions will be enacted. If such legislation is adopted, Exelon may incur costs either to further limit or offset the
GHG emissions from its operations or to procure emission allowances or credits. In June 2013, the White House released the
President’s Climate Action Plan which consists of a wide variety of executive actions targeting GHG reductions, preparing for the
impacts of climate change and showing leadership internationally; but the plan did not directly trigger any new requirements or
legislative action.
The U.S. EPA is addressing the issue of carbon dioxide (CO2) emissions regulation for new and existing electric generating units
through the New Source Performance Standards (NSPS) under Section 111 of the Clean Air Act. Pursuant to President Obama’s
June 25, 2013 memorandum to U.S. EPA, the Agency re-proposed a Section 111(b) regulation for new units in September 2013 that
may result in material costs of compliance for CO2emissions for new fossil-fuel electric generating units, particularly coal-fired units.
Under the President’s memorandum, the U.S. EPA was also required to propose a Section 111(d) rule no later than June 1, 2014 to
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