The Federal EPA has taken action to regulate CO 2  emissions from new and existing fossil fueled electric generating units under the existing provisions of the CAA. The Clean Power Plan was adopted in October 2015 but the U.S. Supreme Court issued a stay of its implementation, including all of the deadlines for submission of initial or final state plans. In 2017, the Federal EPA issued a proposal to repeal the Clean Power Plan and in 2018 the Federal EPA issued a proposal to revise the standards for new and modified sources and less stringent proposed guidelines to replace the Clean Power Plan. See “Environmental Issues - Climate Change, CO 2  Regulation and Energy Policy” section of Management’s Discussion and Analysis of Financial Condition and Results of Operations included in the 2018 Annual Report for additional information. Management expects emissions to continue to decline over time as AEP diversifies generating sources and operates fewer coal units. The projected decline in coal-fired generation is due to a number of factors, including the ongoing cost of operating older units, the relative cost of coal and natural gas as fuel sources, increasing environmental regulations requiring significant capital investments and changing commodity market fundamentals. Management’s strategy for this transformation includes diversifying AEP’s fuel portfolio and generating more electricity from natural gas, increasing energy efficiency and investing in renewable resources, where there is regulatory support. The electric utility industry is in the midst of an historic transformation, driven by changing customer needs, policy demands, demographics, competitive offerings, technologies and commodity prices. Amid this changing landscape, AEP is also transforming to be more agile and customer-focused as a valued provider of energy solutions. AEP’s long-term commitment to reduce CO2 emissions reflects the current direction of the company’s resource plans to meet those needs. AEP’s exposure to carbon regulation has been greatly reduced over the last several years. From 2000 to 2017, AEP’s CO2 emissions declined 57 percent. In 2018, coal represented 47 percent of AEP’s generating capacity, compared with 70 percent in 2005. Management expects the percentage of AEP’s generating resources fueled by coal will continue to decline. Transforming AEP’s generation portfolio to include more renewable energy and focusing on the efficient use of energy, demand response, distributed resources and technology solutions to more efficiently manage the grid over time is part of this strategy. The graph below summarizes AEP’s generation capacity by resource type for the years 1999, 2005 and 2018: Transforming our Generation Fleet (a) Energy Efficiency/Demand Response represents avoided capacity rather than physical assets. 11