AES Outlines Support for National Instead of Regional CO2 Cap and Trade Legislation.

Calls for US Carbon Offset Certification Standards

ARLINGTON, Va. -- In a keynote address at the Inaugural US Point Carbon Conference in Washington, DC today, Paul Hanrahan, President and CEO of the AES Corporation (NYSE:AES), outlined the company's view that any US greenhouse gas emissions legislation adopted to address climate change should be structured as a nation-wide US cap and trade program rather than a series of state or regional programs.

"National cap and trade domestic regulation will be more effective than a set of regional programs with different rules and set-ups that are not interlinked or interoperable," Mr. Hanrahan said. He emphasized that US carbon policy should be expansive, efficient, equitable and equivalent.

Expansive

In addition to a nation-wide policy, Mr. Hanrahan also said that a national cap and trade program should apply to all economic sectors that produce greenhouse gas so that each source contributing to the problem of global warming bears part of the cost of the solution.

Efficient

When implementing these controls, Hanrahan said policymakers need to be mindful of the financial impact on consumers and the industry, as well as the reliability of the supply chain. He reiterated that "over the long term, a national cap and trade program would provide for a more orderly market which we believe will ultimately reduce the cost of compliance."

Equitable

Mr. Hanrahan also endorsed an allowance allocation system rather than an auction mechanism, noting that this approach has worked effectively in reducing SO2 and NOX emissions in the US.

Equivalent

In order for any such program to work, Mr. Hanrahan indicated that the US must adopt a rigorous CO2 offset certification system that provides full credit for offsets regardless of how or where in the world they are created.

AES has experience operating power generation and distribution facilities in 26 countries and 14 states, many of which have greenhouse gas regulations. The company also has experience in almost every form of generation and fuel type, including wind power, hydro electric, natural gas, coal, and biomass (agricultural and wood waste), as well as experience in carbon offset investments, providing AES with a balanced perspective on emissions regulations.

Mr. Hanrahan also discussed steps AES is taking to develop new programs and technologies to address the greenhouse gas challenges facing the US including an innovative, planned partnership between AES and GE Energy Financial Services. The partnership would seek to create an annual production volume of 10 million tonnes of greenhouse gas offsets by 2010, primarily through the reduction of emissions of methane - a potent greenhouse gas with a warming potential 21 times greater than carbon dioxide. In addition, the partnership would also pursue development of offsets through energy efficiency projects and the creation of renewable forms of electricity generation. The offsets from these projects would be sold to commercial and industrial customers that want to reduce the environmental impact of their operations or provide climate-friendly products or services to their customers.

Last April, AES announced the formation of its alternative energy group, making a $1 billion commitment to investments in wind power generation, LNG and climate change sectors. In December, AES adjusted its guidance on investment in this sector to potentially as much as $10 billion over the next 5-10 years. It has already announced a target to produce up to 40 million tonnes of greenhouse gas emission offsets per year by 2012, through development projects under the Clean Development Mechanism of the Kyoto Protocol in Asia, Africa, Europe and Latin America.

Mr. Hanrahan said that regardless of people's views on climate change, "the fact is that regulations are upon us internationally and in many US states. The growing consensus is that national domestic regulation is a matter of when, not if."

He said that AES's greenhouse gas reduction initiatives and policy positions will not only help address the climate change problem, but they also "make good business sense."

For more information on AES's Alternative Energy business, please click here (http://www.aes.com/aes/index?page=alternative_energy) to visit the Alternative Energy section of our website.

About AES

AES is one of the world's largest global power companies, with 2005 revenues of $11 billion. With operations in 26 countries on five continents, AES's generation and distribution facilities have the capacity to serve 100 million people worldwide. Our 14 regulated utilities amassed 2005 annual sales of over 82,000 GWh and our 121 generation facilities have the capacity to generate approximately 44,000 megawatts. Our global workforce of 30,000 people is committed to operational excellence and meeting the world's growing power needs. To learn more about AES, please visit www.aes.com or contact AES media relations at [e-mail].

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