Kentucky’s First-Ever Comprehensive Energy Plan

Kentucky Governor Steve Beshear, along with Energy and Environment Cabinet Secretary Len Peters, released Kentucky’s first-ever comprehensive energy plan on November 20^th, 2008.  The plan calls for significant reductions in greenhouse gas emissions, the creation of approximately 40,000 jobs tied to energy production, and conservation between now and 2025. Gov. Beshear said the new 150 page energy plan, entitled “Intelligent Energy Choices for Kentucky’s Future”, builds on the efforts of state legislators – such as Rep. Rocky Adkins and Sen. Robert Stivers – who in recent years have crafted legislation designed to invest more in technology, research and energy production.

The plan identifies four principal challenges facing the Commonwealth.  First, Kentucky’s energy use is projected to grow by slightly more than 40 percent between now and 2025.  Second, greenhouse gas (GHG) emissions could be more than 40 percent higher in 2025.  Third, coal-fired power generation in the state will not sufficiently support Kentucky’s coal industry if other states cease purchasing Kentucky coal.  Finally, the nation’s dependence on foreign energy supplies endangers our security.

In order to meet these challenges, the plan establishes seven primary strategies.  First, the plan calls for improving the energy efficiency of Kentucky’s homes, buildings, industries and transportation fleet.  It is expected that energy efficiency will offset at least 18 percent of Kentucky’s projected 2025 energy demand.  Next, the plan calls for an increase in Kentucky’s use of renewable energy.  It is anticipated that by 2025, Kentucky’s renewable energy generation will triple to provide the equivalent of 1,000 megawatts of clean energy while continuing to produce safe, abundant and affordable food, feed and fiber.  Third, the Governor hopes to sustainably grow Kentucky’s production of biofuels.  The goal is for Kentucky to derive 12 percent of its motor fuels demand from biofuels by 2025.

The fourth prong of the plan calls for the development of a coal-to-liquids industry in Kentucky that will use 50 million tons of coal to produce four billion gallons of liquid fuel per year by 2025.  Additionally, the Governor seeks to implement a major and comprehensive effort to increase gas supplies, including coal-to-gas in Kentucky.  It is hoped that Kentucky will produce the equivalent of 100 percent of our annual natural gas requirement by augmenting in-state natural gas production with synthetic natural gas from coal-to-gas processing.  The sixth stratagem calls for research into aggressive carbon capture/sequestration technologies for coal-generated electricity in Kentucky.  The plan is to have evaluated and deployed technologies for carbon management in 50 percent of coal-based energy applications by 2025.  Lastly, the Governor recognizes that nuclear power will be an important and growing component of the nation’s energy mix and he believes that Kentucky must decide whether nuclear power will become a significant part of meeting the state’s energy needs by 2025.

The strategies regarding energy efficiency, renewable energy, and biofuels are designed to help the Commonwealth achieve a proposed “Renewable and Efficiency Portfolio Standard”, whereby 25 percent of Kentucky’s energy needs in 2025 will be met by reductions through energy efficiency and conservation and through the use of renewable resources.  These strategies along with the proposed coal-to-liquids industry, are also designed to help the Commonwealth achieve an “Alternative Transportation Fuel Standard” to help transition away from dependence on foreign petroleum, utilizing fuels such as those derived from biomass and coal, plug-in hybrid vehicles and compressed natural gas.

If enacted, the Governor expects that the plan will provide 30,000-40,000 new Kentucky jobs as a result of a booming diversified energy sector.  He also hopes to achieve energy independence for Kentucky from imported oil.  In addition to producing approximately four billion gallons of liquid fuels from coal annually, the Governor hopes that Kentucky will produce 135 billion cubic feet of synthetic gas from coal, utilizing about nine million tons of coal annually, to augment Kentucky’s natural gas supply.  Moreover, the Governor expects the plan to reduce Kentucky’s net per capita carbon emissions into the atmosphere by 50 percent, while ensuring Kentucky’s economic viability by protecting Kentucky’s coal industry against negative impacts of federally mandated carbon management legislation.

This article was co-authored by Kevin McGuire andRyan Schwartz, Jackson Kelly PLLC. For more information on the authors see (McGuire) here and (Schwartz) here.