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Kentucky Needs a New Vision on Energy to Avoid Real Risk


December 19, 2008


By Jason Bailey


Governor Steve Beshear recently released a new energy plan that serves as a starting point for a necessary discussion in our state.


Kentucky is especially in need of this discussion. Our history as a coal-producing state puts us in a vulnerable position in the new clean energy era.


The state’s low-price electricity, made possible by the presence of coal and reliance on old coal-fired power plants, has fostered a dependence that has come at the expense of diversification into new sources of energy and greater efficiency.


While that dependence has kept consumer bills low and helped attract heavy industry, it will become more of a liability. When the economy recovers, demand for energy globally and in our state will force continued increases in the price of coal-fired electricity. And that price will rise further as the world comes together to address the threats of climate change.


As a state 80 percent more coal-dependent than the nation as a whole, and where coal is a source of jobs for parts of eastern and western Kentucky, we face enormous risks and challenges in the coming years.


Kentucky must build a plan that does not extend our existing vulnerabilities. We must be visionary and proactive in new ways. If we do so, we stand to capture new economic returns in our communities while utilizing cleaner forms of energy that fulfill our responsibility to each other and the world.


In four ways, this plan could do more to make that happen.


First, the plan must include stronger measures to pursue the enormous opportunities of energy efficiency. The governor’s plan takes efficiency seriously, but could incorporate more aggressive measures to help residents and businesses throughout the state make efficiency improvements easily and cost-effectively.


According to the Energy Information Administration, Kentucky uses the 6th-most energy per capita of any state. Our residential sector is 24 percent more energy intensive than the national average.


Energy efficiency is the cheapest form of power, and with an aggressive effort we can achieve dramatic efficiency gains. Such an initiative will put thousands of Kentuckians to work in green-collar jobs weatherizing homes and retrofitting buildings, including workers idled by the depressed housing market.


And the resulting savings on energy bills will put money in the pockets of Kentucky residents, business and institutions. When that money is spent locally or reinvested, more jobs are created. New estimates from the Political Economy Research Institute at the University of Massachusetts show that each $1 million investment in efficiency creates 12 jobs. That compares to only five jobs from the same investment in coal.


Second, missing from the plan is any attention to the unique challenges facing low-income Kentuckians, including renters and those living in mobile homes and inadequately insulated houses.


If significant measures aren’t taken to ensure their access to greater energy efficiency and help them pay rising energy bills, we will only exacerbate the growing economic divide that already afflicts our state and nation. The costs of the coming energy transition cannot be left to those least able to afford them.


Third, the plan should set higher goals for the adoption of clean renewable energy.


As technology advances, the cost of renewable energy for consumers and businesses will continue to decline. And renewable energy means jobs: a $1 million investment in solar creates twice as many jobs as the same investment in coal. Kentucky has real potential to produce solar, biomass, wind and small-scale hydroelectric energy that is clean and sustainable. The governor’s plan acknowledges the role of renewables but underestimates their potential contribution to our energy mix.


Small-scale, locally owned generation of renewable energy is an important part of that potential. The plan’s emphasis on large, expensive, centralized production of risky technologies in coal and nuclear will raise costs and uncertainty. In contrast, technology already exists and is improving daily for many kinds of local renewable generation, and our upgraded net metering laws will make them more viable. While the plan mentions this strategy, much more could be done to help Kentucky residents and businesses access and afford local forms of production, the economic gains of which will stay in Kentucky communities.


Fourth, it is critical that any energy plan take into account the impact on coal-producing communities of our transition to a new energy future.


For over a hundred years, those laboring and living with coal have helped power the nation’s growth while bearing the brunt of coal’s environmental and health impacts. Over the coming years, coal will become less price-competitive with other fuels. Many states and consumers are likely to turn away from it for cleaner alternatives, and Kentucky’s remaining resource will become more expensive to mine. There must be greater financial and other support to help miners and mining communities begin the transition to a stronger and more diverse economy.


A new energy future will be built with or without us. How Kentucky responds is a test of our awareness of that fact, and of our ability to create a new vision together.


Jason Bailey is Research and Policy Director at the Mountain Association for Community Economic Development (MACED) in Berea.


MACED works with people in eastern Kentucky and Central Appalachia to create economic opportunity, strengthen democracy and support the sustainable use of natural resources. For more than 30 years, MACED has engaged in research, business development and demonstrations to promote a multi-benefit forest economy in Appalachia. More information is available at www.maced.org.