Issue August 31, 2007

Guest Commentary: Creating a visionary framework for Kentucky energy policy

By Rep. Jody Richards, Speaker of the House; Rep. Larry Clark, Speaker Pro Tem; Rep. Rocky Adkins, Majority Floor Leader; Rep. Charlie Hoffman, Majority Caucus Chair; and Rep. Rob Wilkey, Majority Whip

Gov. Fletcher signed the energy legislation, House Bill 1, into law Thursday afternoon.
Last month, the future of Kentucky’s energy policy was unclear. The governor had convened the General Assembly to pass a laundry list of items that were inappropriate for consideration in an extraordinary session. The House adjourned, insisting the session be limited to truly urgent matters that could not wait until January. The House led the way to an agreement with the governor and Senate to focus the session on a single critical issue: energy independence. According to a recent poll commissioned by the Lane Report, most Kentuckians who expressed an opinion on the matter were pleased the House adjourned the scattershot session so the General Assembly could focus on the challenges of energy policy.

The result of these focused efforts was a one-week session during which the General Assembly passed House Bill 1, a visionary framework for energy policy in Kentucky. The bill, which overwhelmingly passed both chambers, will pioneer new frontiers in jobs and technology for Kentucky, while creating opportunities for private companies and state government to be more energy efficient.

Kentucky’s bold new energy strategy is not unlike other landmark initiatives, such as education reform. It will move our state forward in countless innovative ways. Such significant legislation will always attract critics, but just as energy is an evolving industry, House Bill 1 is an evolving policy and will assuredly be updated and refined as warranted.

To understand the importance of this move, one has to look at the issue with a statewide historical perspective. For decades, traditional economic development incentives have attracted manufacturing jobs to Kentucky. Those incentives have been successful and will remain in place. But luring a new type of industry, one that thrives in coal-dependent regions, requires a new, multi-faceted approach. That’s why the bill incentivizes everything from coal gasification, ethanol and biofuels production to wind, solar and hydropower. Anticipating strict federal carbon dioxide mandates, the bill requires facilities to make plans to manage the carbon that will be released by their operation.

Our energy policy also encourages the hiring of Kentucky residents; forgives student loans of young people who obtain science and engineering degrees necessary to fill the jobs; advances research and development at our universities; and promotes the protection of our environment in the process. And it does so in a manner that protects Kentucky’s investment. House Bill 1 looks to the future of the energy industry by enabling cutting-edge research. It sets aside $7 million to the Kentucky Geological Survey and the Center for Applied Energy Research to perfect carbon dioxide capture management.

Contrary to some news reports, this bill is not about attracting one project or one company. It’s about attracting a new industry to Kentucky by providing a framework that can be tailored to different types of investments. Tax incentives must be approved by the Economic Development Cabinet and KEDFA (Kentucky Economic Development Finance Authority). Any incentives received up front will be tied to hiring Kentucky workers, and funds will be recouped once the plant is operating.

Recognizing that government should lead by example, the bill contains provisions to begin replacing the state auto fleet with hybrids and other alternative-fuel-powered vehicles. The legislation also begins incorporating energy efficient design standards in state buildings and inclusion of more “green” products in state office procurements. Manufacturers are also eligible for tax rebates if they reduce energy consumption by 15 percent after the replacement of machinery.

It is imperative that the United States begin ending its reliance on foreign oil. Political instability in oil-producing nations and its potential for funding terrorism both play into the uncertainties of “staying the course” on oil consumption. This legislation allows Kentucky to be at the forefront of promoting energy independence, but doing so without protecting our environment is doing so at our own peril.

In addition to providing $5 million for research and requiring carbon-capture readiness of any new alternative fuel facility seeking incentives, the legislation creates the Center for Renewable Energy Research and Environmental Stewardship. This collaborative effort will bring together various public and private interests to promote energy efficiency and protection of our most hallowed resource — our planet.
This is merely a starting point. Future sessions of the General Assembly will continue improving on and expanding our policy as Kentucky leads the nation in the inevitable shift toward alternative and renewable fuels.

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leo@leoweekly.com