This past March, I released my Fueling Kentucky First plan – months before the Governor ever made energy a priority. Throughout Fueling Kentucky First, I apply many of the same strategies discussed in Putting Kentucky Businesses First to promote our energy sector. Unlike the Governor’s approach to expanding our energy sector only through costly tax incentives, my plan starts with implementing sound, commonsense strategies to spur new entrepreneurial investments, reform the regulatory landscape and target financial and job training resources so we can create new jobs in rapidly-growing industries – like using energy more cleanly and more efficiently than ever before. Quite simply: “Fueling Kentucky First” means investing in the research and development and deployment of new clean coal, alternative fuel and Clean Technology businesses in Kentucky, establishing new cutting edge workforce development training programs for the coal mining and Clean Technology workforce of tomorrow, and, over time, attracting new Clean Technology manufacturing plants and industries to Kentucky.

Among my top priorities as Governor will be to create a $60 million Kentucky Energy Fund to help jump-start the development of alternative fuels and new clean coal technology industries in Kentucky. By providing $15 million in incentive grants and research funding each year, the Kentucky Energy Fund will create a public/private partnership that will make Kentucky a national leader in the production, distribution and sale of home-grown fuels, like corn ethanol (fuel produced from burning corn), bio-diesel (clean-burning alternative fuel commonly made of soy, animal fats and/or wastes or vegetable oils) and cellulosic ethanol (ethanol blend of grasses and agricultural wastes, such as switch grass and stalks), as well as clean coal (coal that is purged of some minerals and impurities) and coal-to-liquid and coal-to-gas technology. Kentucky can become one of the first states to become energy independent by dramatically ramping up the private sector’s ability to produce alternative fuels to power our cars and trucks, as well as investing in renewable and other clean power generation technology, while providing a much-needed boost to our rural economies across the state.

My Fueling Kentucky First plan builds on Kentucky’s greatest natural resource in our strong energy foundation – coal. Today, Kentucky is 3rd in the nation in coal production, employs over 17,000 workers in the coal mining industry, and produces more than 95 percent of its electricity from coal. Kentuckians enjoy some of the lowest electricity rates in the nation and my Administration will work to keep those rates low, while moving forward with new clean coal technologies.

My Fueling Kentucky First plan also includes:

• Creating a Secretary of Energy Independence. Right now, there is too little focus in Kentucky’s efforts to start attracting the jobs of tomorrow and forging an energy-independent future. Ernie Fletcher seems to have just recently discovered this issue. His Executive Order 2006-1299 of October 2006, establishing a Governor’s Energy Policy Office with a paltry budget and limited authority, was a first step in the right direction, but it isn’t enough to get the job done. That is why, as Governor, I will create a cabinet-level position of Secretary of Energy Independence to refocus state government’s effort toward achieving energy independence. First and foremost, state government must become smarter in the way it leases and purchases goods and services, particularly, in the kinds of buildings that it leases, cars it buys and the fuel and power it purchases. I want Kentucky to become a lead state in this area.

• Making Kentucky the Clean Coal Capital of the World. A number of other states are already moving ahead with new clean coal power plants and coal-to-liquid fuel conversion facilities, but Kentucky lags behind. We have some catching up to do if we want to take advantage of these market trends. First, there is great potential in coal-to-liquid fuel conversion technologies. Not only can the liquid fuels of the future be derived from Kentucky coal, but the liquefaction process can help screen out a number of harmful pollutants. In short, there is the potential for producing cleaner fuels for our cars and trucks from Kentucky coal. Second, anyone who thinks the world of fossil-fueled energy is not headed for some serious regulatory changes is kidding themselves. I believe we should start working right now on new clean coal technologies, to make sure Kentucky is successfully demonstrating that the new integrated gas combined cycle (IGCC), coal gasification, and other clean coal technologies are just as environmentally friendly as other power plant technologies. In that way, Kentucky coal will have a market no matter what the regulatory changes of the future may be. We won’t be competitive if we just stand still.

I will move Kentucky forward in a way that reduces emissions and protects and preserves the environment, including taking the lead in dealing with sequestration and capture of carbon dioxide (CO2) emissions. I will order my Secretary of Energy Independence to immediately identify and tap federal clean coal dollars for demonstration and research development projects in Kentucky.

• Building Our Natural Gas Industry. In addition to finding a market for our coal, we ought to be finding markets for our natural gas. Potential exists to further develop our natural gas resources which are plentiful in many parts of the state. At a time when a pipeline is being built to deliver more natural gas from Alaska and states like California, Louisiana and Massachusetts are considering the construction of liquefied natural gas (LNG) terminals to help import natural gas from around the world, Kentucky ought to be doing more to ensure that our abundant natural gas supplies are being captured, exported and used within our own borders.

• Doing More for Kentucky Taxpayers for Less. Under my leadership, Kentucky will take a different approach to ensuring that state tax dollars are being spent responsibly. First, the Secretary of Energy Independence will bring a new focus to identifying new and existing state and federal funds for clean coal and Clean Technology projects. Examples of the relevant areas to explore include:

1. Retargeting some existing Kentucky state economic development funding toward high-wage, high-growth clean coal, alternative fuel and Clean Technologies.
2. Working with the Kentucky state pension funds to consider a new investment pool to target investment funding toward profitable, high-growth Clean Technology industries and long-term sustainable energy industries in Kentucky.
3. Identifying and drawing down every available dollar from the August 2005 federal Energy Policy Act, which created billions of dollars in grants and tax incentives for new alternative fuel, renewable energy, clean coal and energy efficiency projects and industries.

Second, I will provide a focal point in state government for interactions with the private sector, federal agencies, Kentucky’s public and private universities, colleges and community and technical colleges, trade associations and labor unions.

• Reinventing the Way Kentucky Regulates New Clean Technology Industries. As Governor, I will require all state agencies to re-think how Kentucky regulates, encourages and permits all of our Clean Technology industries. My Administration will provide incentives for the distribution and sale of alternative fuels and “flexible fuel” hybrid cars and trucks, which will help reduce our dependence on foreign oil.

I also will make investing in renewable energy sources like wind, water, geothermal and solar energy a priority. Renewable energy sources generally are cleaner than traditional fossil fuels but, unlike traditional fossil fuels, renewable energy sources never run out. For example, my Administration will investigate the use of renewable power standards, as 23 other states have done, to spur new technologies and businesses that generate electricity from renewable power sources without raising electricity rates.

In addition, state laws and regulations do not provide direct incentives to power generators to help improve energy efficiency. My Administration will work hard to put new regulations and incentives in place that will provide financial and tax incentives to power generators and power consumers to use energy more efficiently.

Kentucky should be fighting for its energy independence using home-grown crops, products, resources and ingenuity. Now is the time to modernize state laws and regulations on electric utilities and alternative fuels to encourage innovation and investment in Kentucky.

As Governor, I will make sure Kentucky state government agencies encourage entrepreneurial investments by streamlining the permitting process for alternative fuels and clean coal facilities while providing technical assistance to new Clean Technology businesses to make sure they comply with environmental laws as they grow and expand.

• Better Targeting Research and Education Funds Toward Clean Energy Technologies. I believe that one of Kentucky’s greatest potential assets for the development of new clean coal, alternative fuels and Clean Technology industries will be its system of higher education.

1. Community College and University Budgets – Advanced Research on Alternative Fuel Technologies. As Governor, I will use the biennial state budget process to encourage universities, colleges and Kentucky Community and Technical College System (KCTCS) to offer students and professors the opportunity to be engaged in the types of research projects that will lead Kentucky toward energy independence.
2. Community College and University Curricula – Workforce Development. My Administration will aggressively pursue federal workforce development funds and use its financial leverage to encourage Kentucky’s universities, colleges and KCTCS to offer students courses on renewable power, alternative fuels and other next-generation technologies. Kentucky should become a national leader in the design, production, maintenance and repair of clean coal, alternative fuel and renewable energy production facilities. Kentuckians with some post-secondary education and/or technical training will form the backbone of the workforce of the new higher-paying jobs in Kentucky. My goal is to create the types of jobs that will keep our best students in Kentucky.

• Kentucky State Government Will Lead by Example. Under my leadership, Kentucky state government will lead by example by:

1. Making Bulk Diesel Fuel Purchases. As Governor, I will start by requiring that state agencies purchase a 20 percent biodiesel blend to run existing state-owned diesel vehicles and equipment.
2. Opting for Electric Power Purchases. As Governor, I will direct the Secretary of Energy Independence to require state agencies to purchase a significant percentage of their electric power from clean coal or renewable sources by the end of my term.
3. Procuring an E-85 Ethanol and Hybrid Vehicle Fleet. As Governor, I will work to replace the state’s vehicle fleet with “flexible fuel” E-85 and hybrid vehicles as these new fuel-efficient transportation options become more available.
4. Providing Guidance for New Office Leases and/or Construction. As Governor, I will consider placing a moratorium on new construction or new leases for office space that do not meet certain benchmarks for energy efficiency and sustainable building. New state office buildings should be required to be Energy Star compliant and to conform to “smart building codes.”
5. Conducting Energy Audits at State Facilities and Increasing Energy Efficiency. I will work with local utilities and energy service companies to fund energy audits in state buildings and facilities, including office buildings, garages, prisons and public university buildings and to develop plans to incorporate identified opportunities for energy efficiency. These investments have a short pay-back period and will save the state thousands, if not millions, of dollars in utility bills during the life cycle of these buildings. In addition, I will work with local school districts to develop matching funds to help school districts undertake similar energy audits and develop plans to install measures to increase energy efficiency.

• Focusing on Immediate Deployment of Cost-Effective Clean Energy Technologies. As Governor, I will require my Secretary of Energy Independence to pursue all viable technologies and industries that are likely to produce the type of Clean Technology jobs and industries we want to locate or expand in Kentucky. Examples include:

1. Energy Efficient Technologies: Many Kentucky homes and small businesses waste energy by relying on outdated insulation, lighting, heating and ventilation technologies. There are technologies available right now that can save those businesses and homeowners’ money in the near term. Simply switching to compact fluorescent light bulbs that use 75 percent of the energy used by regular light bulbs and put out the same amount of light can reduce energy consumption. Yet what is lacking in many instances is the type of financing those homeowners and small businesses can afford. I will ask the Secretary of Energy Independence to work with energy cost savings companies, lenders, non-profit foundations, small businesses and homeowners to come up with creative financing solutions. Deploying these new energy-efficient technologies can often achieve a “triple bottom line” result of creating construction jobs, saving small businesses’ and homeowners’ money through energy cost savings and helping the environment.
2. Ethanol and Biofuels: Ethanol and other biofuels continue to be cost competitive with gasoline, and my Administration will work closely with Kentucky’s farmers, refiners and distributors to make sure that this home-grown resource continues to make inroads in the Kentucky marketplace. In addition to the steps described above to promote the sale and distribution of ethanol and biodiesel, my Administration will provide financial support and incentives for more gas station owners to put ethanol and biodiesel pumps in their station. My Administration will encourage the development of new energy-efficient and water-conserving corn ethanol plants that are located near existing power plants and/or wastewater treatment plants. We will also develop incentives for new plants to locate near existing infrastructure such as rail road lines and ports.
3. Cellulosic Biofuels and Biodiesels: In addition to currently competitive biofuels made from soy, corn and other farm products, new methods of converting cellulose and woody materials into liquid fuels using genetically engineered bacteria and enzymes hold the promise of producing farm-based fuels that are cheaper than gasoline and current forms of ethanol. For example, these new technologies would allow refiners to use corn stalks as well as the corn when producing ethanol. Kentucky’s researchers and farmers, businesses and universities can play a critical role in developing these new alternative fuel technologies. In a 2004 study, the National Academies' National Research Council concluded that newer state-of-the-art technologies will permit the production of certain biofuels in the next ten to fifteen years at approximately $35 per barrel. My Administration will promote research and development of new alternative fuel technologies to spur innovation in this area.
4. Making Sure Rural Kentucky Is Part Of The Clean Energy Solution. As Governor, I will lead a public education and awareness campaign to make sure that all areas of Kentucky benefit from these new alternative fuel and renewable power opportunities. Kentucky farms can sell their grains and other agricultural products to ethanol or biodiesel refiners and feed their farm animals the leftover highly nutritious feedstock produced when ethanol is refined. I will ask my Secretary of Energy Independence to make sure all areas of Kentucky benefit from these new programs, products and investments.