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PO Box 1070, Frankfort, KY 40602  Phone 502.875.2428, Fax 502.875.2845

“Kentucky’s Energy Crossroads” - A conversation at the Faithful Citizenship Luncheon  Posted: November 23, 2010

“Kentucky’s Energy Crossroads”
Central Kentucky Area
Faithful Citizenship Luncheon
Bardstown, Kentucky
November 16, 2010

Good afternoon! I am honored and pleased to have been asked by Sister Mary to speak at this month’s Faithful Citizenship Luncheon.

I always like to begin with full disclosure of my background so that you may appropriately discount all that will follow. I direct the Kentucky Resources Council, a nonprofit environmental advocacy organization providing legal and technical assistance without charge to low-income individuals, to community organizations, and to local governments on air, waste, water, land use, energy, utility policy and resource extraction issues. My perspective has been forged by thirty years of representing those who pay the hidden cost of our craving for cheap energy. In that time, I have buried one friend and client who was crushed to death by slurry from a coal waste dam collapse, and I have seen the lives and peace of mind of countless others subject to avoidable injury and damage.

If the field of environmental protection can be characterized in gross terms as the adjustment of the rights and responsibilities as among those upwind and downwind, the uphill and downhill, and those upstream and downstream, KRC represents those who live downhill, downstream and downwind, and who have borne disproportionately the adverse health and quality of life impacts of our economic and political decision-making. These are impacts that should be internalized but which are instead shifted off-budget and are paid, at dear and unjust cost, by those least able to bear them.

With that disclosure, let’s begin our exploration of Kentucky’s energy crossroads.

Kentucky is blessed with natural resources that are the envy of other states – abundant water, fertile farmlands, verdant forests; a mixed mesophytic forest in Appalachia that is among the most diverse ecosystems on the globe, and a varied landscape supporting everything from a northern hardwood forest system on Big Black Mountain’s summit to the mississippian delta of Fulton County, to the amazing karst systems of this region. Yet our toxic combination of ignorance and avarice continues to place these assets at risk.

Unquestionably, during the intervening 40 years since the first Earth Day, we have improved in stewardship of our natural resources. The level of responsibility for management of wastes, for air pollution, for water discharges has been raised from the era when strip miners indiscriminately bulldozed cemeteries over the outslopes of east Kentucky's mountains, and hazardous wastes were dumped into ravines at the Valley of the Drums. We no longer dig trenches and shoot drums of reactive waste with high-powered rifles as a means of hazardous waste disposal, as happened at the M&T Chemical Plant in Carrolton. Our major rivers do not catch fire as did Ohio's Cuyahoga. Releases of pollutants into our air, land and water resources occur under controls contained in permits issued by state or federal agencies. Our tolerance for the most obvious abuses of the environment is less than in the past, and even the largest polluting industries seek to spin a "green" image.

Yet despite the progress that has been made in reducing the pollution loading, few would argue that we have achieved stability in our climate and that we have reduced pollution to within the carrying capacity of our ecological systems. It is only the most undiscerning person who could state with any confidence that our efforts have been successful in restoring the legacy of environmental damage, in preventing current damage, and in achieving a level of performance and accountability that assures that our children’s children will have the choices that we have, and will have the quality of environment and life that we enjoy and take for granted.

The biological integrity of our streams, the quality and supply of our water, the productive capability of our forest and agricultural lands, the air quality of, and the quality of life in our commonwealth hang in the balance, depending on the wisdom of our decisions concerning energy, regulatory and budgetary policy. These are difficult days, days of deepening mistrust and disaffection of individuals for government, of growing rifts in the body politic between the haves and have nots, a time when the political center where responsible environmental policies have been forged has given way to environmental policies dictated by short-term politics, a time when civil discourse has given way to an almost prideful civic ignorance and generational selfishness.

Our economic fortunes as a state have been largely linked to inexpensive energy powered by coal combustion. What I would like to explore with you today is perhaps our most daunting challenge - how to prepare for the inevitable transition from an economy that has been powered by extractive industries and artificially low-cost electricity, to an economy that can sustain and meet the reasonable needs of all of our state's residents, elevate us from the poverty that afflicts so many of our brothers and sisters, and remain competitive in a regional and global economy while more fully accounting for the impacts of resource extraction, energy generation, industrial production and transportation on climate change.

We have reached an important point in Kentucky’s energy and utility policies, where we stand with one foot in the present where adding value for the coal industry is the preeminent political concern, and the other at the threshold of a carbon-constrained future in which a dramatic shift in how we produce and consume energy is needed to avoid catastrophic social, environmental, and economic consequences.

You can hear the fear and see the conflict in our almost schizophrenic legislative approach to energy policy. Within the course of a single committee meeting this past session, which mercifully ended on April 15th, a committee passed a bill giving a private pipeline company the right to condemn other people’s private lands for a private pipeline to transport carbon dioxide from a proposed coal to gas plant, arguing that a public purpose was served because the CO2 would otherwise be released and aggravate climate change; yet ten minutes later in response to my suggestion that Kentucky should join in calling for Congressional action to monetize carbon emissions in order to spur cleaner energy and energy efficiency, I was lectured that the jury was still out on whether climate change was real.

The verdict is in. There is general consensus within the scientific community that emissions of greenhouse gases should be reduced by 60-80% by mid-century to minimize irreversible effects of climate change. There is also general scientific consensus that we have a relatively brief period in which to restructure the manner in which we produce and consume energy, before the exigencies of climate change will impose even more dramatic costs on our communities and our economy and narrow our options to mitigate, rather than adapt to, climate change.

Just as the overwhelming weight of the scientific community acknowledges climate change as a phenomenon, there is growing consensus in the business community and in local governments, as well as Congress, on the need to reduce greenhouse gases. The debate is no longer whether we should slow, stop and then reverse loading of greenhouse gases into the atmosphere, but is how quickly we should move and how the costs should be allocated.

There is little dispute that Kentucky is perhaps the least prepared for this shift, and that failure to plan could cause significant disruption to our economy and communities. Kentucky is “ground zero” on climate change. As a state that both produces a significant amount of coal and which is 93% dependent on coal and 5% on petcoke for electricity, and as the 48th poorest state in the Nation, the implications for Kentucky of the coming national carbon mandate will be significant.

Absent timely and comprehensive action, Kentucky ratepayers will see significant and sharp increases in electric rates as utilities seek to recover costs associated with reduction in carbon emissions or internalization of carbon costs. For those industries that are energy-intensive, such as the stainless steel, aluminum and automobile industries here in the Commonwealth, sharply rising rates may cause relocation. The sticker shock, and the potential adverse effects on the most vulnerable ratepayers and on our economy, if we fail to plan now and to invest now in a strategy to reduce carbon emissions from the combustion of coal for electricity, could be staggering.

Perhaps one of the most frustrating aspects of a legislative session that produced little of significance in the area of energy policy other than extending additional incentives to advanced coal and natural gas technologies, is that our elected officials act as if we have time and energy to waste. We don’t, for as the Climate Action Partnership, a who’s who of the Fortune 500 including Alcoa, Chrysler, Dow Chemical, Duke Energy, DuPont, Ford, General Electric, GM, Honeywell, Johnson & Johnson, PG&E, Shell, Siemens Corporation, Weyerhauser and several national environmental organizations noted in its “Call to Action”:

“each year we delay action to control emissions increases the risk of
unavoidable consequences that could necessitate even steeper reductions in the future, at potentially greater economic cost and social disruption. Action sooner rather than later preserves valuable response options, narrows the uncertainties associated with changes to the climate, and should lower the costs of mitigation and adaptation.”

The General Assembly as a body has begun to understand and acknowledge that there will be a national policy response to climate change and specifically, towards a mandatory program of controls on emissions of greenhouse gases from fossil fuel utilization. In the 2007 Special Session and the 2008 Regular Session, the General Assembly under the leadership of Majority Floor Leader Adkins, Representatives Moberly, Pasley and Pullin, and Senators Stivers, Jensen, Harris, and Leeper, took several very important steps towards a rational energy future, commissioning a report on carbon emissions, research and strategies; creating a center for renewable energy and energy efficiency; requesting a study on reform in utility regulatory policy; enacting a set of incentives for renewable energy and energy efficiency; and using the financial clout of the state to set the bar much higher on the performance of state-funded buildings.

Unfortunately, a bill that would have taken the next step during the 2010 session by creating a renewable and energy efficiency portfolio standard – sending a signal to the utilities that a certain percentage of their electricity should come from investments in wind, hydro, solar, geothermal, combined heat and power, and from mining out inefficiencies on both sides of the meter – and a feed-in-tariff that would pay generators of distributed renewable power a premium for electricity fed into the grid, did not receive a committee vote. With your help, during the upcoming 2011 Session, we will take that next step towards creating a more diverse, robust and less vulnerable array of energy sources.

Lest you think, however, that the 2010 Regular Session of the General Assembly was a complete bust because we couldn’t pass a budget, we did name the official state agricultural insect and the official state sports car. There is, after all, only a certain number of things one can do in a 60-day session.

How then can we meet our generation’s needs more mindfully so that when we have that conversation with our children’s children, we can look them in the eye without a sense of shame and regret?

First, and foremost, we need to begin an energy conversation that is honest and transparent. Honest in how we measure the value and costs of our energy choices and transparent in how we account for those costs.

All energy choices have a footprint and need to be viewed comprehensively on a life-cycle basis, considering such issues as the potential conflicts between food and fuel, and energy production and other land uses. In order to bring honesty to energy choices, our utility policies must include health, environmental and social costs when pricing energy. We need to provide additional meaning and depth to integrated resource planning, in order to more fully value efficiency and cost pollution in our choices for energy.

Historically, in approving energy projects of utilities, the Public Service Commission has viewed environmental costs as externalities. These historic “externalities” have a nasty way of eventually becoming internalized in ways that are less efficient and more costly to the ratepayers, as add-on adjustments for particulates, mercury, SO2, and now CO2. Utility resource planning processes that fully cost the fuel choices and energy approach in life-cycle terms will more honestly value fuel diversity, congestion relief, reliability enhancement, environmental and cost-savings benefits that clean energy and energy efficiency provide.

Next, we need to think creatively. Our systems, our way of making goods and services, our way of moving people and things from one place to the next, the way we build communities and the way we keep them healthy – all need fresh eyes and creative reevaluation and reimaging. Our society’s aspiration to accumulate the “mountains of things” that Tracy Chapman sings of have not made us a happier, healthier people and it is time to rethink what makes communities and families healthy, and to work to make them so.

The coal industry can be relied upon in the coming years to do exactly what it has done for the 33 years that I have interacted with them in the halls of Congress, in the halls of Frankfort, in state and federal courts – they will oppose anything that would adversely affect their ability to gain access to coal or which would protect consumers by diversifying to lighter-carbon energy, they will do the absolute minimum required by federal and state law (and less if they can get away with it), claiming all the while that the long-deferred enforcement of the pollution laws amounts to a “war on coal” and will put them out of business. Ironically, the industry opposed a bill that would create a modest renewable and energy efficiency portfolio, but supported a bill lifting our moratorium on new nuclear plant construction, which would open the door to siting of new nuclear plants that would inflict ruinous rate hikes on Kentuckians.

For many counties in eastern and western Kentucky, the state of the environment is inextricably intertwined with extraction of coal, oil and gas, and how the costs associated with that extraction, beneficiation and transportation are accounted for. As an activist back in 1972, I cut my teeth in lobbying for what would become the 1977 Surface Coal Mining Act.

It is unfortunate that the implemented law has failed to accomplish what Congress intended. The rich human and ecological capital of the Appalachian region is being squandered by mining methods that impoverish human and ecological communities. The twin promises that mining would be a temporary use of land and that full protection would be accorded coalfield citizens, have been honored in the breach.

Our challenge during this transition period where coal, which is 48.2% of the nation’s electricity generation mix and 93% of Kentucky’s, will continue to be used as a source of electricity, is to demand that state and federal officials utilize all existing tools under local, state and federal mining and water laws, and where necessary to craft new tools, to demand full accountability from the coal industry for the footprint they leave on land and water resources and on miner and community safety and health. We have failed – as a state, as a nation, to fulfill Congress’ 1977 vision – that mined land would be restored to beneficial uses; and that mining methods would be driven by proper planning and environmental protection rather than by profit. The footprint of coal extraction, in terms of area disturbed and land and water resources diminished, is much larger than it should or could be.

There are some hopeful signs – the U.S. Environmental Protection Agency and the Corps of Engineers have re-engaged in demanding that before spoil material generated from surface and underground mines, or coal mine waste, is placed in valley fills, the mine must be designed and planned to avoid such impacts and to minimize what cannot be avoided. The fill minimization protocol negotiated by the Kentucky Resources Council in conjunction with representatives of state and federal agencies and coal representatives, should greatly reduce the off-loading of spoil into fills. That the protocols came about – that industry was willing to accept the dramatic change that they will impose on mine planning – is a testimony to each of you who have raised your voice in various ways to demand an end to radical mining methods. For each of you that has raised your voice, I thank you.

There is other good news. We have significant opportunities to retool our state economy in order to more responsibly address energy needs and to better live within our “means.” The first step towards creating jobs, slowing the increase in electricity prices, and saving consumers money is to invest in energy efficiency and to diversify our energy portfolio to include an array of renewable energy sources.

If we are to chart a rational energy path, we need to put to rest certain myths and misconceptions.

We need to dispel the myth that “opportunities for renewable energy in Kentucky are limited.” In fact, there is a significant potential for greater deployment of renewables, including some 880 MW of hydropower potential on existing locks and dams on the Ohio and Kentucky Rivers and major lakes in the state, and a largely untapped opportunity for solar and distributed generation in the residential, commercial, institutional and industrial sectors the Commonwealth. Wind power capacity expanded by 45% in 2007 alone, with 5,244 MW installed nationwide. In 2008, wind generation increased 60.7 percent again, from 34.5 million MWh in 2007 to 55.4 million MWh in 2008. DOE reported that an ambitious program of investment in wind could provide 20% of the nation’s electricity by 2030. While some mistakenly claim that there is no potential for wind power in Kentucky, a recent report from the NREL indicates that at 120 meters of height, substantial wind potential is there to be harvested.

Kentucky should be investing in renewables – in generation, in the manufacture of components, and in the training of researchers, scientists and engineers to help advance the technological improvements needed to more efficiently harvest renewable energy. Research into storage of electricity, into making solar cells more efficient, and numerous other technical challenges, should be a priority.

We need also to put to rest the myth that we can “balance” environment and economy - we cannot sustain an economy unless we live within our ecological means. We have “balanced” our way into this mess, and need to stop compromising the carrying capacity of our natural systems by allowing industrial and municipal pollution to be diluted and dispersed into our air, land and water.

The time has come to make our top energy priorities a real and sustained investment in energy efficiency and in diversification of our energy portfolio to include greater use of renewables. Investment in efficiencies in transmission, generation and consumption of power, and research and deployment of more efficient transportation systems that make us less rather than more reliant on fossil fuels is the prudent path, and indeed, the only path in the near term. A dollar invested in negawatts yields a far great return in employment and quality of life than a dollar spent creating another megawatt of coal-fired power.

According to several studies, investment in many cost-effective, available efficiency technologies can reduce consumption by 25-30% over the next 20-25 years. Investment in improving efficiency of conversion and use of energy offers a way to “mine” inefficiencies in the way that power is generated and consumed and to buy important time as the framework of the carbon mandate is constructed and as technological improvements in the capture, conversion, and management of various fuels are refined.

And there are abundant opportunities to mine out inefficiencies on both sides of the meter. According to the Energy Information Administration, 67% of the 41.8 quadrillion Btus of energy consumed for electricity are lost – 3% in line losses, the remainder in waste heat lost as stack emissions. We can all agree that the human and ecological costs of coal are too great to waste fully 2/3 of the energy potential of that fuel.

Kentucky wastes energy because it has historically been artificially cheap. Kentucky’s electricity rates remain relatively low-cost, but our bills certainly are not, because we consume power inefficiently. In 2005, there were 20 states with lower monthly residential electricity bills than Kentucky’s. In that year, Kentucky’s residential ratepayers consumed more electricity than our counterparts in 43 other states; our businesses, more than 19 other states; and our industries, more than counterparts in 47 other states.

There is a tremendous untapped potential in all sectors for greater efficiency. And there has never been a better time to combine a workforce in need of meaningful employment opportunities, a housing construction sector facing significant hurdles to new construction, an economy reeling from energy volatility, and an atmosphere desperately in need of a reduction in carbon loading, into a comprehensive program to retrofit housing stock across the commonwealth for efficiency and clean energy.

Patterned after the Clean Energy Corps proposal developed by the Clean Energy Corps Working Group, Finance Secretary Jonathan Miller has begun a Kentucky Clean Energy Corps and has several significant initiatives aimed at improving energy efficiency in institutional, residential and other properties, and at creating employment in weatherizing existing house stock. Visit them at www.finance.ky.gov/ce to learn more.

Joining 24 other states in adopting a mandatory requirement in Kentucky for a state RPS will make Kentucky less dependent on coal and other fossil fuels, with a negligible impact on utility rates. A Renewable Portfolio Standard will help to create a stable demand to attract capital for expansion of renewable energy, and diversifying supply sources through investment in renewables will help blunt the impact of the coming carbon mandate on low and fixed-income consumers; failing to do so will create a far greater burden.

As we transition away from reliance on fossil-fueled power, coal will continue to be used as a bridge fuel. But it is important that we understand that so-called “clean coal” isn’t. The new generation of coal-fired power plants that are in planning are not the solution, nor is gasification or liquefaction of coal, since large-scale geologic sequestration of carbon is an as-yet unresolved problem and unproven strategy. While the new generation of plants may be more efficient that the old, it is important that we look towards more sustainable approaches to power generation and consumption. As Margaret Mead said – “It may be necessary temporarily to accept a lesser evil, but one must never label a necessary evil as good.”

Additional investment in the nuclear power industry, which accounts for some 20% of the nation’s electricity and has seen no new plant constructed since 1974, is not the path to sound investment in a sustainable energy future, since there are far more reasoned, and less costly ways to boil water to turn turbines than by splitting atoms and creating wastes that will have to managed for a millennia.
The third myth we must dispel is the myth of “baseload power.” You will hear repeated by those who really ought to know better, that renewable energy can’t replace “baseload power.” Baseload isn’t a type of power – it is the aggregation of demand and the matching of that demand by numerous plants operating at various degrees of efficiency. No one power plant provides power 100% of the time, and it is quite possible to create a more diverse and distributed array of renewable power sources and a more robust grid in order to offset and replace some and eventually all of the supply that is currently generated by fossil fuels.

So, here at the crossroads, what is our roadmap to living within our means?

I see a path that advocates before the General Assembly for policies to create incentives for ecological stewardship and excellence and energy efficiency. A path where the rate-setting formula used by the Public Service Commission for electric and gas utilities no longer favors the sale of power, instead of efficiency, and which more fully costs and accounts for environmental and social costs, ending the artificial subsidies that skew the market by allowing those costs to be excluded from consideration and making fuel choices that cost the environment and public dearly, seem inexpensive.

I see a path where our Universities, our colleges, our primary schools, and with our manufacturing companies use our clout as utility customers to demand that utilities purchase and generate electricity from renewable sources; where feed-in-tariffs and renewable energy portfolios create employment and allow businesses, institutions and households to better control their energy costs.

I see a path to make a healthier Kentucky, by moving colleges and universities, community food programs, local and state government, and major employers, and households, towards investing food dollars in locally owned, locally grown, healthy agricultural products that provide Kentucky farmers with fair prices for their product – a path that does not rely on food imported from half a world away using significant fossil fuels for production and transportation.

I see a path where our environmental protection programs are fully funded because, in 2010, we got fed up with polluting industries using our land, air and water to dispose of their wastes without paying even a small fraction of what it cost to permit and inspect their facilities, and that we got tired of the taxpayers footing the bill for their pollution permits to the tune of 85 to 100% of the costs.

Though our challenge is daunting, remember that we build a more sustainable, a more just, political and economic environment, as Mother Teresa said, "one soul at a time,” starting with our own. Never despair that your efforts are too small; too little to make a difference, because it takes each of you, blooming where you are planted, mentoring and teaching, working to make your piece of the world a little better. Margaret Mead was right when she said “never doubt that a small group of thoughtful, committed citizens can change the world; indeed, it's the only thing that ever does!”

Let us face our tomorrows with hope and humility and continue together in struggle and in fellowship to improve the environmental legacy we will leave – to become, as one commentator suggested, better ancestors!

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