Kentucky's Energy Sector: Options and Opportunities

With the recent increase in the price of oil and other energy sources, there has been renewed national public and private sector interest in investing in and expanding energy related enterprises including coal gasification and liquefaction plants, as well as ethanol and bio-diesel plants and facilities. Given energy demand and price trends and Kentucky's abundance of coal and bio-energy resources, state policy and industry leaders realize that there is potential for expanding Kentucky's energy sector. An expansion in Kentucky's energy sector could benefit the state in a number of ways. First, these alternative energy enterprises would increase the demand for Kentucky's coal and bioenergy resources, thereby increasing the demand for and wages of workers in these industries. In addition, these new enterprises use sophisticated capital equipment increasing the presence of high technology firms in the Commonwealth. Finally, these plants tend to employ highly skilled workers, and these types of jobs are in short supply in the coal regions of Kentucky. The options and opportunities for expanding Kentucky's energy sector production and the support and incentives needed to attract such firms are not clear. As a result, HB 299 was passed by the Kentucky General Assembly in the 2006 session to have the Kentucky Office of Energy Policy undertake a study of options and opportunities of Kentucky's energy sectors future. The focus of this proposed research project will be to provide an overview of Kentucky energy resources, describe the emerging energy sector environment, and analyze existing incentives and to propose changes if needed for expanding the energy related sector and industries in Kentucky.