Governor's Conference on Energy and the Environment Noon Tuesday, Sept. 17, 2013 Lexington Convention Center Gov.

Steve Beshear
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Its great to see such a nice crowd here at the Governors Conference on Energy and the Environment. As we in Kentucky continue to address complex challenges whose outcomes will have significant impact on our long-term success challenges like education, a competitive workforce and the health of our people the issues of energy, the environment and the economy rank near the top of the list. After all, those three areas are intertwined. Each affects the others each is conditional on the others and each presents problems whose solutions cannot be fashioned without taking into account the effect of those solutions on the other areas. To apply that truism to this conference, we cannot in good conscience create an energy strategy without studying closely the impact of that strategy on both the environment and the foundations of Kentuckys economy. Thats the message Sec. Peters and I have been delivering to Washington since the day I took office. Decisions and discussion on energy production and regulation must not happen in a vacuum. And thats especially true given Kentuckys demographics: With among the highest per capita poverty rates, our people are particularly vulnerable to both fluctuations in job availability caused by the health of our manufacturing industry and to increases in energy costs caused by regulation. *** Now, the Presidents announcement of his climate change agenda earlier this summer didnt take anyone by surprise. We expected it. But what it did do was to add urgency to our need to understand the potential impacts of greenhouse gas regulations on our state.
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Weve not had our heads in the sand on climate issues. In fact, a key driver behind the 2008 comprehensive energy plan we designed was the need for Kentucky to be prepared for eventual federal action on greenhouse gas emissions. At that time, Congress was considering cap-and-trade legislation. We knew that even if cap-and-trade legislation did not succeed, there would be some sort of regulatory plan in due time. So we wrote language into our plan stating quite clearly that federal action on climate change was a matter of when, not if. We also stressed that Kentuckys energy sector would become increasingly influenced by national and global factors in the coming decades. We are certainly witnessing that influence today. Were aware that not everyone agrees on the science of climate change and thus on whether greenhouse gas regulations are even necessary. I happen to agree with Secretary Peters that climate change is occurring and that humans actually are playing a role in it. But were not here to argue about whether climate change is happening or not, or to what extent humans are responsible. Ill leave that to the scientists and we have a few of them here at our conference this year. Regardless of anyones beliefs, the nation is moving forward on addressing the issue, and it will continue to do so, even beyond the current administration. There will be federal regulations, and Kentucky will be impacted, and what we must do now is chart a course that allows our state to not only survive but also thrive given the reality of pending federal rules. As most of you know, the federal Environmental Protection Agency will be proposing standards for new units later this week and these standards will largely inform us as to how EPA will proceed with rules for existing power plants. Now the EPA has indicated they will be listening to states throughout the process. I intend to make sure they keep their word on this. Because we have a lot at stake.
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As the 3rd largest coal-producing state and one that relies on coal for more than 92 percent of our electricity, we want our voice to be heard. But for our voice to be taken seriously in the national dialogue, we have to acknowledge our commitment to addressing greenhouse gas emissions, while stressing the need for a rational, flexible regulatory approach. On their part, the feds have to understand that taking coal completely off the table in our nations energy-generation mix to negate it as an energy source is not rational, nor will it help us achieve our nations climate objectives. That is the task we have before us making the case for a truly all-of-the-above national energy policy not one that makes people on the West coast happy or in the Northeast happy, but one that works for all states, given their unique energy strengths and economic base. Its important that states retain the flexibility to continue implementing state-driven policies and initiatives under any federal plan to reduce greenhouse gas emissions. More importantly, policies to reduce greenhouse gas emissions must account for the varying resource base across states. As the nation benefits from a return to domestic manufacturing, federal policies must also be prudent in recognizing that affordable and stable energy prices are paramount for energy intensive industries. Concerns about price are real. For example, as you will be hearing from one expert at this conference, adding carbon capture to an existing coal plant using current technologies results in an 80 percent increase in the cost of electricity. It also reduces the power load by 30 percent, meaning 30 percent of the energy output of the plant is redirected to the control technology, creating in effect an energy penalty. Those numbers hurt. And technologies that would reduce the cost and energy penalty are not expected until around 2020 seven years from now. We need flexibility on time to allow technology to catch up. Some states depend on coal for a large share of their electricity generation, others on natural gas, and others on nuclear.

Each state should be able to play to its resource strengths while also achieving important environmental and economic development objectives. These regional resource differences and differences among the 50 states in their electricity generation portfolios must be considered for economic, energy and national security purposes. One approach will not work for every state, and certain states or regions should not carry the burden for the entire United States. Were well aware that Kentuckys per capita carbon footprint is 50 percent higher than the national average. So during the last several years, weve initiated a number of policies and programs to reduce our emissions, from all sectors. As I said earlier, a key driver of our 2008 energy plan was the desire to prepare for federal climate regulations and policies. To build on the energy plan, we convened the Kentucky Climate Action Plan Council targeted federal stimulus funding toward effective energy efficiency and renewable energy projects and more recently launched the Stimulating Energy Efficiency in Kentucky initiative. The energy plan stressed the importance of energy efficiency as the most affordable tool we have to meet growing energy demands while reducing emissions. Programs that have focused on K-12 schools have been particularly successful. For example, in March 2008, Kentucky had only a dozen ENERGY STAR schools. Today we have 227 schools that have achieved this standard. One of these schools, Richardsville Elementary in Warren County, is widely acknowledged as the nations first net-zero energy public school. Thats impressive. Here in state government, weve been able to save approximately $1.13 million a year through the Commonwealth Energy Management and Control System. By design, that system has an ongoing process of monitoring, reporting and refinement which has an expected internal rate of return of 20 percent, making it extremely sustainable financially, despite difficult budgetary conditions. We will continue to build on these successes, and expand them in the public sector.
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To illustrate the collective appreciation for energy management, a number of initiatives have involved a wide range of stakeholders through extensive planning and policy discussions. One example is the Stimulating Energy Efficiency in Kentucky initiative. This 2-year stakeholder process, involving more than 80 people and entities, helped to identify policies and programs to achieve a 1 percent annual electric energy savings goal per year. The resulting Action Plan presents 27 recommendations for programs and policy implementation. The bottom line is we know that we have an obligation to address greenhouse gas emissions, and our goal has been to do so in a meaningful and affordable manner. We want to make sure we dont carry the bulk of the burden under federal rules. Doing so hurts our state, and it wont achieve the Presidents stated goal of reducing emissions from 2005 levels 17 percent by 2020 and 80 percent by 2050. Since our goal is to reduce atmospheric levels of carbon dioxide and since there are multiple sources, not just utilities, then we should take a truly holistic approach. There is a better way to achieve the Presidents goal than merely placing a largely unachievable target for existing coal-fired plants that will force utilities to close those plants and build new natural gas generation. Thats not in our states best interest, and its not in the nations best interest. That is the message that Sec. Peters and I will continue to take aggressively and frequently to Washington. ###