State agency offers predictions for Kentucky’s energy future

The Kentucky Department of Energy Development and Independence (DEDI) provided some eye-opening charts at a recent symposium on “The Future of Coal” at Northern Kentucky University. It’s no secret that coal in eastern Kentucky is in steep decline, but seeing where DEDI believes the future will take the industry and the region is very interesting.

First, let’s look at where we are. For all that we hear about a nationwide “War on Coal,” it’s clear that eastern Kentucky and southern West Virginia is really where the significant job losses are. In most other areas, including western Kentucky, mining employment is relatively steady or even increasing.

change in coal mine employment

One of the reasons for this decline is that a number of power plants using eastern Kentucky coal are retiring. This map shows the plants that are or are likely to retire through 2018. The bigger the dot, the more east Kentucky coal the plant uses – clearly, this is going to be a big blow to an industry that is already suffering.

Clearly, our nation’s energy landscape is changing, and Appalachia must position itself to take advantage of these changes like so many other states have been doing. Unfortunately, if projections  by DEDI come to pass, Kentucky’s energy future simply trade one fossil fuel for another, with little room for the innovation or diversification of our energy portfolio that are creating jobs and mitigating rate increases in other states.

While coal provides 38% of US electricity, it generates 92% of Kentucky’s electricity. DEDI believes that by 2050, only 15% of our electricity will come from coal, with natural gas becoming the dominant fuel at 82% of generation. The scenario comes from a DEDI report that projects what Kentucky’s electricity portfolio would look like under a variety of scenarios, including a price on carbon, a limit on point-source carbon dioxide emissions or a blanket reduction in emissions. It also applies different options such as allowing nuclear power and requiring that coal be 40% of our portfolio. In all of these scenarios, coal and natural gas are predicted to remain our dominant fuel sources.

However, the report doesn’t take into account the impact energy efficiency will have on demand, and is pessimistic about the potential for renewable power in our portfolio. But Kentucky has the potential to generate 34% of its electricity needs from distributed renewable resources by 2025, according to a 2012 study by Downstream Strategies. At the same time, it is very difficult to predict what the portfolio will look like 35 years from now given the pace of technological change in the energy sector and the uncertainty about policies. Few forecasters predicted the rapid drop in the cost of solar power over the last ten years or the boom in natural gas.

On the other hand, states across the country are already generating significant amounts of power through renewable sources and will continue to generate more through their renewable portfolio standards. Our neighbors are seeing significant growth in the renewable sector due to their investments. Ohio has 2,900 jobs in the solar industry, and clean energy jobs in North Carolina have grown 30% every year since the passage of its RPS in 2007.

Certainly coal and natural gas will continue to be big factors for the foreseeable future.  But there are real opportunities available today in terms of jobs and utililty bill savings by beginning to move more aggressively into energy efficiency and renewable energy starting today.