Kentucky will press federal officials for flexibility in meeting greenhouse gas emission rules as the state tries to preserve coal jobs and keep electricity prices down, Gov. Steve Beshear said Tuesday.
Federal rules aimed at reducing carbon dioxide emissions from power plants will hit hard in Kentucky, which gets more than 92 percent of its electricity from coal-fired power plants, is a major coal producer and has many energy-intensive industries.
The new federal rules could drive various changes that would cut into the market for coal — such as utilities switching to cleaner-burning natural gas — and increase the cost of electricity because of the need to modify existing power plants or build new ones.
The U.S. Environmental Protection Agency is set to announce new emissions standards for future power plants this week, but lower limits on existing power plants will come next.
Speaking at the Governor's Conference on Energy and the Environment in Lexington, Beshear said it would not be fair or workable for the impact of rules aimed at reducing carbon emissions to fall more heavily on some states.
"One approach will not work for every state, and certain states or regions should not carry the burden for the entire United States," Beshear said.
As people attending the conference in downtown Lexington heard presentations on climate change and the implications for Kentucky, the shock of layoffs in the coal industry continued in Eastern Kentucky.
James River Coal announced Monday that it would shut down mines or preparation plants in Pike, Floyd, Leslie and Johnson counties and lay off 525 employees.
The layoffs are the latest example of a sharp downturn for the Eastern Kentucky coal industry that has wiped out more than 6,000 jobs the last 18 months, driving coal employment to the lowest level since the state began keeping records in 1927.
James River cited weak demand for coal in the U.S. and abroad as the reason for idling its mines.
Some Kentucky lawmakers were quick to charge that the weak demand was caused by oppressive federal regulations, such as the new rules on power plant emissions.
"Deliberate anti-coal energy policies are sending thousands of families in my region to the unemployment line," Republican U.S. Rep. Hal Rogers said in a statement.
"The president is leading a war on coal and what that really means for Kentucky families is a war on jobs," Republican U.S. Sen. Mitch McConnell said in a news release.
The Democratic frontrunner seeking McConnell's seat in next year's Senate race, Secretary of State Alison Lundergan Grimes, said in a statement that she would not stand by while "over-reaching regulation" hurts Kentucky jobs.
Although federal regulations have affected demand for Eastern Kentucky coal and will continue to do so, the region's coal industry faces other challenges as well.
Those include competition from relatively cheap, cleaner-burning natural gas — the main factor in the layoffs since early 2012, according to many industry analysts — and from other coalfields where mining costs are markedly lower.
Going forward, Beshear said state officials will try to get President Barack Obama's administration to give Kentucky more leeway in accomplishing carbon dioxide reductions at existing power plants.
State Energy and Environment Secretary Len Peters said the state wants to pursue an alternative method of calculating reductions in carbon dioxide emissions.
Expected rules from the EPA on existing power plants would likely set limits on carbon emissions per megawatt hour of electricity generated. However, another approach would be to look at carbon dioxide emissions from all sources in a state, then set a target for the overall reduction, while allowing the state to figure out how to achieve the reduction, Peters said.
That's the approach Kentucky favors, he said.
"Every state should be able to play to its resource strengths while also achieving important environmental and economic objectives," Beshear said in his speech.
Such a program presumably would allow the state to count reductions from sources such as energy efficiency programs, rather than specifically targeting coal-fired power plants.
Peters said the state also will ask the EPA to consider a longer time frame to meet reduction targets, which could head off lawsuits challenging new rules.
Beshear cited a projection in his speech that upgrading an existing power plant to capture carbon from the smokestack and store it underground would add 80 percent to the cost of electricity and reduce the plant's output.
There is no full-scale carbon capture and storage system in operation at any power plant, however. New technology to accomplish that job more efficiently is not expected for several years, Beshear said.
"We need flexibility on time to allow our technology to catch up," he said.
Beshear said the state isn't ducking the need to cut its relatively high carbon footprint and has already begun moving to do that through energy efficiency and other programs.