Balancing Act

To find both the problem and the promise facing Dr. Len Peters you don’t have to look any farther than his job title: Secretary of the Energy and Environment Cabinet.

That puts him in charge of two interests that are usually fighting with each other.

“It’s not energy at all costs, it’s not simply the environment,” says Peters. “It’s really trying to find the balance between our energy needs, our energy demands, and making sure that we have a quality environment, one that we feel good about and will be comfortable with passing along to the next generation.”

Peters began his state government job a year and a half ago. Trained as a chemical engineer, he has decades of experience in scientific research and business management. His first venture into public service hands him a tricky balancing act at a time when the debate over global warming puts him in the national spotlight.

When Governor Beshear decided to combine departments dealing with energy and the environment in 2007, Kentucky became the first state to try this approach. Instead of pitting established interests against those seeking sweeping changes, Beshear invited everyone to work together.

The unique experiment recognizes the state’s unusual circumstances. National and international concerns about the use of fossil fuels, especially coal, have special significance in the Bluegrass State.

A favorite image of Kentucky features traditional agriculture and timeless scenic beauty.

But Kentucky is also a major 21st-century business hub. The state sits in the center of several key transportation systems, with barges on the Ohio River for freight, plus the UPS WorldPort for packages at Louisville International Airport. These networks sustain many kinds of businesses and industries. The state produces about one-third of the nation’s steel and more than one-third of the nation’s aluminum. It’s the third largest producer of vehicles in the United States.

“We’ve become a manufacturing state because of the more affordable electric rates here,” says Peters.

Those electric rates, among the lowest in the nation, are extremely important to energy-intensive industries. And they’re closely tied to Kentucky’s major natural resource, coal. More than 90 percent of the state’s electricity is generated using coal.

But coal is under pressure, with concerns about its role in global warming, and worldwide competition that’s driving up the cost of many fuels.

“The days of cheap energy for the most part are over,” says Peters. “It’s not just a Kentucky problem and U.S. problem, it’s a global problem. We can’t predict how rapidly electric rates are going to increase, but undoubtedly they are going to increase.”

Peters warns those cost increases will mean more than just inconvenience.

“As rates go up, that forces business decisions for manufacturers who will ask if they can in fact continue to stay in Kentucky,” says Peters. “If they decide they can’t, they won’t be going to Indiana or Mississippi—we will be losing manufacturing jobs to other countries.”

For households, hardships in family energy budgets are already a problem that Peters and Governor Beshear have been bringing to the attention of lawmakers in Washington.

“We are arguing for a modest, reasonable way of implementing carbon mitigation,” he says. “We have to make sure that we don’t have price increases at such a rate that many segments of our community cannot accommodate them.”

Peters identifies energy efficiency as the first and best solution to the concerns about emissions of greenhouse gases from coal that have been blamed for global warming.

Noting that Kentuckians who reduce the amount of energy they need each month will also reduce the impact of rising energy costs, Peters says, “Everything people learn to do today is going to become compounded over the years. Instead of ‘drill, baby, drill,’ it’s ‘save, baby, save.’ That’s the one thing that we have control over, our personal energy use.”

But Peters recognizes that even energy efficiency can be easier said than done.

“The least energy-efficient homes are generally the homes that are occupied by the lowest income families,” Peters says.

Those are the same families that don’t have the money to pay for increasing insulation, sealing leaky doors and windows, or replacing old energy-guzzling appliances with newer Energy Star models. The newly redesigned Web site for the Energy and Environment Cabinet, www.eec.ky.gov, features a section that will show how $70 million in federal stimulus funds will be used in a variety of weatherization programs.

That should help develop more jobs for Kentuckians. Peters says, “Service industry jobs, such as selling Energy Star appliances, installing them, doing energy audits, advising about energy efficiency—I think that’s where the growth will be.”

THE ENERGY CRYSTAL BALL
Secretary Peters looks ahead to 2030

“Nationally, I believe that we’re going to see increases in the use of nuclear energy and modest increases with renewables. In 2030 we will still be generating just about as much energy from coal on an absolute, not percentage, basis as we are today. As a nation now we’re 50 percent coal, but we could be 35 percent coal then. But we’ll still be generating the same number of megawatts that we are today, because of the increase in energy demand.”