Energizing Appalachia: A Regional Blueprint for Economic and Energy Development
ARC's Energy GoalDevelop the Appalachian Region's energy potential to increase the supply of locally produced, clean, affordable energy, and to create and retain jobs.
Strategic Objectives for Economic and Energy DevelopmentStrategic Objective 1: Promote energy efficiency in Appalachia to enhance the Region's economic competitiveness.
Strategic Objective 2: Increase the use of renewable energy resources, especially biomass, in Appalachia to produce alternative transportation fuels, electricity, and heat.
Strategic Objective 3: Support the development of conventional energy resources, especially advanced clean coal, in Appalachia to produce alternative transportation fuels, electricity, and heat.
By using its full range of energy resources and staying at the forefront of emerging energy technologies and practices, the Region has the potential to increase the supply of locally produced, clean, affordable energy, and create and retain jobs. This approach will help the Region find new ways to satisfy domestic energy demand, minimize environmental impact, and attract service and supply-side industries and businesses that rely on energy resources to grow and sustain jobs. Developing Appalachia's energy potential will provide clean, safe, affordable, locally produced energy to customers, create and retain jobs, help companies stay competitive, and keep the Region economically strong and moving toward energy independence.
To help the Region achieve this energy goal, it is important for all stakeholders to work to realize the economic potential of energy efficiency, innovation, and independence. Engaging multiple stakeholders and leveraging the Region's finance, technology, and human resources will allow the Appalachian Region to maximize its energy potential.
Five key action areas are vital to helping the Region reach its strategic objectives and realize the job creation potential of an energy-based economic development agenda.
The first step in implementing these strategic objectives is to identify and engage potential partners in the needs, resources, and roles in energy-based initiatives. Many energy initiatives are too large for a single entity to undertake alone. Some will require multi-state, multi-county, or public-private partnerships.
Partnerships could be developed with state energy offices (some states have several different types of energy offices); federal agencies, such as USDOE and USDA's Natural Resources Conservation Service, Rural Utilities Service, and Rural Development; state-based trade associations for coal, renewable energy, oil and gas, and others; local economic development organizations; environmental organizations; universities engaged in energy research and development, and university extension services; business and industry, and foundations that support environmental work such as development of clean energy.
Many energy initiatives are already under way, on a small scale, in parts of the Region and the country, and there is great potential to share and replicate best practices throughout the Region.
Not every source of energy is addressed in the Energy Blueprint's strategic objectives. For example, hydrogen is not discussed because it is not expected to be widely available to the public for at least several years. And, although several nuclear power plants throughout the South are under development or scheduled for operation in the next five years, there are ongoing national issues with mining, transporting, and storing nuclear fuels, as well as with the disposal of wastes, that would require a more in-depth analysis than could be covered here.
Energy efficiency strategies reduce energy costs and can help eliminate or reduce the need to import foreign energy. To maintain a competitive position in the global marketplace, businesses must pursue energy efficiencies, or higher energy costs will result in a market disadvantage, lost sales, and potential job layoffs. Efficiency measures are often the most cost-effective strategies to reduce energy costs and can be implemented the most quickly.
Efficiency is one of the best ways to maximize energy use with minimal environmental impact. Since 1970, about 75 percent of all new energy demands in the United States have been met by reducing energy needs through the use of energy efficiency measures. (Annual Energy Outlook 2006, EIA, p. 6-8.)
Energy audits, energy efficiency standards, and financial incentives are often used to promote efficiency. Energy audits provide an independent review of buildings to determine ways to cut energy costs or enhance efficiency. Energy efficiency standards can be established for high-energy consumers, such as appliances and buildings. Finally, some states, utilities, and local governments also offer a variety of financial incentives, such as grants, loans, tax credits, rebates, and exemptions, to encourage energy efficiency improvements.
Energy efficiency does face some implementation obstacles. There is less incentive to use energy-efficiency measures when energy costs are low, as they have been over the last decade. When an energy audit has been performed, recommendations are not always implemented due to lack of expertise or available funds. And architects, builders, and home manufacturers often lack incentives to apply energy-efficient strategies in the design and construction of commercial and residential buildings. These obstacles must be addressed as efficiency programs are created or enhanced.
The following strategies are examples of ways to support and promote energy efficiency.
Research and Analysis
Public Awareness and Outreach
Appalachia has a wide array of renewable energy resources with potential for expanded use, including biomass, biofuel, wind power, solar power, landfill gas, and hydropower.
Biomass is organic matter, including waste streams from paper factories, lumber mills, and agriculture, and crops such as corn and switchgrass. It can be used directly for the production of electricity, or converted into biofuels such as biodiesel and ethanol. Biomass has been identified by many energy experts as possibly having the greatest regionwide potential of all renewable energy sources.
Biofuel is liquid fuel derived from biomass. Biofuels can be made from crops grown specifically for fuel production, such as corn, soybeans, and switchgrass, or recycled from fryer oil. Two major biofuels, ethanol and biodiesel, are often mixed with varying amounts of petroleum and require special transport, storage, and blending. Biofuel refineries are most prevalent in the southern part of Appalachia, where paper plants and farms are more plentiful and can provide biomass for conversion.
Wind energy turbines use existing wind to create electricity. In 2006, wind energy installations in the U.S. exceeded 10,000 megawatts in generating capacity—the amount of electricity needed to power over 2.5 million homes on an average day. (American Wind Energy Association. . Retrieved August 31, 2006, from http://www.awea.org) The potential for wind energy in the Region is greatest along the ridgelines of the Appalachian Mountains.
Solar power harnesses energy from the sun's light. Building designs that incorporate passive solar heating and daytime lighting features reduce dependence on traditional fuel sources for light and heat, and photovoltaic (PV) panels can contribute to meeting commercial and residential energy needs. The solar power PV industry is a $7 billion a year industry, with 5,000 megawatts of production capacity in place in the United States. The industry is growing at a rate of 40 percent annually, and is projected to create more than 40,000 new jobs in the next decade. In the Appalachian Region, production of residential and commercial PV power is currently viable south of Virginia and Kentucky, and several PV manufacturing plants are located throughout northern Appalachia.
Landfill gas (methane created from decomposing garbage) can be harnessed to generate electricity or heat. In one year, a typical four-megawatt landfill gas project can reduce enough greenhouse gases to equal removing the annual carbon dioxide emissions from 45,000 cars or offset the use of 1,000 railcars of coal. In addition, the cost of generating electricity from methane is very low.
Hydropower plants located throughout the Region generate electricity from several of Appalachia's waterways. While there may be some potential for small-scale hydropower installations throughout the Region, development is often complicated by river or stream bank issues. For this reason, development of hydropower is not specifically discussed in the following strategies.
Net metering, renewable energy portfolio standards, financial incentives, and utility bill fees are often used to encourage the development of renewable resources. Net metering provides an opportunity for customers producing energy (from PV panels or other sources) to sell it back to the grid or have their meter run backward when they are providing energy. Renewable energy portfolio standards, usually set at the state level, establish a percentage of energy that must come from renewable sources by a set date. Financial incentives, such as grants, loans, rebates, and tax incentives, are available at the federal, state, and local levels to encourage the development of renewables. In addition, fees can be added to utility bills to provide funds for investing in renewable energy sources. Two common fees are public benefit funds, which add a fee to every customer's bill, and green power programs, which allow customers to choose if they want to pay extra to support the development of renewable energy.
Each renewable energy source faces its own challenges. Biomass energy generation requires appropriate feedstock, and presents policy issues. The development of biofuels will require widespread infrastructure improvements to transport, blend, and sell the fuels on a large scale. Areas in Appalachia most valuable for wind development are often protected from development, and can face opposition due to a real or perceived impact on wildlife, habitat, and views. Solar power is dependant on access to sufficient sunlight. Landfill gas projects face knowledge and policy barriers. And, as described above, development of new hydroelectric power is complicated by local issues.
The following strategies are examples of ways to support and promote the development of renewable energy.
Research and AnalysisDisseminate information
Public Awareness and Outreach
The Appalachian Region is historically linked to the coal industry, and many states in the Region still rely economically on coal and coal-related businesses. Many Appalachian states also are home to substantial oil and gas businesses. As a result, there are still strong reasons to support fossil fuel development, particularly coal, in the Region. The future for continued coal development is known as "advanced coal," which includes integrated gasification, combined cycle, and other clean coal technologies; carbon capture and sequestration; and coal-bed and coal mine methane capture and use.
According to the U.S. Department of Energy, fossil fuels—coal, oil, and natural gas—currently provide more than 85 percent of all the energy consumed in the United States. They provide nearly two-thirds of the nation's electricity and most of its transportation fuels, as well as the raw materials for other industries, such as petrochemicals. Appalachia boasts over 3,907 million short tons of America's economically recoverable coal reserve. The Region has about 5 percent of the recoverable natural gas resources in the nation, primarily in Kentucky, New York, Ohio, Pennsylvania, Virginia, and West Virginia. The Appalachian Region also contains three to four billion barrels of unconventional oil resources, as evident in Kentucky's oil sands and oil shale. Fossil fuel exploration, extraction, processing, and distribution provide an economic boost to Appalachia in the form of jobs and taxes. In 2004, an average of 49,327 Appalachians worked directly for mines in the Region, and the oil and gas industry employs almost 17,000 Appalachian workers annually. Most of these workers are in small and independent oil and gas exploration and production companies and service firms.
The U.S. government anticipates that the nation's reliance on fossil fuels will increase in the next 20 years, despite the aggressive focus on expanding the development of renewable energy. One reason for this is that the United States has one quarter of the world's coal reserves. Due to its low cost and abundance, coal will likely continue to be the dominant fuel for electric power production in the United States for many years to come. And coal is not only a fuel, but also a feedstock that can be used to produce value-added products such as coal liquids, coal-to-process gas, and others. Coal use may also expand as natural gas costs rise and oil becomes more difficult to import.
Fossil fuels are not without their share of challenges. Carbon is released when fossil fuels are burned, and researchers in the Region are investigating clean coal processes to find ways to diminish greenhouse gas effects by reducing the amount of carbon emissions released when coal is burned, or by capturing and sequestering it before it can enter the atmosphere. At present, the technology is immature. Application of new technology is expensive, but the race is on to make it consistently and economically in anticipation of federal mandates on greenhouse gases.
In addition to pollution controls, workforce issues are an important consideration. The coal industry will need advanced skills to operate equipment and manage processes. For instance, an advanced coal facility is more like a chemical plant than a traditional coal plant. Engineers and chemists will be required for operations. As new advanced coal facilities open around the world, competition for resources and qualified workers will be great. An additional challenge is increasing public awareness of and support for advanced coal processes and applications.
The following strategies are examples of ways to support and promote the development of advanced coal and other conventional energy sources.
There is a need for further discussion on what the public-sector role is in large, mature industries working with other fossil-energy sectors in the Region, such as coal-bed methane, enhanced oil recovery, and natural gas. A few strategies stand out, including advocating for advanced conventional energy development, addressing the needs of existing electric transmission plants and energy infrastructure, and developing regulatory policies that are consistent with replacing imported energy with domestic energy.
Research and Analysis
Public Awareness and Outreach