FRANKFORT, Ky. – From tax credits and other incentives for alternative and renewable energy projects to energy efficiency construction and energy research, Kentucky is giving its all to becoming a leader in energy independence in this new century.

Just last fall, Governor Steve Beshear announced the state’s first comprehensive energy plan that builds on major legislation passed in recent years by the Kentucky General Assembly that encourages investment in energy initiatives. The 150-page plan includes strategies to increase production of biofuels, develop a coal-to-liquids industry in the state, increase use of renewable energy like solar, and improve energy efficiency in homes, buildings and motor vehicles. It is also expected to create 40,000 jobs in the energy field here in Kentucky.

Funding the plan and legislative initiatives that support it has not been easy in an economy that has limited funding for the state’s Energy Program to no more than $800,000 annually over the past 8 years. So you can imagine how thrilled state lawmakers and other state officials were when the governor announced in February that about $63 million of the state’s estimated $3 billion in federal stimulus dollars will be spent on Kentucky’s energy initiatives. Details about how that money will be divided are emerging, and I would like to share them with you today.

Most of the funding—$52.5 million—will go to the State Energy Program, administered by the Kentucky Department of Energy Development and Independence (EDI), with a federal goal of spending 50 percent of the funds on programs that can be started this June. To receive the money, the state must send a detailed budget and application to the federal government by May 12 and assure the Feds that certain conditions are met, with priority given to expanding existing energy efficiency and renewable energy programs.

While no final decisions have been made as to how the money will be spent, EDI is considering funding several programs, including but not limited to KEEPS (Kentucky Energy Efficiency Program for Schools) that helps school district lower their energy use and lower operating costs, the KY Clean Energy Corps which provides energy audits, education and home rehab to qualifying homeowners and “Smart Grid Efforts”, which works with utilities to improve the electric transmission and distribution system. I will pass on any updates I receive from EDI on the funding process as decisions are made.

It goes without saying that state lawmakers hope any final decision will complement both our work on the energy front in past sessions and the major goals of the State Energy Program—goals that go beyond energy efficiency to reducing reliance on foreign oil, improving supply and delivery of fuel supplies and making energy more environmentally friendly.

The other $10 million or so in energy stimulus dollars will fund federal Energy Efficiency and Conservation Block Grants to cities and counties to cut their energy use and improve their energy efficiency.  Sixty percent of the $10 million must be granted to local governments, with the remaining 40 percent spent at the state’s discretion. (Plans are for the 40 percent to be used for farm efficiency projects through the Governor’s Office of Agricultural Policy.) So far, according to state officials, there is no process in place for granting the 60 percent to cities and counties. That process is now being worked out between EDI, the Department for Local Government (DLG) and other agencies, with DLG being the agency most likely to distribute the funds.

Around $15 million in additional Energy Efficiency and Conservation Block Grants will also be allocated directly to the state’s most populous cities and counties, according to the U.S. Department of Energy. A list of those cities and counties provided by DOE indicates the following will receive allocations ranging from around $120,000 to $7 million: Bowling Green, Covington, Florence, Frankfort, Henderson, Hopkinsville ($143,600), Lexington, Louisville, Owensboro, Richmond and the counties of Boone, Bullitt, Campbell, Hardin, Kenton, Laurel, McCracken, Oldham, Pike and Pulaski. The federal government, and Kentucky, hopes that the grants will reduce total energy consumption, carbon dioxide emissions and improve energy efficiency in these communities.

Kentucky’s energy stimulus dollars are a tremendous incentive—but not the only incentive—for state lawmakers to continue working toward our energy goals like we did last session when we passed legislation allowing the General Assembly to study the potential for oil and natural gas operations on state and university owned lands. An even better incentive came this month when it was announced that our state will be the site of a federal research lab—Kentucky’s first—to develop a lithium-ion battery for electric and hybrid vehicles. More than anything else, the federal lab shows our state is fast become an energy research leader.

The Commonwealth has managed to carve out a future for itself in the energy industry in just four short years of planning and hard work. And I think the best is yet to come.