The 4th meeting of the Interim Joint Committee on Natural Resources and Environment was held on Friday, October 23, 2009, at 1:00 PM, in Room 131 of the Capitol Annex. Senator Tom Jensen, Chair, called the meeting to order, and the secretary called the roll.
Present were:
Members: Senator Brandon Smith, Co-Chair; Representative Jim Gooch Jr., Co-Chair; Senators David E. Boswell, Tom Jensen, Ray S. Jones II, Bob Leeper, Dorsey Ridley, John Schickel, Katie Kratz Stine, Robert Stivers II, Gary Tapp, and Johnny Ray Turner; Representatives Hubert Collins, Stan Lee, Reginald Meeks, Tim Moore, Don Pasley, Marie Rader, Kevin Sinnette, Ancel Smith, and Fitz Steele.
Guests: Rodney Andrews, Center for Applied Energy Research; John Lyons, Division of Air Quality; Tim Vaughn, Kentucky 8-1-1; Bruce Scott, Department for Environmental Protection.
LRC Staff: Tanya Monsanto, Biff Baker, Lowell Atchley, and Kelly Blevins.
Senator Jensen announced that the committee had a quorum and asked for a motion to approve the minutes from September 25, 2009. After a motion and a second, the minutes were approved. Then Senator Leeper gave a brief report of the Regulated Utilities Subcommittee. He stated that the meeting dealt with funding for emergency 9-1-1 service. It also received testimony on 2-1-1 nonemergency service. The subcommittee took reports from 9-1-1 coordinators in Ohio and in North Carolina. After a motion and a second, the report was approved.
Senator Jensen announced the chair’s intention to request a December meeting and directed staff to proceed with a LRC request. Then Senator Jensen introduced Rodney Andrews with the Center for Applied Energy Research. Mr. Andrews discussed current technologies in carbon management and projected energy demand in the United States. Currently, the United States emits roughly 6 million metric tons of carbon dioxide and that is projected to expand. Electric generation is the largest source of carbon dioxide; although transportation supplies roughly equal quantities. The bigger picture with carbon dioxide is that while most emissions currently come from the developed world, the newly industrializing countries, particularly those in Asia, will contribute considerably more carbon dioxide in the future.
Kentucky is very exposed to risk in a carbon constrained world. This is due to Kentucky’s reliance on coal. More homes in Kentucky are heated by electricity, and we have energy intensive industries located in Kentucky that take advantage of the cheaper power rates. Kentucky’s carbon dioxide emissions per capita are higher than in other states. Based on assumptions provided by the Kentucky based electric utility, E.ON U.S., rates will increase dramatically under carbon constraint policies. It may result in a loss of Kentucky’s highly competitive heavy industries as they seek to relocate to less costly energy sources. Kentucky’s options are to switch to natural gas or to build new plants that have better efficiencies. Switching to natural gas shifts the dependence away from coal to gas but gas prices have fluctuated widely. Kentucky has limited renewable resources so those options are limited but Kentucky can improve energy efficiency.
Kentucky needs to focus on precombustion capture because it is unlikely that the state will decommission its existing plants. However, in order to achieve precombustion on existing plants, investments must be made on expensive retrofits. Kentucky also has deep saline aquifers, and there is considerable discussion among experts regarding biological organisms such as algae being used to fix carbon in permanent storage sites. In fact, Kentucky will need to do everything it can to limit carbon emissions because of the reduced number of options available.
Currently there is no best available technology to capture or limit carbon emissions as there is for other pollutants, and coal remains one of Kentucky’s best natural resources. It will continue to be a mainstay as an energy feedstock. Kentucky would have a superior position dealing with the issue of carbon constraints if the state expended resources on energy efficiency up front rather than expended resources on capturing and sequestering emissions on the back end. Biomass is the only realistic long-term, reliable source of renewable energy in Kentucky.
Senator Jensen asked if carbon could escape from the sequestration site after injection, particularly if a catastrophic event like an earthquake occurred. Mr. Andrews replied that some carbon escapes, some carbon dissipates over time, but the majority will remain captured under pressure. Some of the carbon will become fixed as calcium carbonate, and yes, an earthquake could cause a catastrophic well failure. It is a remote possibility. The biggest issue for those working on carbon capture and sequestration is migration of carbon dioxide. Slow leaks can occur.
Representative Moore asked what food grade carbon dioxide is and what the primary waste products of animals are. Mr. Andrews replied food grade carbon dioxide is the substance in soda pop that makes it fizz, and the primary output of animals is carbon dioxide through respiration. Rep. Moore used these questions to argue that the question of carbon dioxide as a pollutant is hyper sensitized in the public sphere, and rarely is the cost of controlling carbon emissions illustrated in a manner juxtaposing GDP and emissions levels as shown by Mr. Andrews in testimony.
Mr. Andrews stated there is a relationship between affluence and carbon dioxide emissions. It is not possible to determine whether controlling carbon dioxide emissions will lead to a decline in the standard of living in the United States. Rep. Moore stated that it is important to emphasize that Western carbon emissions are related to the United States productivity rate, but the technology will likely overcome the carbon issue as it has addressed other problems in the past.
Rep. Gooch stated that the algae technology is very promising even though the acreage needs are significant. Environmentally friendly solutions can be uneconomic if there are significant resource needs to produce the energy. It takes 26 percent of the nation’s renewables to replace what Kentucky produces in electricity in a year’s time. Mr. Andrews agreed that there are negative effects from some of the renewables particularly water needs and it is certainly true that algae farms require land and water. Retrofits to existing plants will cause efficiency losses in electric generation.
Senator Leeper asked how much energy comes from Kentucky coal, and have you examined the issue of nuclear energy. Mr. Andrews replied about 5% of the nation’s energy is from Kentucky coal. Kentucky mines around 100 million tons and burns only 35 million. So the rest goes to the nation. The Center for Applied Energy Research has not examined nuclear energy because of the moratorium on nuclear power. The technology is viable, but it hasn’t been subject to further research. Sen. Leeper followed Mr. Andrews’s response by arguing that the moratorium prevents the state from looking as new technologies and ideas.
Then Mr. John Lyons with the Kentucky Division of Air Quality provided an update on air quality throughout the state. He stated that air quality is inextricably linked to energy production. Currently, air quality is good in Kentucky due to improvements over the past eight years. Programs such as the NOX-SIP and Acid Rain have shown success. For example, sulfur dioxide emissions have dropped from 79% over the past 25 years since the program’s inception. The only nonattainment ozone area is the Boone-Kenton-Campbell area, but this area should be redesignated to attainment in the coming year.
In 2008, U.S. EPA lowered the standard which led to many counties being designated as in attainment, but the new administration is proposing a more stringent standard of .02 and if this goes into effect than 20 counties will fall into nonattainment. Then, Mr. Lyon discussed regulatory actions in the past year. The issue for Kentucky is the new “endangerment finding” which was issued as a new rule by U.S. EPA. It is not finalized but will require Kentucky to start addressing the problems of greenhouse gases. The endangerment finding grew out of the attempt to target new vehicle emissions of greenhouse gases. However the finding will affect Title V Prevention of Significant Deterioration PSD permits and may address best available control technology. Also the greenhouse gas reporting rule went into effect. Mr. Lyons then discussed legal challenges and the impact of future climate change legislation. Mr. Lyons stated that the problem is there is no money to cover these regulatory changes as the Division like other agencies has significant budgetary shortfalls.
Sen. Jensen asked if there are federal resources to address the fiscal problems. Mr. Lyons responded that the agency receives a 105 grant, and there may be an increase in that grant amount. However if the general fund match is unavailable then there is less money from the federal government. Sen. Jensen asked how much general fund dollars are needed. Mr. Lyons replied roughly $400,000.
Rep. Gooch stated he was disheartened because the United States may not meet its energy demands. These new pollutants will add to the existing litigation tying up good projects. He asked if anything could be done from a legislative standpoint to stop legal actions from stalling projects. Mr. Lyons stated that he had no suggestions. The Division will continue to issue permits along the existing regulatory guidelines but an interesting aside is that the legal challenges are now at the federal rather than state level.
Rep. Gooch continued by asking who files the legal actions. Mr. Lyons responded principally the Sierra Club and other environmental groups. The U.S. EPA has the final decision of Prevention of Significant Deterioration (PSD) permits. The filings and petitions are similar for most cases. One legislator asked if the prevailing parties can recover from the action and has the state ever sought recovery after a decision was found in the state’s favor. Mr. Lyons stated he did not know about right of recovery but the state had never pursued such recovery. If this is a viable option then the Division will keep the opportunity under advisement. The Division expends considerable personnel time on litigation. There are three attorneys dedicated to air quality litigation.
Sen. Jensen asked if the attorneys have ever asked that sanctions be imposed to prevent frivolous lawsuits. Mr. Lyons stated no. Sen. Schickel asked for clarification on a statement that air quality has never been better. Mr. Lyons clarified that the programs to reduce air pollution have worked and Kentucky has a very good monitoring program.
Sen. Jensen then announced that Sen. Stivers had just been named Majority Floor Leader for the Senate, and the committee congratulated Sen. Stivers on his new position. Then, Sen. Stivers asked about carbon dioxide monitoring, whether emissions come from oceans, and how much carbon dioxide Kentucky produces. Mr. Lyons replied that the Division does not monitor emissions of carbon dioxide. Mr. Andrews interjected that he estimates Kentucky produces roughly 93 million tons of carbon dioxide per year. He would provide some comparable statistics on sources of carbon dioxide.
Secretary Len Peters of the Energy and Environment Cabinet stated that oceans are a carbon sink; they absorb carbon dioxide. However human respiration and plants contribute emissions as well as other anthropogenic sources. The concern is that there may be an upset in the carbon balance over the past 100 years during the industrial revolution. Sen. Stivers followed up asking for a breakdown on sources. Secretary Peters stated that the cabinet could provide that information.
Rep. Steele asked about an event in Pikeville on October 13th and whether there is information about the response from US EPA. Commissioner Bruce Scott states that the U.S. Army Corps of Engineers will determine whether the nationwide 21 permit will continue to be available or whether the permitting process will develop into a single permit system. A decision is not made at this time.
Sen. Jensen thanked everyone for attending the meeting and invited Mr. Tim Vaughn to speak on a legislative proposal involving 8-1-1. Mr. Vaughn stated that they propose an 8-1-1 call center in Kentucky. This center would work through a process to aid utilities in locating lines and informing all the parties before excavation work begins. Sen. Jensen then announced the next meeting would be held on November 17, 2009 at 1:00 PM which is not the regularly scheduled date. After a motion and a second, the committee adjourned.