State has committed millions to coal projects

State has committed millions to coal projects

Even before Gov. Ernie Fletcher asked the General Assembly to approve incentives to attract coal-conversion plants to Kentucky, his administration had quietly committed at least $2.4 million to two such projects.

Without a public announcement, the state awarded a contract in May to Peabody Energy for $400,000 to conduct a feasibility study on a $3 billion coal-to-liquid fuel plant near Sturgis, in Union County.

And it committed $2 million in February to help a company called EnviRes LLC develop technology in the Ashland area to gasify coal, biomass and other carbon-bearing materials.

Fletcher has said repeatedly that Kentucky would not be considered for such projects without tax incentives that he is proposing for a special legislative session, tentatively scheduled to begin next week.

Democratic leaders in the House have taken the position that the issue can be dealt with during next year’s regular session and that a special session is unnecessary.

And, in fact, the Peabody feasibility study isn’t even expected to be completed until April 2008, when next year’s session would be ending.

The two contracts clearly indicate that the state is willing to make a financial commitment to attract such projects.

But they do not indicate that either project is a done deal. For example, the Peabody contract stipulates: ”Results from the feasibility phase will determine whether or not the Kentucky project will proceed.”

At the same time, nothing in the contract states that the project would be contingent on tax incentives, and in fact it maps out the company’s tentative timeline, with construction to begin in 2010.

Representatives from Peabody and the governor’s office could not be reached for comment today.

The $400,000 Peabody grant, from the Governor’s Office of Energy Policy, is to be used to pay a portion of the $1.4 million cost of conducting studies of engineering, labor and product marketing studies, according to the contract.

Representatives of House Speaker Jody Richards’ office and Majority Leader Rocky Adkins’ office said they were not aware of the contract and declined to comment further.

EnviRes officials could not be reached for comment.


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