Governor Bob Taft State of Ohio Energy Policy & Action Plan February 24, 2006

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1 Governor Bob Taft State of Ohio Energy Policy & Action Plan February 24, 2006 Governor Taft today outlined long-range energy initiatives that will improve state energy efficiency and contribute to economic development and job creation in the State of Ohio. These initiative focus on biofuels, renewable energy, clean coal and energy efficiency. Biofuels Making use of Ohio s extraordinary agricultural assets to help diversify our transportation fuel supply is a high priority for the Taft administration. A number of integrated steps are being taken to focus on increased biofuels production, distribution and use: Ethanol plant construction: The Ohio Department of Development has assisted in assembling the financing packages for several ethanol production facilities that will use Ohio corn to produce ethanol for use as a vehicle fuel and fuel additive. Facilities have been announced for Fayette, Harrison and Allen counties. Governor Taft visited the Greater Ohio Ethanol site in Lima, where he announced several steps that the State is taking to support increased biofuels production and use. State fleet biofuel targets: In September, Governor Taft announced that the Ohio Department of Transportation was committed to using 30,000 gallons of E85 and 1 million gallons of biodiesel per year. During his appearance at the Greater Ohio Ethanol site in Lima, the Governor announced a number of additional steps: o Require that all new state vehicles procured be flex fuel vehicles when an equivalent alternative fuel vehicle is available on the state contract at a similar price; o Double E85 consumption in the state fleet to 60,000 gallons by January 1, 2007, and require annual increases of 5,000 gallons thereafter; o Require state agencies to use one million gallons of biodiesel by January 1, 2007, and to increase usage by 100,000 gallons annually thereafter; o Require state agencies to examine the potential to maximize their future use of alternative fuels and report their findings to the Fleet Management Commission of the Department of Administrative Services; o Require the Department of Agriculture, with the assistance of the Department of Administrative Services, to provide information about the

2 location of alternative fuel refueling facilities to each state agency on a regular basis. Use E85 pump conversion grants to triple the number of E85 pumps in the state by the end of the year: The current state operating budget includes a grant program in the Department of Development to assist in converting service station pumps to dispense E85 and biodiesel. Six stations have taken advantage of this program since its inception. Renewable Energy In addition to diversifying our energy supplies through biofuels, the state will also support renewable energy that holds promise, not only for energy diversification and independence, but also for building energy product manufacturing jobs in Ohio. Renewable energy sources take many forms, including wind turbines, fuel cells, solar voltaic panels, biomass conversion and geothermal technologies. The Department of Development has provided incentive for solar cell manufacturing expansion and the Ohio Governor s Residence has the only solar cell installation at a Governor s residence in the country. In addition, the following steps are being taken to advance renewable energy production and use in Ohio: Wind power production incentives: The Department of Development has recently updated the Ohio wind map, revealing substantially greater wind resources in the state than earlier estimates. In addition, a number of Ohio companies are manufacturing components for wind turbines. During a visit to one of these companies, Magna Machine in Cincinnati, Governor Taft announced a new Ohio program to provide incentives for electricity production from wind power. This five-year, $25 million program will provide a grant from 1 to 1.2 cents per kilowatt hour of electricity produced by wind. It will provide a maximum $5 million a year and will target projects from two to fifty megawatts. The program is expected to create Ohio jobs through project construction and maintenance and through supply-chain development of wind turbine components and add clean electricity to the grid, thereby diversifying Ohio s energy portfolio. PUCO Commission-Ordered Investigation: On December 7, Governor Taft requested the Public Utilities Commission of Ohio to investigate the obstacles to renewable energy generation of electricity and other forms of generation that occur near farms, factories and other electricity consumers (called distributed generation ). In response to the Governor s request, the PUCO opened a Commission-Ordered Investigation to examine these obstacles and expects to conclude its investigation and make recommendations by summer. The first technical conference was held on February 24, and First Lady Hope Taft appeared to describe the solar panel installation at the Governor s Residence in Columbus. 2

3 Fuel Cell Initiative: In 2002, as a component of the Third Frontier Project, Governor Taft announced the Ohio Fuel Cell Initiative, a three-year, $103 million initiative to position Ohio as a national leader in the growing fuel cell industry. In February 2005, Governor Taft extended the Ohio Fuel Cell Initiative for an additional three years with a sustained funding commitment of $100 million. To date, the state has invested more than $40 million in 30 various fuel cell-related projects throughout the state. State long-term purchases: The state will use a portion of its savings from energy efficiency investments to enter into long-term contracts to purchase electricity from Ohio renewable energy production, including wind, solar and biomass. Clean Coal Building on Ohio s immense coal reserves and leadership in clean coal research and development, Governor Taft has taken the following steps to assure environmentally appropriate use of Ohio coal: FutureGen: Ohio is competing with several other states for a $1 billion federal research facility and its construction and operating jobs. The Ohio FutureGen Task Force, comprised of various state agencies, universities and other stakeholders, was created to prepare Ohio s response to the federal Request for Proposal, to be issued in March. Taft and legislative leaders announced their commitment to drilling a deep well needed to collect the geologic data needed for this competition. Department of Defense Assurance Fuel Initiative: Representatives from state agencies, Ohio universities, Wright-Patterson Air Force Base and the Ohio Coal Association are working with the Department of Defense to plan for a pilot plant to produce jet fuel from coal using the long-established Fischer-Tropsch technology. The Governor has directed Alan Schriber, Chairman of the Public Utilities Commission of Ohio, to lead this work group. Coal Resource Characterization: Ohio s only comprehensive statewide assessment of coal resources is nearly 50-years old. To allow the state to take full advantage of emerging coal combustion and coal conversion technologies, the state is exploring funding options for and updated assessment of the distribution, quantity, and quality of the state s coal resources. The project will be managed by the Division of Geological Survey in the Ohio Department of Natural Resources. Oil and gas data: Ohio has great untapped potential for additional oil and gas development, with an excess of 1.26 trillion cubic feet of proven natural gas reserves, valued at $11 trillion, and at least 66 million barrels of proven oil reserves, valued at $3.6 billion. Ohio s oil and gas producers rely heavily on ODNR s oil and gas records to identify, acquire and develop the State s natural 3

4 gas and oil resources. The state is exploring ways to make this geological data available in a user-friendly digital format. This project will also be managed by the Division of Geological Survey in the Ohio Department of Natural Resources. Energy Efficiency Small businesses: At the Governor s Small Business Summit in November 2005, the Governor launched the Ohio Business Energy Resource Center ( to help businesses access the various state programs and services available to them. During the Summit, many small business owners commented on the difficulty of dealing with escalating energy costs and the importance of correctly assessing energy use and opportunities for energy efficiency. The Department of Development will purchase a commercially available web-based program to help small and medium-sized businesses calculate the various returns on investment for different energy efficiency measures. Ohio s investor-owned gas and electric utilities will partner with the state by providing funds for the needed monthly maintenance of the site to ensure this service is available to business consumers. Advanced Energy Fund: Since 1999, the Energy Loan Fund, established under electric deregulation, has accumulated money raised by a rider on consumer electricity bills. The purpose of the fund is to make loans and grants for energy efficiency projects for residential and business consumers. Governor Taft has proposed to rename the fund the Advanced Energy Fund and to focus it on projects that have significant economic development potential, such as the wind production incentive described above. Energy Efficiency in State Buildings To restrain its energy costs ($47 million for electricity and $37.9 million for natural gas in FY 2005), the State will ask for a $3.6 million earmark from the Energy Loan Fund to support energy efficiency projects in state facilities. The savings from these projects are expected to pay back the investment in five to seven years. A portion of these savings will be used to enter into long-term purchases of renewable energy, allowing the state to create further awareness in renewable energy and advance the demand for renewable energy development in Ohio. Governor Taft proposed an Energy Standards and Reporting Task Force to report on energy use and energy efficiency in state government. The task force would also standardize reporting of energy information and may create standards for building commissioning, energy education, energy efficient design, renewable energy procurement, among others. The task force will provide to the State Controlling Board a list of state agencies that have not provided the required energy information by October 1 of each year. The State Controlling Board shall not release capital funds to any State agency on this list until that agency has 4

5 met the reporting requirement to ensure that all state entities are thoroughly reviewing their energy consumption. Minimum educational requirements for state building operators will be created to ensure proficiency in energy efficiency. This will raise the level of expertise and professionalism in the relevant state workforce. Cost-effective energy efficiency standards will receive increased focus in state contracts for leasing, design, maintenance and operations. ### 5