how Kentucky is investing in renewable energy

Ford announced plans in Sept. 2021 for a massive electric vehicle manufacturing campus in Tennessee, as well as two additional battery facilities in Kentucky, in what the company called the largest investment in the U.S. electric vehicle market at one time by an automaker. (Courtesy: Ford)

IRA drives growth and economic development across Kentucky coal country

Contributed by Josh Combs, energy regulatory attorney at Troutman Pepper

My Kentucky roots run deep. My bloodline can be traced to a hidden gem nestled in the hills of Eastern Kentucky- Beattyville. For generations, coal has been the lifeblood of Eastern Kentucky. In fact, coal is interwoven into the history, culture, politics, and soul of Kentucky.

In recent years, communities across my home state have faced significant challenges as the nation transitions from coal to cleaner energy and technologies. The Inflation Reduction Act (IRA), passed in 2022, has spurred massive investments that will reverberate in communities across Kentucky for years to come. This article briefly explores the positive returns thus far.

The IRA specifically contemplates the need for climate, energy, and tax reform in Appalachia and other coal-country communities. It aims to steer investment dollars toward regions that have historically relied on fossil fuels. Several IRA provisions already have benefited or will benefit communities transitioning from coal-based economies. IRA credits for domestic content, energy communities, and low-income communities have all helped spur unprecedented growth and development. For example, the IRA contains incentives for investments in areas that have longstanding reliance on fossil fuel production. The Energy Community Tax Credit Bonus in the IRA provides an additional 10% for production and investment tax credits for communities that meet relevant criteria.

To maximize IRA benefits, the Kentucky legislature proactively passed legislation that helped prime coal closure communities for federal investment. House Bill 9, signed into law on April 7, 2023, established a $2 million matching funds program. The law supports 41 Kentucky counties that have been directly impacted by coal-related economic loss. Other state legislatures have taken similar actions that help leverage and maximize the impact of IRA funding on coal closure communities.

Kentucky’s clean-energy workforce has certainly experienced remarkable growth. Since 2022, the IRA has spurred more than $3.4 million in funding for clean energy projects in Kentucky alone, creating nearly 2,000 jobs. In fact, according to a recent report, Kentucky’s clean-energy workforce was the second fastest-growing in the country. In addition to creating thousands of living-wage jobs, this growth is helping establish Kentucky as a leader in the clean energy sector. The following examples highlight key projects and developments:

• BlueOval SK Battery Park: In Glendale, Kentucky, the approximately $6 billion BlueOval SK Battery Park will include two battery plants capable of producing 80GW annually. This will help create 5,000 new jobs upon completion.

• Envision AESC: This $2 billion EV battery manufacturing facility is currently under construction in Warren County, Kentucky. It will help create 2,000 skilled jobs upon completion.

Ford’s battery plants under construction represent Kentucky’s largest single economic project in the state’s history. Kentucky Governor Andy Beshear said the project has “cemented our status as the EV battery production capital of the United States and it ensures our future as an automotive leader.”

The IRA is driving generational investments that are helping communities across Kentucky embrace a new era of economic opportunity and innovation. While coal has been an integral part of Kentucky’s history and culture, the IRA investments will help these areas pivot toward new opportunities and thrive in the face of transition. I am proud to see my Kentucky home rise above the ashes with renewable energy as an integral part of its continuing story.

Josh Combs, a Nicholasville, Kentucky native, is an energy regulatory attorney at Troutman Pepper in Atlanta, Georgia.