FRANKFORT -- Jan 11 - Knight Ridder/Tribune Business News - Owen Covington Messenger-Inquirer, Owensboro, Ky.

Holding up a small vial of clear liquid derived from coal, Rep. Rocky Adkins said the technology already exists for the state to develop alternative energy sources that could decrease the reliance of the state and nation on foreign oil.

"You're looking at coal that was turned into liquid fuel," said Adkins, House Democrat floor leader. "We have the technology to make these liquid fuels from these natural resources."

A long-term strategy to develop alternative and biofuels and providing financial assistance for heating bills for low-income families are at the center of an energy plan presented by the Kentucky House Democratic leadership Tuesday.

Under the Energy Independence Act proposed by the Democrats, the Kentucky Office of Energy Policy would be charged with developing a strategy for the production of fuel from coal, oil shale and biological resources.

That strategy should include the establishment of a federal energy research laboratory in the state, the construction of alternative fuel plants with incentives from the state and additional incentives for the use of renewable energy sources such as solar power.

The office would be required to make recommendations about the expansion of alternative fuel research and production to the governor and the legislature within a year.

The Democrats are pushing for an expansion of initiatives in the development and use of biodiesel, a cleaner-burning diesel fuel made from renewable resources such as vegetable oil.

"To our agriculture community, we don't want you to just feed the world," Adkins said. "We want you to help fuel the world as well, and the technology is there to move this forward."

Rep. Jim Gooch, a Providence Democrat and chairman of the House Natural Resources and Environment committee, was on the team who helped develop the Democrats' energy initiatives for this session.

"Finally, we're getting an organized effort," Gooch said. "We have to start talking about coal in 21st century technologies."

Gov. Ernie Fletcher said Tuesday that he believes his administration's energy plan, which was presented in February, was more comprehensive.

"We're really glad that they have joined us in realizing that having an energy strategy is important to Kentucky," Fletcher said.

To combat increased heating costs this winter, the Democrats propose an emergency appropriation of $5 million for the state's Low-income Energy Assistance Program.

The program used $11.5 million to serve more than 109,000 households from, and has only $2.7 million for the "crisis" phase of the energy bill-assistance program, which is expected to last about two weeks, Adkins said.

The money would come from the state's "rainy day" fund and would be available as soon as the bill, filed Monday by Rep. Darryl Owens of Louisville, passed.

"I think it's important that we realize that we are not the only state that's dealing with this crisis," Owens said of increased heating costs this winter. "We're hopeful that the Senate and the governor will move this legislation quickly and that we can show our people that we care about them and we're going to help them."