Feb 11 - McClatchy-Tribune Regional News - Owen Covington Messenger-Inquirer, Owensboro, Ky.

With its recent withdrawal of hundreds of millions of dollars of support for a proposed $1.8 billion power plant with near-zero emissions, the U.S. Department of Energy announced it will be looking to spin that money off to more projects and smaller projects in various states.

In the minds of several Kentucky legislators, that news comes with the state well-positioned to pull in that federal research money and help boost the state's reputation as a leader in the energy development field.

In a speech on the House floor and during an interview last week, Majority Floor Leader Rocky Adkins lamented that the Department of Energy was pulling back from the FutureGen project but said it could be good news for Kentucky.

"If FutureGen is not going to get back on track, we need to make sure we take advantage of the millions of dollars that will be coming to different projects in different states," Adkins said.

The news from the Department of Energy comes after Kentucky made a failed bid to land the FutureGen project but also after the Legislature reconvened in August to pass a comprehensive energy bill that includes incentives for "clean coal" technologies and the development of alternative energy sources.

The bill was integral to Peabody Energy Corp. moving forward with an investment of between $30 million to $50 million for a study to determine where in the state it could build a coal gasification power plant.

Much of the interest in coal gasification and reducing emissions to a near-zero level has focused on carbon sequestration, or separating the carbon dioxide from a power plant's emissions to either deposit it underground or use it in various commercial applications.

Sen. Robert Stivers, a Manchester Republican who helped craft House Bill 1, said Kentucky has already pushed itself to the forefront in research in this area and attracted investments from outside its borders.

A portion of House Bill 1 designed to support research and development made a $5 million commitment to the Kentucky Geological Survey to conduct experiments about sequestering carbon dioxide underground, and earlier this year, the project got under way with the creation of the Kentucky Consortium of Carbon Storage.

The consortium will be drilling in both western and eastern Kentucky to test the ability to store carbon dioxide underground and use the compressed gas to revitalize abandoned oil and natural gas wells.

The western Kentucky portion of the research has attracted a $250,000 commitment from the Illinois Office of Coal Development because of that area of the state makes up a portion of the Illinois coal basin.

"When other states such as Illinois start sending us money to do research, I think that's a prime indicator of our positioning in the scientific world," Stivers said during an interview last week.

The increased attention to reducing "carbon footprints" and controlling the emission of the gas in coal-fired power plants could mean Kentucky will be drawing more attention from the federal level, said Rep. Jim Gooch, a Providence Democrat and chairman of the House Natural Resources and Environment Committee.

"We already have the bill in place ... that kind of established the things that would make this possible," Gooch said. "Carbon capture is one of the main issues."

The decision to focus resources on the issue of carbon capture will likely lead to the attention that can produce federal dollars, said Sen. David Boswell, a Sorgho Democrat.

"I think the more that we can show that the carbon problem is being solved and dealt with, the more attention we're going to get out of Washington," Boswell said.

Gov. Steve Beshear last week directed the Governor's Office of Energy Policy and the Kentucky Cabinet for Economic Development to work toward responding to federal request for information about potential clean coal projects with a March deadline.

House Bill 1 "along with our vast natural resources clearly makes Kentucky more ready than ever to take advantage of future federal investments in innovative energy development," Beshear said in a press release.

On Friday, the state issued its own request for information to assemble private parties interested in partnering with the state on energy projects that could attract federal investment.

Additional legislative action to build on House Bill 1 and encourage more federal investment isn't in the plans for now, but legislators do need to be prepared to act if the Department of Energy responds with interest, Adkins said.

"I think the effort we made with House Bill 1 has really put us in a good position to be the national leaders in many of these areas of expanded research and development," Adkins said.