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2 The Problem 75% of our energy expenditures leave the state, versus growing jobs, incomes and revenues here at home. Indiana already imports essentially all oil and gas and is about to become a net importer of electricity. - More vulnerable to supply disruptions - Competitive advantage at risk HOOSIER HOMEGROWN ENERGY energy.IN.gov

3 HOOSIER HOMEGROWN ENERGY energy.IN.gov Indiana now imports its oil and natural gas at high - - and volatile - - prices Need to produce IN ‘unconventional’ natural gas and make more use of IN coal

4 Value = $1B HOOSIER HOMEGROWN ENERGY energy.IN.gov THOUGH STILL A MAJOR COAL PRODUCER, INDIANA NOW CONSUMES TWICE THE COAL IT PRODUCES

5 HOOSIER HOMEGROWN ENERGY energy.IN.gov Indiana has not built a new baseload generation plant in the last 20 years

6 HOOSIER HOMEGROWN ENERGY energy.IN.gov NEGAWATTS EQUAL MEGAWATTS - BOTH MORE POWER PLANTS (MEGAWATTS) AND ENERGY SAVINGS (NEGAWATTS) WILL BE NEEDED

7 An Indiana economic comeback depends heavily on the successful development of our energy potential. - We must make more of what we need ourselves to create new, well-paying jobs and stop exporting needed revenue for imported energy A winning energy strategy is thus a critical underpinning of our overall economic strategy. HOOSIER HOMEGROWN ENERGY energy.IN.gov

8 VISION Grow Indiana jobs and incomes by producing more of the energy we need from our own natural resources, while encouraging conservation and energy efficiency. GOALS Trade Current Energy Imports for Future Indiana Economic Growth Produce Electricity, Natural Gas and Transportation Fuels from Clean Coal and Bioenergy Improve Energy Efficiency and Infrastructure HOOSIER HOMEGROWN ENERGY energy.IN.gov

9 Generate new wealth for Hoosiers by exploiting our abundant sources of coal and biomass - New ‘clean coal’ plants would create needed new power, syngas and liquids plus jobs - New biomass plants produce rural development and energy while solving environmental problems HOOSIER HOMEGROWN ENERGY energy.IN.gov

WE’VE MADE AN IMPORTANT START IN PRODUCING ‘HOOSIER HOMEGROWN ENERGY’ IN BIOFUELS HOOSIER HOMEGROWN ENERGY energy.IN.gov

11 …. And Today New Plants 12% of US ethanol production projected in Production Goal of 1 Billion Gallons Already Achieved! HOOSIER HOMEGROWN ENERGY energy.IN.gov

12 WHAT WE NEED TO DO NOW (see Plan) Expand financial incentives to both utility and non- utility ‘clean coal’ and biomass producers Partner with U.S. government, private industry and major research universities on supply and demand technology R&D Convert state fleet vehicles to flexible-fuel technology as they are replaced Provide incentives for customers to use energy more efficiently Establish Interagency Council on Energy to further develop and implement Strategic Energy Plan (ICE) HOOSIER HOMEGROWN ENERGY energy.IN.gov

13 (WHAT WE NEED TO DO NOW - - continued) Spur production of ‘unconventional’ natural gas in shale formations through production tax credits Require local government finance applicants to consider energy-efficient geothermal heating/cooling systems Seek U.S. loan guarantees (EPACT) and tax credits for Indiana energy projects Expand Indiana Finance Authority’s “volume cap” funds beyond utility pollution control projects to include renewable and ‘clean coal’ investments HOOSIER HOMEGROWN ENERGY energy.IN.gov

14 POLICY OPTIONS FOR 2007 GENERAL ASSEMBLY Extend current tax credits for utility coal generation units to non-utility energy production units, open to Indiana source feed stocks like biomass, pet coke, and especially coal Develop a residential/commercial EE/RE programs that spurs the market in energy efficiency appliances and small scale renewable energy technologies for reduction in natural gas and overall energy efficiency Promote through a grant program, the development of biomass technologies particular to large scale farms and industries using or creating biomass waste. HOOSIER HOMEGROWN ENERGY energy.IN.gov

15 POLICY OPTIONS (cont’d) Support the work of Purdue’s Technical Assistance Program (TAP) on industrial energy efficiency. Work with Purdue TAP on creating a equitable and enticing energy efficiency tax credit program to spur more industrial energy efficiency projects. All of these policy options are still in the planning stage and will need the review and blessing of the Governor. Also, the state is not limiting support to these policy options only. HOOSIER HOMEGROWN ENERGY energy.IN.gov

16 HOOSIER HOMEGROWN ENERGY energy.IN.gov Hoosier Homegrown Energy commits Indiana to use new and emerging technologies to convert Indiana coal, corn, soy and other renewable sources to energy. The payoff will be: Thousands of new high paying jobs Economic and energy security A stronger hand in attracting new employers to our state More stable, affordable energy supplies for consumers

17 energy.IN.gov Phone: Fax: