Appalachian states have the potential to compete in the global energy market and should seek alternative sources of energy beyond conventional coal production, regional leaders said Thursday.

Kentucky Gov. Ernie Fletcher and other members of the federal Appalachian Regional Commission released a report detailing how the area could increase energy efficiency and the use of renewable energy resources, including biomass, and develop conventional energy resources, such as clean coal.

“Energy is quickly becoming one of the biggest issues facing the country today,” said Fletcher, who is also the state’s co-chair of the ARC. “It is important for Kentucky and the other ARC states to develop a solid plan of action in order to capitalize on our natural resources and provide high-quality job opportunities for our citizens.”

The report, dubbed “a regional blueprint,” suggests that the ARC states fund research into alternative fuels, educate the workforce on new energy technologies and alert the public to ways to save energy among other ideas.

The ARC distributes money to Appalachian communities in 13 states to improve the region’s roads, sanitation, telecommunications, economy and tourism.

The commission kicked off the energy initiative with a $400,000 grant challenge for projects in developing renewable resources and increasing energy efficiency. Anne Pope, ARC federal co-chair, said the commission hopes to double the grant award in upcoming months through partners in the federal government and private sector.

“We want to bring the blueprint to life, and nothing does that better than money,” Pope said.

Fletcher said states can use the blueprint as the groundwork for their own improved energy policies.

He jumpstarted Kentucky’s plans by signing two executive orders that replace the state transportation fleet with fuel-efficient vehicles, commit $1 million to renewable resources and energy efficiency projects and direct the state Department of Education to help school districts design energy-efficient school buildings.

Fletcher said last month’s fifth anniversary of the Sept. 11, 2001 attacks was a stark reminder of the nation’s dependency on imported fuel. That dependency leaves the U.S. vulnerable from a national security standpoint, he said.

“Appalachian energy resources can supplant that dependency on foreign energy resources,” he said.

And, since August 2003, average oil prices have jumped 139 percent, according to the Energy Information Administration. As a result, consumers are seeking lower-cost fuel substitutes, such as ethanol.

This is where ARC’s 13 states can make an impact, said Anne Pope, ARC federal co-chair.

“When you think of Appalachia, you think of coal,” but the region has renewable energy resources - such as biomass, wind power, solar power, hydropower and landfill gas - that are underdeveloped, she said.

For example, biomass is organic matter such as sawmill wood residue and farm waste that can be converted into fuel. Appalachian states have an estimated 108 million tons of biomass annually, meaning there’s a potential for 500 million gallons of alternative fuel to be produced annually, according to the report.

The blueprint has been in the works since February, when the governors from all 13 ARC states met to discuss ideas for energy development in the region.

The commission even came up with a high-tech vision for coal, promoting new technology that would convert coal to different forms of fuel, including gas and liquid fuel to serve as substitutes for foreign oil.

Appalachian mines produce 35 percent of the nation’s coal, generating $16 billion of output and $720 million in taxes in 2005.

In 2004, electric utilities in the region generated 15 percent of the total U.S. output, though the Appalachian population makes up only 8 percent of the nation.

“It’s a really good time to think about energy issues,” said Gerry Yurkevicz, managing director of Global Insight, a Massachusetts-based energy analysis firm. “The region really has an opportunity to take advantage of.”