Filling the Sails of Offshore Wind Energy

The key to offshore wind energy’s success is putting it on equal economic footing with traditional fossil-fuel energy sources.

Wind turbines are seen in Dronten, the Netherlands. (AP/Peter Dejong)
Wind turbines are seen in Dronten, the Netherlands. (AP/Peter Dejong)

Since 1896, when Californians sunk the first oil well into the seabed from a wharf jutting 300 feet into the Pacific Ocean, the American offshore energy industry has been all about fossil fuels.

But our potential is so much greater. “Drill now, drill everywhere” is a closed-minded strategy of the past. And with every day that goes by as we continue to focus on fossil fuels for energy, we fall further behind the rest of the world in the quest to diversify our offshore energy portfolio.

By continuing to prioritize yesterday’s technologies, we are locking ourselves into an energy future that dooms our climate, harms our environment, and sacrifices human health. The costs of coal, oil, and natural gas have all been kept artificially cheap by government subsidies and by our failure to make polluters pay for the negative effects of their emissions. Artificially lowering the price of these commodities slants the playing field, making it harder for new clean energy sources to compete in the marketplace.

As America has stood on the sidelines, other countries such as Denmark, the United Kingdom, Germany, and even China have leapt ahead of us in developing one particularly strong—and commercially viable—renewable resource, which the United States also happens to have in abundance: offshore wind. As of June 2012 the rest of the world boasted 4,619 megawatts of total installed offshore wind energy capacity. Meanwhile, we have not even begun construction of our first offshore turbine. Lack of a clear regulatory structure, inconsistent messages from other ocean stakeholders, congressional budget battles, opposition to specific project siting, and instability in financial markets have all played a role in preventing domestic offshore wind from becoming a reality.

Much of this has changed under President Barack Obama’s leadership. In February 2011 the Departments of Energy and the Interior announced the intention to develop 54 gigawatts of offshore wind capacity by 2030, and the United States is closing the gap between our domestic offshore wind industry and those of the rest of the world. In 2012 alone the administration and Congress made major strides toward encouraging renewable energy development on the outer continental shelf:

  • In November 2012 the Department of the Interior announced the first-ever competitive sales on the outer continental shelf for offshore wind energy. This allows potential developers to bid on 277,550 acres in two wind energy areas—one off the coast of Virginia and another off the coasts of Massachusetts and Rhode Island. These areas are expected to be able to support more than 4,000 megawatts of wind generation—enough electricity to power an estimated 1.4 million homes.
  • In October 2012 the Bureau of Ocean Energy Management signed its first lease under the “Smart from the Start” program with developer NRG Bluewater Wind, giving them rights to build a wind farm off the coast of Delaware. In May and August the bureau issued Determinations of No Competitive Interest for two cable routes to transmit power—one for the Atlantic Wind Connection off the mid-Atlantic seaboard and another for the Deepwater Wind Block Island project off Rhode Island. And in December 2012, the bureau began leasing and approving site assessment/characterization environmental assessments off the coast of Georgia and North Carolina.
  • In December 2012 the Department of Energy announced that it will fund seven offshore wind technology demonstration projects, including Fishermen’s Atlantic City Windfarm in New Jersey; technology projects in California, the Great Lakes, Connecticut, and Maine; and two turbines off the coast of Virginia. The recipients are eligible for up to $4 million each in project-development grants.

The U.S. offshore wind industry is beginning to emerge from the political doldrums that clouded its early days, and it is finding champions in Congress, as well as in the Obama administration. Sen. Tom Carper (D-DE) led legislation to ensure that offshore wind is covered by key tax provisions that had previously only applied to onshore wind. Sen. Susan Collins (R-ME) championed funding for offshore wind development, including a deepwater pilot project in her home state of Maine.

Governors such as Martin O’Malley (D-MD) and Deval Patrick (D-MA) have prioritized offshore wind development as well. They view it as a political victory on multiple fronts—creating sorely needed jobs in construction, operation, and maintenance, and contributing to a diverse energy portfolio while moving us closer to renewable energy targets and away from polluting fossil fuels.

As political opposition falls away from offshore wind projects, opponents are turning more toward economic arguments against further development of this technology, suggesting it will increase electricity rates and ultimately cost jobs.

As with any new product or technology, the first U.S. offshore wind farm will undoubtedly face steeper costs of construction and development than its successors. But as the industry grows, experience, technological developments, and economies of scale will cause those costs to decline. Multiple studies of the offshore wind industry in Europe have shown that the “learning rate”—the rate at which the overall cost of offshore wind energy development declines over time—can be as high as 10 percent per year.

The question is not, therefore, whether the cost of offshore wind energy will come down, but rather how quickly. Cost-reduction rates will depend heavily on the amount of upfront investment the industry receives, including investment from the federal government. The billions of dollars in subsidies spent on mature industries such as oil and gas would go further in growing the nascent renewable energy technologies, which can in turn keep us competitive in the global market and create high-quality green jobs that reduce our dependence on foreign oil and help forge a new energy future.

Finally, and perhaps most importantly, to truly level the playing field for offshore wind or any renewable energy technology, we must incorporate the cost externalities currently being ignored for oil, gas, and coal-fired power generation—most prominently the societal cost of pollution it generates, including the greenhouse gas emissions.

Those who suggest Americans can’t afford to spend more for energy in the middle of an economic recovery are ignoring the fact that we are already spending more for our energy than the amount we see on our monthly utility bills or at the gas pump. We’re paying through Congress when we subsidize Big Oil. We’re paying at grocery stores when food prices increase as a result of an epic Midwestern drought. And we’re paying at hospitals as more of our children suffer from asthma and other maladies caused by unclean air.

One of the catchphrases tossed around cavalierly in Washington by both parties is the need for an “all of the above” energy strategy. Conservatives say the president is failing to achieve this when he makes any decision not endorsed by the American Petroleum Institute. But the reality is no true “all of the above” strategy can be complete if it leaves out a commercially viable, renewable, and domestic resource that has the potential to make major contributions to our country’s energy needs and our economy without perpetuating the negative and uncounted effects of our fossil-fuel dependence.

While no single energy source can turn back the tide of climate change that is already raising sea levels, acidifying our oceans, and contributing to extreme weather events, as President Obama said in his second Inaugural Address, a failure to respond to climate change “would betray our children and future generations.” Affordable domestic offshore wind can and must be a part of the response.

Michael Conathan is the Director of Ocean Policy at the Center for American Progress.

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Michael Conathan

Director, Ocean Policy