Over the past 40 years, the field of behavioral economics has emerged to explain why humans make irrational decisions. We talk with one of the pioneers of the field to find out what’s behind the choices we make, and how we can use this knowledge for good.
Guest Host: Marc Fisher
Hundreds of offshore wind turbines generate power across Europe, but here in the U.S. ambitious offshore wind projects have stalled in the face of local opposition and regulatory hurdles. This year, one long-planned offshore wind farm is slated to move forward off Cape Cod. Maryland also recently approved legislation to develop a project off the coast of Ocean City. We explore the future of offshore wind in America.
- Jim Lanard President, Offshore Wind Development Coalition
- Bryan Russo Coastal Reporter, WAMU 88.5; Host, Coastal Connection, 88.3 (Ocean City)
- Nathan Hultman Professor at the University of Maryland’s School of Public Policy and a Nonresident Fellow at the Brookings Institution
MR. MARC FISHERFrom WAMU 88.5 at American University in Washington, welcome to "The Kojo Nnamdi Show," connecting your community with the world. I'm Marc Fisher sitting in for Kojo. Coming up this hour, offshore wind has been part of Europe's energy equation for 20 years now, and today, hundreds of offshore wind turbines generate power there. But here in the United States, not a single offshore wind project has gotten off the ground.
MR. MARC FISHERAlong with local opposition, legal and regulatory hurdles have stalled several projects, but this year, it looks like two long-planned offshore wind farms are slated to move forward, including Cape Winds off the coast of Massachusetts. And the federal government is working to streamline the way -- the permitting and the regulatory process to smooth the way for future plans. Now, Maryland is getting into the act, recently passing legislation to help develop a wind project off the coast of Ocean City.
MR. MARC FISHERAnd joining us to discuss offshore wind farms are Nathan Hultman. He's the director of the environmental policy program at the University of Maryland School of Public Policy. Jim Lanard is president of the Offshore Wind Development Coalition, which represents seven offshore wind developers. And joining us from the studios of WRAU in Ocean City, Bryan Russo is the coastal reporter for WAMU 88.5 and the host of "Coastal Connection" on 88.3 in Ocean City.
MR. MARC FISHERAnd, Bryan, if we can start with you, set the scene for us over on the eastern shore. Are -- what is expected from this offshore wind turbine? Will it be invisible to beachgoers? And is there much controversy on the shore about this prospect?
MR. BRYAN RUSSOWell, Marc, it's -- I've been following this for three years, and it should be noted, you know, the third time was seemingly the charm for offshore wind in the state of Maryland. You know, when I first started covering it, you know, they started having these town hall meetings in Ocean City just letting people know what, you know, was coming up the pike here. At the beginning and for the first probably year and a half, two years, there was a lot of worrying concern about aesthetically what it would look like on the shoreline if these, you know, big huge turbines would, you know, affect the view, seemingly.
MR. BRYAN RUSSOBut, you know, it came out very quickly and eased a lot of concern because, you know, 12 miles off the coastline, 10 to 12 miles, where this wind farm is going to be. It's really only going to be about as large as if you were to hold your hand out in front of your face and it's basically the size of your thumbnail. So aesthetically, it's really not gonna have a huge amount of impact.
MR. BRYAN RUSSOI've even heard, you know, tourists -- tourism folks saying, you know, hey, we'll set up a boat company, and we'll take, you know, tours out there. So there are entrepreneurial people who are thinking about ways that offshore winds can help their business, you know, in Ocean City. And then the other thing too, I've spoken with some tourism folks that think that this national conversation about offshore wind anytime Maryland is brought up, obviously, Ocean City is brought up.
MR. BRYAN RUSSOSo anytime people throughout the country can hear about the wind farm that may happen off the coast of Ocean City, there are many people who believe that's good for tourism, and that's, you know, even before we get into the conversations about what it does for energy and the state's energy goals for 2020.
FISHERWell, we'll certainly talk about that as the hour goes on. You can join our conversation about offshore wind by calling 1-800-433-8850 or email us at kojo, K-O-J-O, @wamu.org, or you can send us a tweet to @kojoshow. If -- let us know what you -- your thoughts about offshore wind turbines. Do you support them? How do you feel about a wind farm off the coast of Ocean City?
FISHERAre you willing to pay a little more for your electricity to subsidize wind power? Jim Lanard, from the Offshore Wind Development Coalition, not a single one of these offshore farms has been built yet in the United States. What are the obstacles why it hasn't happened yet?
PROF. NATHAN HULTMANMarc, the first project was proposed about 12 years ago, and immediately, some of the folks in the backyard of the proposed site decided to get together, formed an organization to talk -- start funding against this. So there's a mini initiative funded by Bill Koch, who's related to the Koch brothers who don't like any of the renewable energy initiatives. And this fellow, Bill Koch, spent about $20 million with litigation fees challenging it.
PROF. NATHAN HULTMANThe litigation is winding down. The project has been formally approved by the federal government, by the state government. There's one last federal lawsuit that has to get resolved that Bill Koch is funding, and once that's resolved, Cape Wind will start by the end of this year building their project.
FISHERSo is his opposition and the money that is supporting the opposition entirely based on support for other forms of energy? Is that what's mainly driving them? Or are there -- these aesthetic or other issues? I know that -- I understand the Kennedys were opposed to this because they didn't like the prospect of seeing something off their coast of their estate.
HULTMANWell, Bill Koch is a big petroleum carbon-producer, and he clearly is -- eager to see the slowdown of renewable energy so he can continue to pump his carbon into the atmosphere. He also is a sailor, and in his case, not in my backyard really means not in my ocean. He spent $65 million building an America's Cup sailing vessel that won the America's Cup, and he thinks that Nantucket Sound where Cape Wind is going to be built should be his private backyard.
FISHERNate Hultman, from the University of Maryland, give us a sense of sort of the full scope of this opposition to offshore wind farms. It's not just a regulatory and legislative hurdles. There are -- in addition to the Koch opposition, there are other kinds of opposition.
HULTMANWell, Marc, that's right. While there might be individuals who have particular access to grind about offshore wind and I think that the effect of the not-in-my-backyard is particularly acute with offshore wind, and it's something that we will in fact as we roll this particular resource out have to be very conscientious about. It's a lesson that was learned in Europe as they were doing their offshore wind projects as well.
HULTMANBut there are certainly other concerns about offshore wind, not of which should be necessarily seen as fundamental obstacle to the development of the technology, but just like with any other energy technology, you can have some strengths and weaknesses. And just like when we look at our energy policy, we have to evaluate what we want to cross a number of different factors. We have to look at the effects in the economy.
HULTMANWe have to look at the effects on our energy security, effects on human health and the effects on the environment. And if you look at those four things, offshore wind can be a very solid part of the overall mix.
FISHERAnd the price is considerably more than some other forms of energy. The -- according to the Energy Information Agency, wind cost about $330 per kilowatt hour, which is double that of nuclear and triple that of coal. So, Jim Lanard, is there a willingness that -- do people's concern for carbon output of those other forms of energy outweigh their desire for lower prices?
MR. JIM LANARDSure. First, if we internalize the cost of carbon and the risk of nuclear power generation and then created a level playing field, we would be able to compete without asking for federal or state support. That's number one. But number two, what Gov. O'Malley has done and congratulations to him for being so tenacious about this and working with the state legislature. As Bryan said, the legislature looked at it three times before they passed it.
MR. JIM LANARDThe governor has required a net economic benefits test that will show that there are enough jobs and economic development and manufacturing being created to offset the additional costs that ratepayers might be asked to pay. And they've also gone further and kept the amount that a ratepayer would pay to about $1.50 per utility bill so that we can start creating a new industry here in the United States, one that's been operating successfully in Europe and employing tens and tens of thousands of people for 20 years.
FISHERAnd that extra $1.50 a month, there was a recent survey that found that 60-odd percent of Marylanders support that idea. Nate Hultman, why do they support that? Is it just the sense that this is somehow a cleaner form of energy?
HULTMANI think it's important when we're thinking about our energy system to again look at those four components that I mentioned earlier -- economy, security, health and environment. And when we look at it, it's a portfolio of technologies, and we would expect we're gonna have some legacy technologies that will continue to operate. But we also want to be developing constantly new and better forms of technology.
HULTMANAnd it's important to note that, yes, while offshore wind is more costly now, the expectation is just like we've seen with many other kinds of technology. As you build experiences, you roll it out. As you develop economies of scale, you absolutely expect that the cost per kilowatt hour delivered will in fact go down over time. So the reason that, you know, when we're looking at surveys of Marylanders in this case, why do people want offshore wind?
HULTMANWell, they probably want it because just like when we go to auto dealer and we don't just demand to have the cheapest car, we sometimes go, and we ask: Well, what are the features that I get in different kinds of vehicles, and what's my willingness to pay for different kinds of vehicle for my needs? It -- that survey result just underscores that people do want a functional energy system. They want energy security, but they also want a clean energy system as well.
FISHERJim Lanard, the offshore wind project that is probably farthest along in this country is Cape Winds in Massachusetts, which has nonetheless taken years to get off the ground or off the water, what was the main holdup there and what lessons can be drawn from that in applying for -- to expand wind farms across offshore areas in the rest of the country?
LANARDCape Wind and Jim Gordon, its founder, were one of the founding members of the coalition that I work for, which also represents a lot of the supply chain, and he had a vision. He was a man really ahead of his time, so he came up with the idea that it's time to diversify the electricity portfolio, let's move into renewable energy and scale it up, which really offshore wind is ideally suited for because the power demand is very close to where the wind would -- the energy would be generated were just bringing the power 10 or 15 miles offshore right to the hub of the need for this.
LANARDSo as a first mover project, just as Gov. O'Malley saw, he had moved this legislation through his legislature three times. First mover initiatives always are gonna get push back because they've never done that before. That's what happened in Massachusetts. That's what happened in Maryland. And as people get more comfortable with this and see that it's real and get a better understanding of the great successes in Europe, there will be a comfort level, and we'll see round two and round three of offshore wind moving much more expeditiously, efficiently, and we'll also see the economy of scale achieved so the prices will down.
FISHERWe have a tweet from Jan saying I'm an Ocean City resident and supporter of alternative energy sources, including wind power, and I'm curious about the effects on wildlife, especially birds. Nate Hultman, what does the research tells about that?
HULTMANWell, the research shows that if you're careful about citing the turbines, that you can avoid most of the problems that have plagued in particular some previous examples of onshore or land-based wind turbines that have been cited in migratory flyways. So clearly, you wanna cite it properly avoid particularly hazardous areas for the wildlife. It's thought that the areas that we're looking at in -- off of Ocean City are relatively benign locations, but, of course, this is something that can come up and ought to be discussed and evaluated as part of the environmental impact statements when the turbines are going up for permitting.
FISHERJim Lanard, there's -- in some of the opposition from environmental groups, there is this notion that the turbines literally slice up the birds. Is that not the case?
LANARDThat is not the case, actually. And, Jan, I appreciate your tweet. I'm gonna respond to that as well as Marc's question. I agree with Nate. We're building these wind farms far offshore, and the migratory pathways are closer to land so -- and we also have studied hundreds of thousands, actually millions of flights of birds in Europe. And the birds do two things. These turbines are so far apart. They can be half a mile to a mile apart that they can see them and they fly either around them, over them or between them.
LANARDThe other issue, though, that I would like to raise is that there are marine life issues that we have to be very sensitive to, particularly the endangered species, the North Atlantic right whale, which migrates from the North around Massachusetts to the Georgia-Florida border. And we do a lot of heavy construction to put wind farms up so that they stay in hurricanes and other types of storms, and there's noise associated with that.
LANARDSo we're going to have to be very careful to make sure that we have what are called monitors on these vessels that -- marine mammal monitors -- observers so that if we see one of these important species, we stop our work and we make sure that they have gone away before we start developing again.
FISHERAnd along the same lines, there's some concern, I gather, from fishermen about the cables that carry the energy being tangled with their lines and nets and so on.
LANARDWell, two points there: One, we will bury all of our cables two meters more than six feet below the seabed floor. And if there were a storm that came out, we'd actually bring a remote-operated vehicle to make sure that the cable didn't get dislodged with turbulence on the seabed floor. So we have a great degree of confidence in there. The cable lines will be marked. We spend a lot of time with commercial fishermen, dredgers for scallops, gillnet fishermen that dropped their gills and anchor them onto the seabed floor.
LANARDTheir anchors go down about 14 to 16 inches, will be six feet of 72 to 80 inches below the seabed. So we're not terribly concerned about it. In fact, we won't have exclusion zones, and we will welcome recreational/commercial fishermen into the wind farms where we think we'll be creating -- we know we'll be creating new habitat because these foundations will serve as feeding grounds. Mussels and other marine life will attach themselves to these foundations, and the fish will be coming there to feed, and it would be a great place for recreational fishermen to come out and have a good time.
FISHERWhen we come back to continue our conversation about offshore wind farms, we'll talk with Bryan Russo about what's happening in Maryland and off the coast of Ocean City in the coming months. You can join our conversation by calling 1-800-433-8850. I'm Marc Fisher of The Washington Post. You're listening to "The Kojo Nnamdi Show."
FISHERWelcome back. I'm Marc Fisher, sitting in for Kojo Nnamdi. And we are talking about offshore wind farms with Nate Hultman, director of the environmental policy program at the University of Maryland School of Public Policy, Jim Lanard, who's president of the Offshore Wind Development Coalition. And joining us from the Eastern Shore, Bryan Russo, the coastal reporter for WAMU 88.5.
FISHERAnd, Bryan, take us up-to-date on what's happened in Maryland. This has been a long time coming. But this year, Gov. O'Malley just recently signed the Maryland Offshore Wind Energy Act. What does that mean? And what will it do?
RUSSOWell, you know, it's interesting because you talk to environmentalists, you talk to politicians, you support offshore wind and they're all very excited about it. They think this going to be a very a big deal. But I guess on the flipside of that, you talk to people who live here on the coast, and there's a lot of indifference, I guess, is really the only word I can describe it. You know, offshore wind is a few years away. I mean, the Cape Wind project has been developing for a while.
RUSSOIt may break ground or get started this year. You know, offshore wind in Maryland, more than likely, is going to be some time away, so many folks here on the shore, you know, some of them don't even believe it's actually going to happen. They look just a bit a north in Delaware where in 2011, you know, NRG Bluewater Wind pulled out of a power purchase agreement that they had with their offshore wind project, citing that it just wasn't going to be profitable for them.
RUSSOSo there is a lot of indifference and speculation about whether or not, you know, offshore wind off the coast of Ocean City is actually going to happen anytime in the near future. You know, as far as the political standpoint for people here on the coast, they've been paying much more attention to proposed gun legislation than they have about the offshore wind bill this year.
FISHERJim Lanard, what's your best guess on when this will actually happen?
LANARDWell, the first step will be the leasing of the area that the federal government has indentified that's suitable for offshore wind. Right after that, the state of Maryland will hold a competitive process for those lease holders to bid for the right to sell that power into the state of Maryland. That's probably a two-year process. During -- and at that time, the developers will start the federal permitting process. That could be another couple of years, two years to build.
LANARDSo I think we're looking at a five- to seven-year window. But a lot of the work gets done early. The port has to be prepared. That's a huge investment. The developers are gonna be partnering with the ports to make sure that they can accommodate these 700 ton pieces of equipment. And the jobs in the workforce will have to be prepared for this effort. So there will be things that happen before steel gets into water, and I think that Bryan is right.
LANARDThere's indifference now, but the excitement will grow as the community and trade and technical schools start really gearing up the programs to get people ready to work in the marine environment.
FISHERLet's hear from Jean in Springfield, Va. Jean, you're on the air.
JEANHi. I was wondering, does this change the pattering -- the wind pattering, you know, of the atmosphere?
LANARDThat's a great question. The wind is disrupted as it blows through a turbine. In fact, we have to spend a lot of time modeling the wind resource between the first turbine and the second row of turbines to make sure that it's fully up to speed again so we can get the maximum energy out of that area. By the time, Jean, that the wind is through the last turbine in a row of, say, seven or eight turbines, it's already picking up speed again.
LANARDSo, yes, we're taking a slight bit of energy out of the atmosphere, and we're turning it into electricity, but it's very hard to measure that the wind speed is going to be virtually the same once you get passed that wind farm.
JEANAll right. Thank you.
HULTMANSure. Just to add a brief point that this is all very small-scale relative to, you know, kind of broad meteorological pattern. So we're not certainly talking about any kind of noticeable change in weather or the wind.
FISHERWe have an email from Jeff in Germantown, who asks, he says, "Wind farms are often located in bird flyways precisely because of the winds needed by both wind farms and birds." And he says that this results in many bird deaths due to collisions with wind turbine blades. "Is your guests aware of the bladeless wind technology that is being tested, and has Maryland irreversibly committed to the blade version?" Jim.
LANARDI'd like -- yeah. I'd like to just question Jeff's initial assumption about the location of wind farms. There were a couple of very early land-based wind farms that were placed in unfortunate areas. We've learned those lessons. But as far as the offshore sector is concerned, we're so far off that birds are not flying around at that attitude.
LANARDThey're either up higher up in the migratory pathways we talked about then, or they're going to be flying around it. So what -- the technology that Jeff's talking about won't be commercialized for a decade or two, and the scale is very much smaller than what a turbine that we'll build out in the ocean is. So there will be -- we have to do two years of bird studies before we can locate the wind farm in that area.
LANARDAnd that means that we're studying and counting birds by airplane and by vessels going across our wind farm every month of the year for two years to make sure that the federal government has enough data to determine that the birds and other species will be protected. Just to give you a sense, this year, a club wants to do study, and they thought that the likelihood of bird strikes in offshore conditions for offshore wind would be one bird per turbine per year. To put that in perspective, house cats take about 400 million birds a year and another 400 million birds fly into tall buildings every year.
FISHERNate Hultman, give us a quick primer on the advantages or disadvantages of offshore wind farms versus those located on land.
HULTMANWell, there are a couple of reasons that you would want to look at it. The reasons that offshore wind is generally preferable from a technical standpoint is that number one, they are farther away from sort of human settlements. You have a -- you know, less problem kind of sighting them and making sure that they're not gonna disrupt sort of human settlement and human habitat, as well as the kind of land-based environment. So that is one of the big difficulties that land-based wind often runs into.
HULTMANThe other reason that we want in the long run to look at offshore wind is that the resource is excellent, and it's a steady high-speed, high-density, you know, it's at sea level. So the area is very sort of dense and thick. And so it actually pushes the turbines very effectively. So the offshore wind resource is very good, and it turns out that we in the Mid-Atlantic region area and sort at the U.S. East Coast have proximity to what is an excellent offshore wind resource.
HULTMANThat's one of the reasons that we're looking at this as part of not only our vision for kind of a developing a cleaner energy system but also one that provides more energy securities for domestic energy.
LANARDSure. I'll just follow up. I agree with Nate. One of the great things about offshore wind is that we are what's known as a load-following resource. What that means is as the demand picks up in the summer afternoon, air conditioners are being turned on, people are coming home and starting to cook, the wind is actually picking up during that same period. So we have our maximum production in the summertime just when the demand is the greatest. On land, the wind is blowing the most at night time when the demand for electricity is often at its lowest.
FISHERSo is the energy that's being generated in that moment, is that then used instantly, or is it stored somewhere else in between? What's the connection between the time when the energy's collected and when it's actually used?
LANARDIt's immediately put into the electric grid. We don't have economical energy storage yet, other than hydropower which can be actually pumped up a mountain, stored during the evening when the electricity price is cheap to do that and then they flow it down the mountain, spin generators during the day. Other than that, the energy storage is not commercialized yet.
FISHEROK. Jim Lanard is president of the Offshore Wind Development Coalition and Nate Hultman is director of the Environmental Policy program at the University of Maryland's School of Public Policy. Let's hear from Mike in Silver Spring. Mike, you're on the air.
MIKEHi. Yeah, to that last point. I understand that there's a city in Spain that is totally powered by wind and that they actually do have storage in a kind of salt brine or something like that or salt mine where they've actually created, I guess, some kind of storage battery for the power produced during the day or during the evening, and then they use it during the day. Comments?
HULTMANWell, there -- so I'm not -- this is Nate. I'm not completely familiar with that particular project, but let me return to a point that Jim made which is that in general, we have very few options for large-scale storage of electricity right now. Now, there are a lot of really good ideas out there about what we might be able to do to achieve a kind of commercial-scale storage of electricity. This Spanish town might have one of those sort of a test program.
HULTMANCertainly, people are looking people at even things like batteries, they're looking at mechanical storage. There's a lot of ways that we could imagine we could store energy economically. but right now. most of those are very site specific, or they're technologically a few years down the road.
FISHERJim Lanard, Mike asked about a city in Spain and a year just back from Europe where apparently wind -- offshore wind is well more advanced than it is here. How did the industry there get beyond the obstacles that it's faced here and sort of what's the political climate there now?
LANARDThe driver for European countries that are really growing the offshore wind industry is that they have an energy policy that makes sense. The United States really doesn't have an energy policy. We're not looking to find ways of reducing carbon in a legislative way right now, so different states adopt the various policies, but we don't have a national policy. In Europe, they really are worried about energy independence.
LANARDThey don't have the homegrown energy sources that we have. We've got so much coal and oil and gas that our policymakers aren't driven to find the alternatives, and they haven't embraced the climate change issue yet. That's one of the main drivers there, and now the European countries are really enjoying the economic benefits -- the manufacturing. I toured many factories over the last week in Denmark and Germany, thousands and thousands of workers making really good wages in high-skilled jobs producing parts.
LANARDThere are 8,000 parts in a turbine, plus you have the foundations, you've got vessel construction. We're gonna bring this over to the United States. We're gonna create this industry here, and I think in five to 10 years, we're gonna see a huge new industry coming with great workers and great opportunities for the future.
FISHERLet's hear from Jay in Silver Spring. You're on the air.
JAYI'm a former resident of Cape Cod (word?) and kind of familiar with the Cape Wind project up there. But my question now as a Maryland resident -- I get out to the shore quite a bit is one of my concerns would be the risk and benefit of the turbines and the difference between the private and public ownership which we see in Europe.
JAYI guess in Massachusetts, a lot of people discuss this low kilowatt price that would be available to consumers, but really, the turbines produce energy that gets dumped into the grid and would be sold probably at a price point closer to what the market is bearing and not at a -- there will be no direct discount or benefit to the community that they serve. And along the same lines, what happens in the event of a disaster, and what happens in the event of decommissioning these turbines at the end of their lifespan?
LANARDSo let me...
JAYIs there money set aside for that? That's...
LANARDSure. I'll work backwards, Jay. Thanks for those comments. First, on decommissioning, all the project in federal waters will be required by federal regulation to have a decommissioning plan, and funds will have to be put in an escrow account to ensure the decommissioning. Right now, the regulation requires that we take the turbine and the foundation out about to 10 feet below the sea bed floor.
LANARDWe expect, however, that as the habitat that's created by these turbine foundations is proven that the federal government may ask us actually and the recreational commercial fisherman may ask us to keep some of the foundation above the sea bed floor staying in place because it's such a great habitat for fish, and it really become great fish breeding ground. As far as weather-related risk to the turbines, we'll build these wind farms to withstand at least a Category 3 hurricane.
LANARDOur insurance premiums will be between 10 and $40 million a year which means that the insurance companies which are insuring one or $2 billion dollars worth of investments out there are going to be creating their own view and analysis of the projects to make sure that they're not taking on more risk than they can afford.
LANARDSo in addition to the developers trying to get it right 'cause they wanna sell electricity into the grid, and the banks also lending this money, I wanna make sure that they get paid back for the money they're lending. Also, another independent party assessing the engineering and design will now see the insurance companies.
LANARDSo with that, when we get a hurricane, say, we turn the blades into the wind so that there's very little resistance, we then change the angle of the blade, just like an airplane wing changes when it wants to land or when it wants to take off, so there's less aerodynamic lift potential. And we then move this out of -- we take the turbine out of the gear and lock it down with break.
LANARDBut as soon as that wind gets below 56 miles an hour, we reverse the efforts because we wanna capture that wind at 55 miles an hour and less so that we can put more electricity into the grid. This is all done remotely by our operators on land.
HULTMANSure. Thanks for the question, and let me address that first question on the price point. It is -- any of these technologies we're talking about for the consumer, the consumer will see just the regular residential price. And well, if it's a residential consumer, if it's an industrial consumer, they have different arrangements with the utilities. So on the consumer side, you'll see the same price for the electricity that you would've seen before. In other words, it all goes into one bill.
HULTMANNow, the addition with the offshore wind is that there -- in Maryland's case, there is a provision for an additional fee up to, as Jim mentioned earlier, up to $1.50 extra per month. But that depends on demand and use. So basically, there's no price differentiation based on whether the electricity you're getting has wind or no wind.
FISHERBryan, we're so -- we had heard Jim a couple of times now talk about the jobs that are created by offshore wind farms. How much of a factor is the prospect of those jobs in building support for this plan on the Eastern Shore? Obviously, there's a great economic need there given the economic difficulties in recent years.
RUSSOCertainly. I mean, unemployment rates here on the coast are amongst the highest in the state. Obviously, in Worcester County, where Ocean City is, you know, that is a bit misleading because of the seasonal nature of the economy here. Obviously, in the winter, there many people who are not working. But at any rate, unemployment is a huge problem. If you really look at it and go down to brass tacks, there's only a few different industries -- tourism, of course, you know, real estate, which, obviously, since the economic downturn, is, you know, slowly making a recovery.
RUSSOAnd then, of course, you have the poultry industry. And then you also have a growing medical industry because many people retire here. So, you know, as we have a proverbial graying of the coast, more and more medical companies are coming here, and that is a growing part of the economy here on the shore. But manufacturing is vital, and there's certainly a need for that. There's a lot of, you know, blue-collar workers that are looking for work.
RUSSOAnd, you know, you -- I had a gentleman on "Coastal Connection" about a year ago who has a company called AC Wind. They build the large wind turbine propellers and the casings on the inside, the fiberglassing, you know, the things that make the turbines run. Basically, he wants to set up in Salisbury, in an old ship factory, and it's a perfect location. He's hoping to bring about 500 jobs.
RUSSOSo, you know, based on where the shore is geographically, you know, all those green jobs that you heard, you know, during the debates about this in Annapolis, you know, it could make a huge impact here on the shore. And if you think about it, because these things are so big, you know, obviously they're going to -- you know, they're not going to ship them from Europe or across the ocean because it would just be too darn expensive. So Maryland is in a perfect position, mid-Atlantic region, you know, to really, you know, capitalize on all these potential green jobs.
FISHERWhen we come back after a short break, more on the developments in Maryland, as well as the prospects for wind, offshore wind, in Virginia, and more of your calls. You're listening to "The Kojo Nnamdi Show." I'm Marc Fisher. We'll be back in a moment.
FISHERWelcome back to "The Kojo Nnamdi Show." I'm Marc Fisher. We are talking about offshore wind farms, which may be coming to Maryland and, Jim Lanard from the Offshore Wind Development Coalition, perhaps to Virginia as well. The federal government this year has started its first competitive bidding for land off the coast to be used for wind turbines, including 112,000 acres off the coast of Virginia. Is Virginia as good a prospect for this technology as Maryland, and what are the issues you're facing in Virginia?
LANARDMaryland and Virginia have very different structures for their electric utilities, and it determines a great deal about how the policies will be developed for offshore wind and other energy generation. So, in Virginia, the utility there owns the generation that it -- or it can choose to buy whatever generation it wants to feed into the market. In Maryland, the utility commission actually regulates and oversees who the generators are. That's why...
FISHERSomehow not a surprising distinction, given the politics of the two states. Right.
LANARDAnd as a result, there is a monolithic utility in Virginia, Dominion Resources, that is moving forward with offshore wind, and we'll see how they decide to take what next steps. They've received a U.S. Department of Energy grant for up to $4 million to pilot some new technology for foundations using a turbine from one of our companies, member company Alstom, that will be put in the water the next couple of years.
LANARDThese will be in the nearer term than the big utility-scale wind farms. And I guess based on Dominion's experience there, Dominion Resources, the utility in Virginia, will decide whether to ask its utility commission to allow them to develop and own a utility-scale wind farm.
FISHERSo some years farther off, perhaps, than Maryland.
LANARDThey're taking a baby step now, and then they'll decide if they want to go further. Maryland has looked at the European experience. They've seen all the lessons learned there and said, let's get in this and let's start creating jobs right now. We don't need to wait any longer.
FISHERSpeaking of Europe, Art in Olney has a question about wind energy there. Art, you're on the air.
ARTThanks very much for taking my call. Yeah. Last summer, my wife and I were on a cruise in the Baltic area, and not only did we see lots of land-based turbines driving through East Germany to Berlin, but when we were in Copenhagen, we saw just a whole wind farm basically right in the middle of Copenhagen harbor, which appears to me is that they've accepted it as a mainstream source of energy.
ARTAnd I was just wondering. You know, has anybody here looked at how they were able to put it right in the middle of a commercial setting like that? And, you know, could we think of putting it in the middle of Baltimore harbor to -- you know, it obviously would cost a lot less to transport the electricity you generate rather than being way offshore. Thank you.
LANARDArt, thanks for your comments, and welcome to the club of offshore wind supporters.
ARTI've got solar panels on my house, just so you know.
LANARDWell, you're an all-of-the-above renewable energy supporter. We like that very much. I saw the Middelgrunden wind farm that you're talking about just two days ago. There are 20 turbines in a very gentle, arched array about a mile offshore, and these have become, as Marc talked about earlier, a real tourist attraction. The major tourist attraction in Copenhagen is a mermaid by the sea, and right beyond her, about a mile off, are these turbines.
LANARDWe wouldn't build a utility-scale wind farm that close to shore. These 20 turbines are not the largest. And when you build 40 to 70 turbines in an area, they're spread really far apart, and we get into the view shed issues. We get into some of the issues that Nate talked about with avian and bird issues. So we like to go much further offshore.
LANARDBut to your point about tourist attraction -- and Marc referenced this, and Bryan talked about it earlier too -- I will tell you that in Cape Wind, the major ferry company that brings people to Nantucket and Martha's Vineyard from Cape Cod has been designated the major tourist provider for Cape Wind and will be taking people out to see the wind farms as they're being constructed and when they're operating. It is a sight to behold, and people really are excited by it.
FISHERThat's Jim Lanard from the Coast -- Offshore Wind Development Coalition. Nate Hultman from the University of Maryland, what -- as you look at the range of energy sources that are available, has the availability of cheap natural gas proved to be a disincentive to these new industries such as offshore wind?
HULTMANThat's a great question, and the context of this is that, you know, five to seven years ago, we just didn't have this abundance of fracked shale gas that we have today. Now, of course, fracked shale gas has some associated concerns that I think we don't wanna get into in depth in this conversation. But the reality is that that has dramatically lowered the price of natural gas here in the United States, not necessarily in other places 'cause it's very site-specific.
HULTMANBut here in the U.S., we do have an abundance of natural gas right now. Now, there are a number of new demand sources that may come online that would -- could potentially push that gas price back up a little bit. But the reality is that we're looking at a 10- to 20-, maybe longer period, 20-year period of gas prices that are substantially lower than they were maybe 10 years ago, seven years ago.
HULTMANDoes that affect renewable energy in a particular offshore wind? It does if you make one assumption. If you just assume that everything is competing just on the basis of what is the lowest costs, the cheapest kind of energy you can get, that makes natural gas a pretty attractive option. It's relatively inexpensive. It can be occasionally cheaper than even coal-fired electricity. And in addition, unlike coal, it's a substantially cleaner option.
HULTMANIt's still a fossil fuel so it still has some negative environmental consequences, But it's cleaner than coal is, and that's generally good. The one issue comes up in terms of -- Jim mentioned before the question of climate change. And right now, our energy system is one that very few economists would agree is a system that allocates our resources efficiently. The reason is that there is a number of non-priced externalities in our system, health externalities, environmental externalities that were not currently accounting for and that actually can skew the investment.
HULTMANIf you look at the gas issue in the broader context, including the externalities of environmental problems, certainly renewables look much better. But right now, if you're just making them compete on the basis of cost alone, it does actually skew the calculation of it.
FISHERI wanna bring in Bryan Russo for a moment on this point because, Bryan, in this sort of age-old tension between environmental impact and price, that obviously plays out in the political arena in how these new technologies are brought along. And have you detected in the Maryland battle over this issue that tension? And does -- is there a Republican-versus-Democrat or libera-versus-conservative aspect to this in the way the Maryland debate has developed?
RUSSOOh, absolutely. I mean, I think the big question that everyone's sort of having to ask themselves is the high cost on the front end to ratepayers and developers of making offshore wind a reality worth, you know, the long-term benefits to our planet and to, you know, our local economy? You know, I think there's a lot of people that are struggling with that. I mean, you know, we mentioned fracking a minute ago. If you look at polling, the more people learned about fracking, the less the support goes down.
RUSSOAnd the more people are learning about offshore wind, the support seems to increase. You know, humans were creatures of habit. I mean, this is a new technology. And yes, it worked overseas but, you know, it hasn't worked here in America. So I think the Cape Wind project, it could be the proverbial first domino that really moves this forward. If it comes online, starts being successful, I think more people are gonna say, well, this is a good idea, you know, even though there's 40 or 50 of them, you know, overseas.
RUSSOSo I think -- you look at it politically, I think Republicans here on the shore have basically had to go against anything that the governor was moving forward with. I spoke with one before the legislative session started this year, who said, you know, I'm adamantly opposed to offshore wind, but I think they have the votes. And he basically, you know, just put all of his eggs in the basket of fighting gun legislation. So I think moving into this, they thought that the third year was gonna be the charm.
RUSSOThe votes were there. The support was there. And there really wasn't much that Republicans could do about it. You know, it just seem to be there. I think, you know, it's gonna be interesting, you know, what happens and when the first one gets online if public opinion, you know, supports it even more.
FISHERJim Lanard, we have an email from Will in Silver Spring, who did engineering research on ethanol in the early 1908s and found that several decades later after the federal and state government set up subsidies and incentives, we now have a large industry that consumes more fossil fuel than the biofuel that is produced. And that still depends on continuing public subsidies and is still controlled by a few large companies.
FISHERWhat have Massachusetts and Maryland done to assure that we aren't fostering another industry that will depend on corporate welfare for a few large companies and not live up to its green potential?
LANARDWell, there are three points I'd like to make. First, the oil industry is as rich as it's ever been. It's making billions and billions of dollars of profits but it's still getting federal subsidies. So we talked about wanting a level playing field and we also talked about an all-of-the-above strategy. An all-of-the-above strategy would be when all the different energy sources can compete fairly against one another. And they talked about it again, internalizing those externality cost related to health impacts, sea level rise and so on.
LANARDSo we believe that these first-mover projects are a way to jumpstart in history that will create jobs and economic development and will be able to competitive as our policies look to some of these things. And when we have more severe storms like Superstorm Sandy and some of the flooding that we've seen, I think that the federal legislators will wake up. I did wanna mention the Democrat versus Republican. On the federal level, we have tax credit legislation that we need to start this industry off.
LANARDAnd in the House of Representatives last year, we had 76 co-sponsors, 75 of them were Democrats, not because we didn't try. We speak to moderate and liberal Republicans in the House of Representatives in Washington, D.C., from a number of states. They are so afraid of the Tea Party challenge from their right that they won't do what they already philosophically believe in because they want to stay in office.
LANARDAnd what we're encouraging them to do is to stand up for their beliefs, and we'll back them, and the environmental groups and the other stakeholders will back them if they get into that type of challenge.
FISHERHere is Nedra in Harpers Ferry. Nedra, you're on the air.
NEDRAYes. Hello. I'd like to go back to the economics arguments about this. I'm a native of a Marcellus Shale region in Appalachia. And of the promises made the legislators and to the people of Ohio and now West Virginia is -- was that lots of jobs would be generated. And I hear that today about this, the wind energy. And, in fact, jobs are not being generated.
NEDRAPeople are being brought in from other energy-rich states like Oklahoma and Texas to do the work. And this is becoming an issue of great concern to the natives who thought they were investing in job generation. Thank you.
FISHERNate Hultman, is there -- is that a proper concern to have?
HULTMANYeah. Nedra, that's a great question. And certainly, this dovetails a little bit with the previous comment about ethanol and to raising concerns about government policy to encourage one kind of energy. Does it produce all of the benefits that we hope it might at the outset of the program? These are great things to ask at this point in the policy process and to make sure that we have plans to ensure that, for example, if there are jobs that we hope to get, that we look at how to foster those jobs if they're being sold as local jobs, how might you actually encourage that.
HULTMANI know that the governor's office has been very concerned and is developing some strategies to ensure that, and we'll hope that they are successful. In addition, there is this question of ensuring that, as a general principle, were not having to have a new technology subsidized infinitely, right? The whole idea is that we're gonna be able produce a technology that's viable, an industry that's self-sustaining and then could reduce the amount of -- and eventually potentially eliminate the amount of support we're giving.
HULTMANThe example of this that I like to point to is Denmark, which did, in fact, provide very generous initial support to its wind industry in the early '80s, developed a world-beating wind industry and then managed to successfully pinch out its subsidy system so that they're, you know, they still are sort of support about the technology, but they're not offering the same level of subsidies they were before.
FISHERWe're running out of time, and I'm not gonna be able to get in Dan in Frederick, but his question is one I'd like to get a quick answer to you -- from you on, and that is, can he put in a wind turbine on his own property? Jim.
LANARDYes. The laws will allow it. There are local zoning issues that you have to address related to what's called community wind. And there are community wind advocates and associations. So, Dan, I would recommend that you take a look, Google community wind and you'll find all the resources and some of the opportunities to move forward.
FISHERJim Lanard is president of the Offshore Wind Development Coalition, Nate Hultman is director of the environmental policy program at the University of Maryland School of Public Policy and Bryan Russo joined us from 88.3 in Ocean City. I'm Marc Fisher of The Washington Post, sitting in for Kojo Nnamdi. Thanks so much for joining us.
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