by Jon Sanders
Director of the Center for Food, Power, and Life, Research Editor | John Locke Foundation
Having grown accustomed to issuing edicts as if his office combined legislative and executive power, assisted by ideological support from media who lack the inclination, fortitude, or knowledge to challenge the assumption, on June 9, 2021, Gov. Roy Cooper “ordered” that “The State of North Carolina will strive for the development of 2.8 gigawatts (“GW”) of offshore wind energy resources off the coast of North Carolina by 2030 and 8 GW by 2040.” His top stated reasons for so doing were economic: “clean energy resources create North Carolina jobs, grow our economy, and help reduce climate change pollution.”
But a new study presented before the North Carolina Energy Policy Council May 18 found that following Cooper’s offshore wind energy order would have devastating economic effects for North Carolina’s people, economy, and marine and avian wildlife.
The study by David T. Stevenson, Director of the Center for Energy & Environment at the Caesar Rodney Institute of Newark, Delaware, examined several aspects of Cooper’s wind order:
Note: This aspect sets Stevenson’s study apart from the typical industry/government studies of offshore wind (and other projects). Those tend to focus only on the industry receiving the government favoritism and support, report on expected jobs (even short-term construction jobs) and economic activity, and pretend those will be all newfound activity. Directing resources, however, is redirecting resources from people’s preferred uses. But those studies never consider the impact to people and the economy of redirecting uses to things that are by definition not market-based choices. Those lost uses would have had their own job impacts and economic activity, which are forgone by the government’s choosing instead.
Those studies never state so directly (and often seem never to realize the assumption in the first place), but their implicit economic model requires the belief that all the resources offshore wind energy projects will use are right now lying about unused. Then government shows up and orders they be put to use in building — in an impressive coincidence — the very thing that government lobbyists, cronies, and special interests are demanding.
It’s the only way to project no actual opportunity costs from the order, let alone costs that don’t exceed the benefits. And they certainly don’t consider the economic impacts of producing higher electricity rates on families, small businesses, and large industrial users. But since electricity is a basic human need, such a necessary resource, the impact of raising rates behaves like a regressive tax hike and resounds throughout the economy.
Stevenson’s study understands that aspect as well as the importance of considering other impacts, including especially to marine and avian life and habitats.
In examining the electric premiums that ratepayers would have to pay “every year for the next twenty years” for this order, Stevenson used U.S. Energy Information Administration (EIA) figures on capacity factors and levelized cost of electricity to show just how expensive offshore wind energy development is (as discussed here previously, it is the most expensive form of electricity generation — while our least expensive form is preexisting nuclear power plants, which are also zero-emissions resources, the most efficient, and strangely opposed by the Cooper administration). But Stevenson acknowledges another problem certainly not considered in industry/government studies: inflation.
The EIA estimate does not include the recent extreme material cost rise that is lifting the cost of solar, wind, and batteries by up to 25%. In addition, offshore wind is expected to add another 25% to costs for the massive increase in onshore transmission infrastructure according to the Federal Energy Regulatory Commission. The premium cost of offshore wind could be as high as $174/MWh. (Emphasis in original.)
Resulting higher electricity rates will reduce employment, make it harder for families to afford other needs and wants, and create significant net job losses. Stevenson estimates over 15,000 to nearly 24,000 permanent job losses from Cooper’s order of 2.8 MW of offshore wind development by 2030. Going further, however, Stevenson estimates:
The 8,000 MW target could cost 45,000 to 67,000 jobs. Additional jobs may be lost to negative impacts on tourism and commercial fishing. (Emphasis added.)
Speaking of tourism and commercial fishing, here are Stevenson’s findings with respect to those matters (emphasis added):
• An area about three times the size of Raleigh will be closed to commercial fishing, which adds $300 million a year to the state’s economy and 5,500 jobs, and may increase vessel collisions, kill endangered whales and migratory birds, and may injure marine life at the bottom of the food chain
• Views of offshore wind projects threaten the $731 million a year tourism industry in Brunswick County, NC and the associated 4,475 jobs with losses as high as $2.9 billion over twenty years and 1,700 jobs. Studies showing negative viewshed impacts on tourism used visualizations of 579’ to 600’ tall turbines, but turbines now could be as tall as 1,041’ [317.5 m]. New York created a 20 mile exclusion zone, and Brunswick County wants the same 24 nautical mile limit as the Kitty Hawk lease area
• A projected CO2 savings of 4 to 8 million metric tons a year will reduce global temperatures at most an undetectable 0.0004 degrees F, at a cost of up to $648/ton when carbon offsets are selling for about $16/ton
Next week the Locke Foundation will release a comprehensive Policy Report on the costs and impacts of Cooper’s wind order. Stay tuned.