Rouille

I've been meaning to write about wind for a long time and today's NYT gives me a good excuse. You can go read their article on the Nantucket sound offshore project; it gives a good summary of the kind of silly behavior we see around energy production and outlines many of the (real) issues surrounding project development of any kind nowadays.

The immediate reason for the article is that the US Army Corps of engineers produced a detailed assessment (which can be found here ) and which is basically favorable to the project. The coalition against the project (apparently - I have not checked this myself in detail in this case, but it sounds VERY likely from my experience elsewhere - Bostoners or New-Yorkers unhappy with the potential change in their sea view) has seized on this document with various arguments:

- the promoter paid for the study (of course, this is compulsory and a way to avoid the taxpayer to pay for it...) and it thus not impartial;

- the study grants "free" use of a federal resource (the sea bed) which is an unfair advantage;

- the study does not comment on the fact that the project requires subsidies (via the PTC mechanism) to be economic and is thus incomplete.

Now, all these arguments, on the face of it, have a legitimate basis and raise real questions:

- who should pay for (independent) impact assessment studies?
- what is the price for "public" goods and what should be the procedure to allocate and use them?
- what subsidies can be seen as legitimate?

This raises other questions in turn:

- why does it seem that such questions are asked with more intensity for the best projects and seem to be less important for other, more harmful projects?

On the one side, the wind industry, which was started when it was not fully industrialised nor competitive, by idealists who viewed it a a genuinely better source of energy, and were willing to be absolutely transparent about all visible and invisible costs, is still operating under that mindset - and is willing to submit itself to that process because it feels that it can genuinely convince doubters. On the other side, the opponents are most often the secondary-home-owners from the cities, easily lawyered up and procedure-wise, who raise everything they can to oppose projects that might disturb whatever notion of their holiday place they have.

- if we do not to give up our energy consumption (in this case, electricity), a political choice, we have to produce that electricity - and someone has to live with the production units. Who chooses WHAT sources of energy are used, in what proportion? Who decides how the inevitable nuisances are valued? And who chooses who is to carry that burden for others, as these nuisances will not all be borne by all consumers?

Definitely not an easy question. But it easily leads to point the contradictions of those that oppose projects on more or less valid grounds - without opposing energy use itself, it also points to the hypocrisy of those who do not support any of the consequences of their consumption choices, it underlines how easy it is to ignore or discount the not-easily-quantifiable nuisances (air or water pollution, noise, security of supply, security vs terrorism), and it also reminds us that it is easier to make the nuisances fall on those that are less able to defend themselves - the poor, the less educated, etc.

So who decides "impartially"? This should be the topic of a separate thread between the different traditions of France (a strong government, which is able to hire the best minds of its generation, provide them with interesting jobs, and provide strong and highly credible assessments in the name of the "public good") and of anglo-saxons (for lack of a better word - independent studies are provided by hired experts, usually paid by the investor, and whose independence is only guaranteed by their credibility and their track record - whether in the accountancy, technical expertise, legal, etc fields, and who have to manage conflicts of interest with their paymasters (balancing their reputation with their desire to please their clients). The anglo-saxon method is increasingly dominant, both as a result of the worlwide spread of US business methods and the relentless ideological disparaging of government as a wasteful and incompetent entity, but we have seen recently that it is not immune to its own crises... as I said, aonther thread is probably required.


The wind industry has taken a difficult route in that they have decided to face frankly all obstacles from the start, and provide as truthful an accounting of its costs as possible from the start, which sometimes imposes on it costs that are imposed on no other industry (For instance, in France, wind mills are the only type of industrial buildings that are required to pay for their dismantling costs upfront - not provision over the years, but actually pay in cash upfront! They also are the only energy source required to submit to the "Commissions des paysages" (landscape commission - yes, we have that in France) for an impact assessment).
And yet, they are incredibly successful. Most projects have very strong local support (from the farmers - they get nice fees to give up only a few square meters of land - from local authorities - they get taxes, jobs, quite often more tourism, and from the local population, which often end up being very proud of "their" project - modern, "clean", making them nominally self-sufficent, etc...

This works only if you have a sophisticated enough environmentalist movement, not easily hijacked by minority interests or pressure groups. Logically, Germany, where the debate between the "realos" and the "fundis" within the Green party took place many years ago - and where, thankfully, the realos won - is the most developed market for wind in the world. Denmark is similar (I can't comment on the politics of the green movement there, but I imagine it is similarly mature) and both countries have a strong first-mover advantage (and they get most of the jobs in the industry, now several tens of thousands).
Spain, the third largest market is an interesting example of an "enlightened" industrial policy, with strong government regulation which was not fought by the industry as they found ways to profit from it by investing in the sector themselves rather than fighting a rear guard action against the new entrants.
Now that "big industry" is investing in the sector big time (GE and now Siemens on the manufacturing side, Shell, Total, BP and most utilities in Europe and many in the US on the generation and development side, most big banks in the energy finance business) it will be intersting to see how the dynamic evolves.

Wind is a really interesting sector in that

- it encourages total cost accounting ;
- it is already almost competitive with other energy sources even when these do not do that total cost accounting;
- regulation is moving its way (with Kyoto and many other Europe-specific rules);
- big business now believes in the sector - even while applying that total cost accounting

Expect to hear more about it, and not just from rich lawyers complaining about their spoilt view...