By DAN REYNOLDS, senior editor of Risk & Insurance®
If you want a brief lesson in how short-sighted the United States can be when it comes to energy policy, you need only visit present-day Detroit and its stalwart 15 percent unemployment rate. Since 1973, when an Arab oil embargo first showed Americans the real meaning of petro-fear, it was apparent that a dependence on foreign oil was this economy's weak point. But for decades after 1973, efforts to fund research into alternate fuels, or better mass transit, or even mileage standards for U.S.-made automobiles were scuttled in Washington, D.C.
Now let us consider wind energy. Despite its limited environmental impact and its generous capacity for electricity generation, offshore wind still has not gotten the blessing it needs in the United States in the form of a national renewable energy standard. And we are not alone.
No less a citizen than Robert Maurer, global head of renewable energy for Allianz Global Corporate & Specialty, pointed out that the German citizenry has been very prickly when it comes to developing offshore wind in that country. The thought of those slender blades on the horizon is so unfathomable that German offshore turbines in the North Sea are located at least 80 kilometers offshore and have to be built at depths up to 50 meters.
"They all cry for renewable or green energy, but no one wants to see the windmills. That is No. 1, and No. 2, the government has got a scheme in place that you get more support in subsidies from the government the further away from the shore you are and the deeper the water is," Maurer said.
And that creates risk, but the insurance industry is OK with that for now. According to our sources, U.S. utility companies know that they need to start getting wind energy into their portfolios. The brokers and insurers who assist them in their risk management plans know that the turbine on a windmill is nothing to replace compared with the turbine in a coal-fired electricity plant.
What's more, the energy-creating capacity of U.S. wind power, according to Allianz's Maurer, is every bit the match of the far more problematic nuclear power industry.
Thirty-eight states have renewable energy standards, but not so our federal government. As a result, we will install less wind energy in this country in 2010 than we did in 2009. Over the objections of the well-healed residents of Martha's Vineyard, the United States saw its first offshore wind energy lease with the federal government signed this October, a 28-year lease inked with Cape Wind Associates. By German standards, this farm is close to shore, being only five miles from the Massachusetts coast in places.
According to Curt Maloy, the Newport Beach, Calif.-based vice president of business development for GCube Insurance Services Inc., and other experts, the Great Lakes hold tremendous capacity for wind energy development, located as they are in relatively placid waters and so close to the power grids that fuel Chicago, New York and, yes, even Detroit.
According to Maloy, the renewable energy standard is fighting with the immigration issue for the attention of many federal lawmakers.
October 15, 2010
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