TODAY’S STUDY: A CAREFUL STUDY OF ONE STATE’S OCEAN WIND FROM NO. CAROLINA

Report on North Carolina Offshore Energy
September 30, 2011 (Governor’s Scientific Advisory Panel)

Introduction

Executive Order 23

In recent years, as the United States and North Carolina have sought to engage the energy future, a variety of proposals and plans have emerged to explore for and develop energy resources off of North Carolina’s coast. On Sept. 18, 2009, Gov. Bev Perdue issued Executive Order 23, establishing the Scientific Advisory Panel on Offshore Energy. As recently as March 2010, President Barack Obama initiated plans to lift a decades-long moratorium on offshore drilling along the East Coast – though that was put on hold after the BP Oil Spill in the Gulf of Mexico. We all drive or ride in cars and depend on commerce that moves in trucks and other vehicles dependent on oil or natural gas for fuel. The prospect that these basic energy sources are limited drives our efforts to locate untapped reserves. The reality that fossil fuels will, in time, be exhausted, pushes us to identify cost-effective alternative energy sources that, in the least, might delay the day of reckoning.

The potential for fossil fuel reserves off North Carolina’s coast is still a matter of significant speculation. But the potential of power from offshore wind and other renewable resources from the ocean’s thermal gradients, currents, waves and tides makes our state’s extensive coastline a potential site for efforts to develop offshore energy. What are North Carolina’s offshore potential energy sources? What is there? How effectively can they be harnessed? What obstacles stand in the way of harnessing the offshore energy resources? The basic issues are these:

• Should oil and natural gas drilling be permitted off North Carolina’s coast?
• Should there be wind turbines and wind farms off North Carolina’s coast?
• What conditions or limitations should be placed on these activities?
• Should the evolution of these issues be left to commerce alone, or monitored and regulated by federal or state agencies, or some other combination?

Scientific knowledge and technology to harness offshore energy resources have increased substantially with time. But the costs – environmental, economic and to quality of life – require examination to be sure the interests of all North Carolinians – present and future generations – are protected. Gov. Perdue charged the panel to provide sound scientific research and a thorough evaluation. She directed the panel to:

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1. Perform a comprehensive evaluation of all potential offshore energy resources, including oil, gas, wind and other renewable resources.
2. Report on the current state of technology in extracting and/or utilizing these resources.
3. Identify benefits and areas of concern related to these energy resources, including the economy, environment, public safety, infrastructure needs and impacts, and potential revenues.
4. Inventory current laws, rules, and processes affecting the use of offshore energy resources at the federal, state and local levels.
5. Review federal laws, regulations, policies, procedures, and major developments -- as well as those in other states -- relative to offshore energy.
6. Evaluate any federal proposals for use of North Carolina’s offshore energy resources.
7. Make policy recommendations to ensure that North Carolina has a comprehensive plan for using offshore resources wisely and to the benefit of all North Carolinians.

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Summary of All Findings and Recommendations

General Findings

• North Carolina has diverse ocean and coastal resources that are the foundation of a strong coastal and state economy.
• North Carolina’s coastal travel and tourism industries contribute 40,000 jobs and $2.6 billion to North Carolina’s economy and depend on public access to clean beaches, estuaries and waters and abundant fisheries.
• North Carolina’s commercial and recreational fishing industries contribute 27,000 jobs and $116 million annually to North Carolina’s economy.
• North Carolina’s estuaries support massively productive fish populations, including many of the historical drivers of fisheries and societies in the region (herrings, shads, striped bass, sturgeon, and eels, among others) and nearshore spawners tied to brackish-water primary and secondary nursery areas (blue crabs, shrimps, drums, flounders and many other fish).
• North Carolina’s beaches and barrier islands sustain large populations of migratory animals from bluefish to seabirds and shorebirds.
• The North Carolina coastal system has a complex geologic framework with major differences occurring between inshore and offshore segments as well as between the north and south continental shelf components.

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• Exploration and development of offshore-energy resources – oil and natural gas, wind and hydrokinetic technologies and thermal – pose environmental and economic benefits and risks (environmental benefits include potentially providing habitat) to North Carolinians and Americans.
• The development of any source of offshore energy, whether renewable or fossil fuel, will likely have some socioeconomic and environmental impacts, including those on marine and estuarine waters and those on the species that inhabit these waters. General impacts include: habitat alteration during installation, operation, maintenance and decommissioning of new offshore-energy facilities; impacts from transmission crossings in North Carolina’s coastal zone; debris from storm-damaged facilities; minor toxicant releases; conflicts with and displacement of other ocean users; indirect and cumulative impacts; and worker safety. Revenue sharing from any offshore resources has been important for states that receive it. Revenue and royalty sharing are essential components to North Carolina’s development of offshore energy.
• Many decisions related to offshore energy are made at the federal level.
• Offshore wind, oil, gas, or other offshore-energy development will have challenges related to infrastructure development, including transmission.
• Even with aggressive conservation measures, such as greater fuel efficiency standards for cars, the demand for energy in the U.S. and N.C. is likely to continue to grow. U.S. dependence on imported energy has many negative consequences to the nation’s economy, including affecting the international balance of payments, reducing the value of the U.S. dollar, increasing inflationary pressures, living under economic uncertainties about oil-supply disruptions and price hikes, and risking engagement in military actions overseas to preserve access to oil supplies.
• Although N.C.’s energy development policy must balance different risks and benefits as compared to the national energy policy, development of North Carolina’s energy resources is intertwined with national energy policy.

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General Recommendations

A1: North Carolina needs a program of research and data collection to ensure that the state has adequate information to evaluate these impacts. At a minimum, the state should evaluate resource potential; the oceanographic and ecological processes acting on North Carolina’s continental shelf, and slope and waters out to 200 nautical miles; the habitat, migration corridor, and other needs of commercially and recreationally important fisheries, sea turtles, pelagic birds, and other potentially impacted species; and socio-economic studies that assess the impact on coastal communities.
A2: Establish a central data collection point for information on coastal energy resources.
A3: Establish and implement an offshore strategy integrating ecosystem protection and restoration strategy that is science-based and aligns state conservation and restoration goals.
A4: North Carolina should continue to build relationships and dialogue with the appropriate federal agencies around these issues.
A5: Better coordinate and support federal, interstate, state, tribal, local, and regional management of the ocean and our coasts. Improve coordination and integration with the federal government and within state government.
A6: North Carolina’s Congressional delegation should take appropriate action to provide revenue and royalty sharing for any offshore oil and gas development in waters off the North Carolina coast.
A7: Infrastructure costs and benefits, both socioeconomic and environmental, should be fully evaluated as part of a comprehensive management plan for North Carolina’s coastal and ocean-energy resources.
A8: North Carolina’s energy policy should consider the national energy policy framework, including an assessment of the impact from full development of North Carolina’s energy on national-energy security.

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A9: The state should engage in comprehensive ocean and coastal resource management to ensure the sustainable and best use of our ocean and coastal resources. Resource-management tools like marine spatial planning should be used to develop a comprehensive management plan. A comprehensive plan should be in place to ensure the highest and best use of all the ocean and coastal resources. A marine spatial planning effort should include:
1. Basic mapping of North Carolina’s potentially sensitive offshore habitats to the edge of the Exclusive Economic Zone (EEZ) should be completed, beginning with the high-priority zones where energy industries are most likely to locate, and where conflicts are most likely to occur: a) the wind power high-value zones, and b) the deepwater coral high-probability zone identified by the South Atlantic Fishery Management Council (SAFMC). Methane seep communities should also be explored.
2. An analysis similar to the UNC wind study should be completed for each potential resource that includes the deep-water zone, taking into account the distribution of vulnerable habitats as well as potentially competing uses of those waters, including commercial and recreational fishing, military, navigation, mariculture, and other existing uses.
3. North Carolina’s Coastal Habitat Protection Plan and the SAFMC’s Fishery Ecosystem Plan should be utilized as vehicles to consider the establishment of habitat targets for economically important species that could be affected by offshore-energy production, so that potential negative impacts can be assessed and effectively minimized during project development and consultation, and then potentially mitigated.
A10: The state should work to increase its knowledge of offshore-energy production to continually inform and improve management and policy decisions and increase its capacity to respond to change and challenges. The state should also better educate the public through formal and informal programs about the ocean and coastal systems and their importance to North Carolina’s economy.
A11: As a major coastal state that produces much of the fin and shellfish resources in North America, North Carolina should participate in federal inter-jurisdictional planning, including the work of the National Ocean Council, and support federal and interstate policies that ensure a balanced and comprehensive approach to the development and use of the many resources found in state and federal waters.
A12: This Panel’s work is an essential first step in assessing the impact of offshore-energy development on North Carolina, and this report represents our best thinking on the critical questions. But taking the next steps to develop offshore energy will require a unified effort to assess impacts on North Carolina’s economy, communities, and natural resources, to promote economic development of offshore energy that boosts North Carolina’s economy, and to establish North Carolina as a leader in offshore-energy development. It is our recommendation that the state support a consolidated, focused effort to assess the contribution of any offshore-energy production to North Carolina’s overall energy needs in the future.
A13: North Carolina’s academic institutions have already initiated research efforts to address portions of the offshore energy equation. North Carolina’s research campuses are already examining alternative energy: Appalachian State has a renewable energy initiative; N.C. State has the Solar Center; UNC-Charlotte and North Carolina A&T State Univeristy have an Energy Production and Infrastructure Center and an Energy Research Center. These efforts recognize the critical importance of new and expanding energy sources to the nation and to North Carolina, and we recommend that the state support and expand these efforts. Furthermore, the North Carolina Biotechnology Center, which is a public/private partnership, recently launched the Marine Biotech Center of Innovation to accelerate development of commercial products from the state’s marine resources. North Carolina can be in the forefront of energy research and development to produce breakthroughs in development of novel energy solutions with economic benefits to the State, while minimizing adverse impacts and supporting North Carolina’s coastal communities…

Offshore Oil and Gas…Findings…Recommendations…

Offshore Wind

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Findings

• NC has the largest offshore wind resource on the East Coast, resulting from a combination of: (1) The long N.C. coastline, (2) The continental shelf extends far off the N.C. coast, providing ample shallow-water area in which to erect turbine arrays, and (3) The convergence of the Gulf Stream flowing from the South and the Labrador Current flowing from the North creates a unique and energetic microclimate resulting in an impressive estimated capacity factor for offshore-wind energy off the central portion of the N.C. coast.
• There are rapid increases in wind-energy potential as one moves from land over coastal waters of the major sounds (Pamlico and Albemarle) and then again as one moves offshore over the continental shelf.
• There is relatively small risk of hydrocarbon release and contamination in general and specifically in the case of catastrophic events.
• The pattern of bird abundance over the near-shore continental shelf demonstrates large declines with distance from the shore, such that bird density declines by about two thirds from the highest density within the first 10 kilometers of the beach to the average of the zone from 10-40 kilometers. To the degree that abundances imply relative risk, the risks are much lower over North Carolina’s near-shore continental shelf than over land where wind farms exist.
• Existing evidence implies that risks to birds and bats may be lower, even substantially lower, over the N.C. continental shelf 10-40 kilometers from land than on land where wind farms are found.
• Marine mammals and sea turtles are more dense and abundant in the coastal ocean than in Pamlico Sound. A potential risk to marine mammals from wind-energy development is that of noise disturbance, particularly during turbine construction.
• Wind turbines may provide secondary benefits, such as provision of new habitat and mariculture opportunities on the near-shore continental shelf.
• As of the most recent BOEMRE North Carolina Task Force meeting in May 2011 in Raleigh, there are 506 federal lease blocks (approximately 3 mile x 3-mile areas) off the North Carolina continental shelf in waters shallower than 40 meters that have the potential for wind-farm development after excluding all areas with known use constraints. More than 500 lease blocks represent a larger shallow-water resource than any other East Coast state has before even considering potential use constraints in those other states, and could accommodate as much as 50,000 megawatts of nameplate (peak) capacity, which would likely generate a yearly average of 20,000 MW of power – based on 505 lease blocks.

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• The cost of producing wind energy is high relative to costs associated with the current mix of energy sources and thus would increase what ratepayers pay for electricity in the near term. However, this comparison fails to account for the absence of discharge of atmospheric pollutants, which are associated with all combustion sources of energy and whose costs are now externalized. These economic benefits of wind power and other energy sources that avoid combustion include in particular reductions in health-care costs as discharge of atmospheric particulates is reduced and reductions in global-change costs such as from hurricanes, sea-level rise, floods, and droughts.
• The offshore-wind industry may offer significant opportunities for renewable energy generation and for economic development and job creation. North Carolina’s extensive coastline and large offshore-wind resource appear to make it a prime area for offshore-wind development. Among the benefits of offshore wind-energy development, the Panel finds the following:
-Renewable energy generation, including opportunities to meet utility obligations under Senate Bill 3 (Session Law 2007-397) and possible future federal energy and climate change regulations.
-Job opportunities created by those involved in generating power, supporting operations and maintenance and the establishment of an industry supply chain.
-New venues for eco-tourism and energy tourism.
-Revenue for the state from offshore leases.
-Workforce development and job-training programs to serve the industry in North Carolina as well as other states.
-Possible clients and business for the ports at Morehead City and Wilmington.
• Offshore wind-energy development is also likely to have modest impacts on the coastal environment, habitats and coastal communities, mitigated and minimized by effective spatially explicit planning, and including:
-Species and habitat impacts, including those on marine mammals, birds and bats, fish, and other marine life.
-Environmental impacts, including those caused by construction of the wind farm.
-Impacts on coastal viewsheds, including those off the national seashores.
-Conflicts with other uses, including military activities, commercial and recreational fishing, tourism, navigation, natural seashore and barrier island dynamics.

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Recommendations

C1: North Carolina should continue to promote opportunities for offshore-wind development.
C2: Develop appropriate statutes, rules and regulations that foster and encourage appropriate offshore- wind development consistent with concerns for the coastal environment and communities.
C3: Work with wind-energy developers, utilities, local communities and others to provide the energy transmission infrastructure necessary for offshore wind-energy development.
C4: Cooperate with federal authorities and agencies to promote consistency among federal, state and local rules and procedures.
C5: North Carolina should support installation of meteorological (MET) towers in prime offshore sites to further quantify the wind resources, the open sharing of which will benefit all entrepreneurs by decreasing uncertainty and avoiding revenue risk early in the development process. This can decrease the costs of producing offshore-wind power, benefitting N.C. ratepayers.
C6: We recommend that the Governor engage with industry to attract to N.C. a wide range of supply-chain facilities and jobs associated with the emerging wind-energy industry, and as part of this process consider advocating for tax credits and incentives to locate a cluster of manufacturing serving to provide wind-energy hardware and expertise in NC.

Other Ocean Renewable Energy Resources

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Findings

• Substantial potential exists for developing renewable energy from both the thermal gradient (OTEC) and the flowing Gulf Stream off of NC. This potential is unique to N.C. due to the generally narrow and deep continental margin where two major ocean currents meet at Cape Hatteras. These high energy current systems include the north-flowing, warmwater Gulf Stream and the south-flowing, cold-water Labrador Current.
• The potential recovery of energy from the waves is difficult due to the extreme variability, high energy of a dense medium, and a present technology of massive equipment. The real potential may come when combined with and recovered as an add-on to one of the other energy sources -- for example, if a set of wave machines were attached to a wind tower at the ocean’s surface or hung off the flanks of an energy platform.

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• Tidal energy is unlikely to become a sole source on NC’s outer continental shelf. Unlike wind, the tidal fluxes are quite regular and predictable, but quite small. A small potential is possible if tidal power is collected in concert with other energy resources using two-way tidal turbines attached at several locations on the submarine segment of a wind tower or attached to the piles of an energy platform.
• Energy derived from methane hydrates remains a distant opportunity at best. While tremendous energy is tied up in those deposits, environmentally safe and economically efficient exploitation is probably decades away at best.
• North Carolina, the United States, and the world need energy policies that include a diverse portfolio of renewable energy resources which can grow to ultimately replace a substantial portion of our fossil-fuel dependency.
• While research and development on other forms of ocean renewable energy is ongoing and appears promising, these technologies are not yet ready for widespread commercial deployment.
• At this time, no single (renewable) marine energy source can replace any of the fossil fuels independently. Thus, all marine sources must be developed simultaneously and integrated into a system of inter-dependent energy supplies.

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Recommendation

D1: Although some oter locations in the U.S. may have more potential for developing this energy commercially, the unique nature of this convergence of currents off N.C. implies that an in-depth assessment of the potential for N.C. should be carefully completed.