Introduced by chairman of the House Natural Resources Committee, Raúl Grijalva (D-Ariz.), the Ocean-Based Climate Solutions Act (OBCSA) is a conglomeration of several bills in the United States House of Representatives targeted at improving coastal resilience, regulating offshore energy production and habitat preservation. Of particular note, if implemented, the OBCSA would:

As is the case with any large bill that mixes policy proposals, the OBCSA is itself a mixed bag of good and bad ideas.

To start with a positive, the bill optimistically directs substantial focus to coastal resilience. This is of key importance because the federal government spends considerably on disaster-response for hurricanes and storm-related flooding, acting as both an insurer of last resort through the National Flood Insurance Program (NFIP) and as a source of direct post-disaster relief. The Congressional Budget Office estimates that such funding accounts for $17 billion in federal spending annually, and this amount is growing due to both climate change and the rising value of coastal property. In light of this, coastal resilience efforts, especially preserving “natural systems” such as mangroves, help to reduce the flood damage for which taxpayers are required to compensate. Indeed, one study found that a district in Florida had a 25 percent damage reduction during Hurricane Irma due to the presence of mangroves. Policies that amplify resilience, then, are worthy of consideration.

Yet, despite this healthy focus, the OBCSA is ideologically inconsistent in other areas, as it introduces policies that could easily do more harm than good. For example, while the bill correctly notes that some U.S. products (fish, specifically) have a lower carbon footprint and their consumption in the face of higher-emitting competition ostensibly reduces global emissions, it also seeks to ban “extractive” processes—presumably including fishing—in 30 percent of the U.S. ocean. By the logic expressed elsewhere in the bill, such limitations on U.S. fishing would actually lead to higher emissions, as foreign competitors would be necessary to fill the gap. China, for example, accounts for a third of the world’s fish consumption and is also its largest seafood exporter. Instead of imposing a mandate on U.S. oceans and seeking international reciprocity after the fact, then, the international objectives should be sought first.

Further, the logic of environmental efficiency for one industry should be applied across the board. The OBCSA would seek to prohibit any new leases on offshore oil and gas in the United States, which in 2019 produced 1.9 million barrels of oil per day—about 2 percent of the world’s supply. But a government-produced Argonne National Laboratory report found that the flaring intensity of U.S. offshore energy production is among the lowest in the world. Moreover, a study by the Carnegie Endowment for International Peace compared the emissions intensity of oil production across the world and did not find U.S. offshore production to be any higher emitting than its onshore counterparts. In fact, in a global context, U.S. exports of natural gas can reduce global emissions according to research from the National Energy Technology Laboratory, due to their replacing of foreign coal and natural gas competitors with higher upstream emissions. Because nothing in the OBCSA tempers global demand for oil and gas, a prohibition on U.S. production does not lower global emissions, it simply shifts supply fulfillment to higher-emitting global competitors.

On the topic of offshore energy, potentially the most expensive provision is a mandate to build offshore wind power. Offshore wind is an interesting technology and has a place on the competitive margins in areas of the United States like Massachusetts, Puerto Rico and Hawaii that have high electricity prices, limited land availability and a lack of access to competing energy sources. A blanket mandate, however, will force consumers to buy a product even if a lower-cost option is available. Offshore wind is among the most expensive energy types in the United States, and has a capital cost of $4,375 per kilowatt, or 346 percent higher than a conventional wind farm. At these costs, an offshore wind farm would produce electricity at a price of about $200 per megawatt hour, which is roughly quadruple the typical price.[1]

Although these prices will eventually fall and the 2018 Department of Energy report on offshore wind estimates a cost of about $50 per megawatt hour by 2030 (which is competitive with current costs), this does not make a mandate a wise or economic policy to implement. In fact, to mandate construction of generation without addressing the very real constraints of transporting produced energy to customers who can consume it is foolhardy. Transmission infrastructure is the great enabler but navigating the regulatory processes to site new transmission has become a lengthy burden. Transmission projects large enough to fall under the National Environmental Protection Act can take an average of 4.5 years to get approval, and in rare cases longer than 10 years. Congress can direct up to 25 gigawatts of generation to be added, but if transmission does not exist to move that generation from the coasts to inland consumers, the turbines will just be offshore, spinning in the breeze—not providing any benefits.

If Congress is intent on spurring offshore wind production, they should examine the barriers to capital flows in that space. Easier permitting requirements for production, addressing the regulatory barriers to transmission siting and improving tax policy so that fuel inputs are not tax advantaged could all improve offshore wind deployment. That said, from a climate perspective, there may be clean energy resources that can provide more energy and abate more emissions than offshore wind—and at a lower cost. Simply, a mandate to buy one of the most expensive forms of clean energy available is not going to be a cost-effective climate policy.

While it is encouraging to see Congress making strides for coastal resilience, habitat preservation and clean energy, some of the OBCSA’s policies threaten to do more harm than good. Expensive mandates would direct resources away from other clean energy opportunities that may deliver greater benefit, and prohibiting traditional energy production may simply result in worse-polluting competitors filling the gap. Accordingly, future legislative efforts should instead be aimed at unlocking the power of competition, removing roadblocks to the infrastructure needed for clean energy, and identifying opportunities to deliver the greatest climate and environmental benefits at the least cost.

[1] Assuming 15 percent capital recovery, 45 percent capacity factor, and current EIA operation and maintenance costs ($110/kW/year). (4375 * 0.15 + 110) / (8.76 * 0.45) = 194.4

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