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Reduce federal subsidies for oil industry

Posted: Wednesday, July 28, 2010

We can't spill wind.

That's a fundamental lesson we should take away from BP's offshore oil disaster - even if we learn nothing else.

So before we clutter our fragile waters with even more risky rigs punching holes in the seafloor, Congress and the administration need to get serious about giving a fair shake to a much less problematic power source: offshore wind. The technology is ready. But unfair policies that favor Big Oil - and provide little incentive for investors to embrace safer alternatives - are hindering efforts to turn sea gusts into gobs of green power and new jobs.

The Deepwater Horizon disaster underscores the need to end this double standard. For decades, the oil industry has enjoyed kid-glove government treatment, from lax oversight to billions of dollars in direct and indirect taxpayer subsidies. The industry will get at least $36.5 billion in taxpayer help over the next decade, for instance, under current policies. And don't forget the additional perk: a laughable, congressionally ordered liability cap of $75 million per accident. In 2009, BP made profits of nearly $25 billion - so in about one day, the company makes more than it is required to pay for its continuing disaster.

In the meantime, alternative energy advocates struggle to sustain even modest government backing. They've constantly fought to protect federal research budgets and tax incentives that are, by oil industry standards, laughably paltry. Federal support for wind R&D is expected to be just $75 million in fiscal year 2010, for instance less than one-sixth of the $469 million funneled to fossil fuels.

That imbalance reflects another troubling reality: Policy-makers have largely ignored pleas to prevent the United States - which pioneered wind technologies - from falling behind competitors in Europe and China. When investors first proposed the Cape Wind project off Massachusetts a decade ago, for example, no federal agency even had the clear authority to lead its permitting process, despite the fact that offshore wind turbines already had been spinning off Europe's coast for nearly a decade.

Ironically, Congress ultimately gave the job of overseeing Cape Wind and other offshore wind projects to the Minerals Management Service - the same agency in charge of offshore drilling. Even with the current reshuffling of that agency, there's little reason to believe that renewable energy will not play second fiddle to oil and gas unless the Administration sets some clear priorities.

Given this history of neglect, it's no wonder that most proposed U.S. offshore wind farms languish, entangled in red tape and often short of needed investment dollars. Even though Cape Wind recently won one federal permit, its approval process is far from over. It's a shaggy dog tale that doesn't help stimulate investment. Investors know that, to date, not one offshore wind farm is operating in the United States.

We need to change that fact, soon. Of course all offshore energy projects need adequate environmental review. In retrospect, however, many concerns about offshore wind's impacts - including aesthetic and noise concerns - seem downright quaint compared to the huge plumes of oil blackening the Gulf of Mexico. It's hard to imagine a scenario in which even the largest offshore wind farm poses risks comparable to a single drilling rig.

Indeed, offshore wind's advantages become clearer with each passing day. No tourism-, seafood industry-, and wildlife-killing muck. No toxic plumes. No massive explosions that leave behind broken families.

And yet some policymakers continue to claim that offshore drilling is the way out of our energy problems. But even the petroleum industry concedes that offshore fields can provide less than one percent of America's current energy needs, even during production peaks. That's not enough to make a meaningful dent in prices. And once the oil is gone, so too are the onshore jobs and economic benefits.

The wind, in contrast, never runs out. The jobs last for generations.

So let's make the Deepwater Horizon disaster a teachable moment about offshore energy. As they craft a new energy policy for the United States, Congress and the Obama Administration should put the brakes on further ocean drilling. There's no rush to dig, especially now that it is clear that drilling rigs are incredibly dangerous. It's time to stop treating the oil industry like the teacher's pet when it's really more like a playground bully.

Meanwhile, we can accelerate alternatives like offshore wind. That means funding research and development, providing stable tax and investment incentives, and creating a predictable, practical regulatory structure. We should set a goal of regaining the lead in the growing global offshore wind market, and reaping the jobs, wealth and technological prestige that comes with being the best.

If we start now, we'll get to rewrite history. We'll get to brag about how much carbon dioxide we prevented from entering the planet's atmosphere, and how we helped prevent the ocean from becoming too acidic to support life. Projects like Deepwater Horizon will be remembered as a symbol of the dirty, dangerous past. And projects like Cape Wind will be revered as harbingers of a cleaner, safer and more prosperous future.

Remember, we can't spill wind. But without a smarter energy policy, we can surely waste it.

• Andrew Sharpless is CEO of the international ocean conservation group Oceana, 1350 Connecticut Avenue NW, Suite 500, Washington, D.C. 20036.



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