Theodore Roosevelt IV on Cape Wind

The Promise of Offshore Wind is Here

Speech given by Theodore Roosevelt IV at the Renewable Energy Finance Forum Waldorf Astoria Hotel, N.Y. June 23, 2005. Mr. Roosevelt is the great, grandson of our first "Environmental President" and owns a home on Martha's  Vineyard. He is an executive with Lehman Brothers and the Chair of the Pew Center on Global Climate Change.

What a pleasure it is to be here with all of you today as we anticipate the outcome of a great race into the future of energy generation.  We are in position on the start line, muscles tensed, counting each breath, eager for the start gun to go off.  In terms of offshore wind development in the United States, the successful completion of the Cape Wind project is the signal event.

This will be the first foray into tapping the enormous wind potential of the East Coast’s continental shelf and with it the possibility of reaping an abundance of additionalities in terms of the public good: mitigation of global climate change not least among these.  While the race must yet be won, our presence on the starting line signifies a great deal:  technological maturity, managerial skill, enormous preparation, the right timing, and – perhaps most importantly – determination.

The political shoals that Cape Wind is navigating

Now, I know that all of you want to hear about the nuts and bolts of how we plan to get this financed.   And, at next year’s Forum, Jim or I may be able to divulge the details to you. 

It is estimated that the wind resources off the continental shelf in the eastern United States could supply most of the energy to that region and significantly reduce greenhouse gas emissions in the near term

But today, in the interests of the success of this project, I will have to limit my remarks to the political shoals that Cape Wind is navigating, rather than the financial. To a large extent, while politics must be undertaken in the rough and tumble of public discourse and opinion making, financing in the initial stages is best accomplished quietly and soberly.  And, quite frankly, the economic climate is so ripe for this project that the purely financial aspects of the story are the least of it.   

As Harvard Business Review wrote years ago:  “Those who believe that ecological disaster will be averted must also appreciate the commercial implications for that belief:  over the next decade, sustainable development will constitute one of the biggest opportunities in the history of commerce.”   Technological advances, as well as anticipated demand pressure on fossil fuels, is making wind power cost-competitive, or as the Boston Globe wrote:  “a conservative hedge bet for a future that could put a premium on non-polluting power sources.”
 
And wind, as you know, is a large resource without constraints in terms of supply or pollution.  It is estimated that the wind resources off the continental shelf in the eastern United States could supply most of the energy to that region and significantly reduce greenhouse gas emissions in the near term. Cape Wind will be a first step in that direction.

So, needless to say, Lehman is not only – in the pro forma vernacular of our industry – “confidant that this will get done,” we are also extremely enthusiastic and grateful for this pioneering opportunity: to have our foot in the door of an energy industry that is, in our view, inevitable and a public good.  In fact, it is beginning to look to me as though doing the right thing in the future will also be the profitable thing. 

New technologies depend on government to break down market barriers

What will be just as important as financing future wind projects, however, is the political and social will for moving forward with them -- and that is a wayward thing, far less predictable than financial markets.  But it is the necessary underpinning to financial success.  New technologies must depend on the government to break down market barriers and overcome obstacles, such as the capital investment gap between R&D and deployment.  We want to see Congress, for instance, renew the production tax credit for wind power and pass an energy bill that includes a carbon tax or cap.  In short, social/political consensus building requires just as much, if not more, management, transparency, and perseverance as getting a deal done in the capital markets. 

As a homeowner on Martha’s Vineyard, I find the specter of sea level rising far more threatening to the permanence of our view shed than the barely thumb-nail sized shadows of wind mills on a distant horizon

As one commentator put it:  “Whether or not the possibility [of displacing much of the fossil fuel power on the East Coast of the United States with wind power] is realized will depend on public acceptance and the policies for project evaluation and permitting.”

Of course, it is inconceivable to most of us who puzzle over the overwhelmingly obvious need -- from multiple perspectives -- to diversify our country’s energy portfolio that a well-considered and necessary project, such as Cape Wind, would summon up any opposition, especially in one of the most liberal states in the Union, Massachusetts.  It is inconceivable to me that, in a low-lying coastal landscape such as Cape Cod, one that is particularly vulnerable to rising sea levels due to climate change, this project would not be considered a lifeline and quite frankly a badge of honor and civic duty fulfilled. 

As a homeowner on Martha’s Vineyard, I find the specter of sea level rising far more threatening to the permanence of our view shed than the barely thumb-nail sized shadows of wind mills on a distant horizon.  As a Republican, I have been dumbfounded by the pursuit of an irrational federal energy policy on the part of conservatives in Congress and the White House, but my astonishment is now compounded by the irrational rejection of self-proclaimed environmentalists in the Cape Cod community toward locating a renewable, clean energy source in their region.   

But, all of that being said – and my own annoyance now vented -- it is probably far more important for us all to come to terms with what might be some of the sources for our responses, rational or not so rational, to the changes that a carbon-constrained future demands of us.

Beauty & benefit in the eye of the beholder

Wind power will create good long-term jobs in the region, as well as positioning Massachusetts to become a leader in a new technology

It seems as though it has always been with us, but it has not been even twenty years since we started to talk about globalization.  Early in that discussion, the World Bank began to note in some of its publications that there was a countervailing trend accompanying the growing homogenization and unification of world economies and cultures and that was an often heated defense of the sovereignty of the local and regional – sometimes in ways that seemed oddly counterproductive to their self interest.  In this case, for instance, wind power, which is far more labor-intensive than other power sources, will create good long-term jobs in the region, as well as positioning Massachusetts to become a leader in a new technology.  
 
One sociologist described the hostile response to projects such as wind power infrastructure as caused by locals feeling “expelled from their homeland.”  One can hear that sentiment echoed in many of the reactions to globalization: alarm at the perceived, and sometimes real, loss of sovereignty over what a community regards as an essential aspect of their lives in a specific place.  Whether that is about aesthetics, economics, or cultural/religious concerns, all aspects unfortunately seem to be equally weighted and placed on par with an opposing common good for a broader and more abstract constituency.   

Another study of wind power opposition that took place in England noted that three-quarters of proposals fail because industry did not “grasp the important links among landscape, memory, and beauty in achieving a better quality of life.”  The Brits call this environmental split, the macro/micro schism:  or what is good for the global landscape is abstract versus the perceived tangible negatives to the immediate experience of “home.”

I know that this discussion strikes a financial group as muddying the water with a needless excursion into “externalities” – a discussion more suitable perhaps to eco-therapists or new age shamans rather than financiers. And, you have a point.  But it isn’t good enough.

As Paul Drucker, the father of modern corporate management theory, often stated:  corporations cannot be cavalier about being sanctioned by society as legitimate institutions within it; externalities must be incorporated into a company’s business plan, or view shed, in order to “fulfill automatically that company’s social obligations in the very act of seeking its own self-interest.”  Transparency and accountability are not only the foundations of a rational marketplace, they are the foundation for engendering community trust. 

Cape Wind's place in the debate

I think that we can expect opposition to always be with us just by virtue of today’s society, where our citizens feel they can have it all without paying a price for that.   The question is whether or not we allow opposition to swamp important projects.   Cape Wind is an excellent model for us in this regard as we go forward.   While Cape Wind has had to face one of the most staggeringly well financed opposition groups that I have ever encountered, Jim Gordon’s staff has kept pace with both the unsound criticisms and legitimate concerns leveled at the project.

We all need the Cape Wind project to succeed

Jim made an investment in public relations capacity by hiring community relations and communications professionals early in his staffing efforts.  In fact, the bulk of his investment so far has been spent, as described by one publication “on environmental impact studies, erecting a wind measuring tower on site, and an extensive public relations campaign.” Ongoing and consistent communication that avoids blaming local opponents or holding their expressed values in contempt --  as tempting as that may occasionally be – demonstrates a commitment to transparency and inclusion.  It means that there is at least a chance for the community to feel enfranchised, rather than disenfranchised, in the process. 

We all need the Cape Wind project to succeed, and Jim has brought the right resources and the right frame of mind to bear in that regard.  I suspect that many more success stories will follow Cape Wind’s and that next year we will spend this time in glasses raised in a toast to its accomplishments.