Windfall, Part 5: The Just Transition

Outside In is committed to journalistic rigor and transparency. To learn about the reporting process for this series, visit windfallpodcast.org. This is our final episode of Windfall. So let's go back to where we started this series. Henrik Steastall, the Danish wind turbine inventor with the unruly hair and the short shorts. Back in 1976, ended up building wind turbine for my parents' farm. And I got kind of hooked. Henrik was part of an inflection point for the technology of offshore wind. He helped invent bigger and bigger turbines, built in bigger and bigger factories, able to capture ever stronger winds. But the technology was just one of the inflection points that Henrik was part of. There was another sea change at the same time. And the two went hand in hand. In 1987, Henrik started making wind turbines at a tiny company. You've most likely never heard of. Bonus. When I started in this wind company back, bonus back in 1987, we were 80 people. We were nine people in engineering. And we had some wonderful Christmas parties. Food and drink, and they would be dancing, and it would be great. That's how things started. Then, bonus was bought by the tech giant Siemens. Today, the company has more than 24,000 workers. And then around 10 years later, around 1998, I was seated for the Christmas party. Pure little people I didn't know. And that's why I saw I had lost this family feeling. Somewhere along the way, Henrik lost that comfy feeling of working at a little wind energy startup. But he and the company also gained something. It gained money, investment in the technology Henrik pioneered. Henrik remembers these meetings in the early 2010s with bankers and their engineers. They would bombard him with questions about offshore wind, endless questions. All those different things people wanted to know could be boiled down to. You need to convince us why we should invest in this. OK, fair enough. Then from almost from one day to the next, around the change from 2012 to 2013, it stopped. I never had any more of those meetings. And what came in step was that they would no longer say, you have to convince me why I should invest in another of those parties. They would say, do you have one more? I can't invest in. Here's one thing the arrival of offshore wind to American shores really symbolizes. It's a sort of coming of age of the renewable energy industry, a turning of a corner. For decades, renewable energy has been called alternative energy. It has carried the cultural baggage of its early associations, hippies, counterculture, Jimmy Carter, and his sweaters. It was criticized for being too expensive, a fancy green plaything for high-minded rich people. But now, alternative energy has grown up. It wears fancy suits. It's a stable investment, not a risky one, even for multinational oil majors. So the new face of alternative energy is big companies. The kind that some environmentalists don't trust. Hi, I'm a stay-at-home mom, now a climate justice activist. I signed up on the list of those speaking in favor, because I needed more time to put together my remarks. But I really don't want to be counted as speaking in favor or against. I'm deeply ambivalent about this project. This is a person who spoke at a public hearing about Vineyard Wind in Rhode Island in 2019. I didn't get her name. I wish I had. So yes, we need to build out offshore wind in a big way. But it has to be done responsibly. Hers is a reaction I've seen and heard many times from environmentalists. They like the idea of renewable energy. But they're sensitive to the environmental disruption that occurs when you build literally anything. We also have an extinction crisis, a crisis of habitat loss, crises of soil erosion, fresh water. And when they start to see how much stuff will have to build to get to a climate-friendly energy system and realize that doing so might involve big corporations, some with roots in denying climate change. Suddenly, some environmentalists get uneasy. Any large-scale project will have some unavoidable environmental impacts. But those impacts should be minimized through consultation with all impacted communities from the get-go. And it seems clear that that hasn't happened here. In fact, as someone who's been fighting fossil fuel projects for years now, this project sounds all too familiar. From New Hampshire Public Radio, this is Windfall, the special series from outside in. I'm Annie Ropeak, and I'm Sam Evans-Brown. The world is in a race against climate change. An offshore wind is one potential game-changer. But every solution has its costs, financial and human. So how much and who will pay the price? Offshore wind is just one in a huge range of radical changes we'll need to make in order to prevent the worst effects of warming. Fossil fuels are woven into everything we do. They will need to get unwoven, fast from our homes, our cars, our food, everything. And all of that will cost a ton of money. How much? Let's put that to someone whose job it is to try to keep track. Somewhere in the range of a lot, but no. Somewhere in the range of $2 to almost maybe $4 trillion a year worth of total investment. This is Nat Bullard. He's a clean energy finance analyst for Bloomberg. He writes about the money side of the global energy transition. And we asked him to help us do the math for the goals of the Paris Climate Accords. How much would it cost to cut emissions so that global warming doesn't go above two degrees Celsius? Let me just say that dollar figure again. Two to four trillion a year needs to be spent globally on climate solutions in order to keep temperatures even remotely under control. But for reference, the investment in energy transition right now was just over $500 billion last year. So for the first time just over a half a trillion. But therefore, a fraction of where it would need to be if you wanted to meet those targets. So just a quarter of where we need to be. Not great progress. And yet, there is so much more money out there that we could be using. There are investments that the world economy could, in theory, nudge in a new direction to pump up climate solutions. For one, there's the money controlled by fancy angel investors and private equity firms and venture capitalists like the folks in Silicon Valley. It's about $2 trillion at the moment. There's even more money sitting in pension funds. Those are retirement accounts for public workers. In the world's pension funds, there's a little bit over $50 trillion. And there's even more money sitting in the private sector, things like mutual funds or index funds, all of those investments that people stick money into instead of stuffing it under their mattress. And amongst just the 500 largest of the world's asset managers, there's more than $100 trillion of assets under management. And we are just scratching the surface of the global pools of capital. There's a lot more out there. So two to four trillion a year invested toward climate solutions. It sounds like a lot. But when you tally up the capital in capitalism, we've got more than we need. The financial turning point for Europe's offshore wind industry? It was the moment when the biggest retirement funds started to invest. These pension funds are designed to be a safe place to keep workers money and be ready to pay it out when they retire. Remember the meetings that Henrik Steese all used to have? Once the turbines got big enough and the factories got big enough that the projects started to make some money, the pension fund started to see offshore wind as a smart choice. It had transitioned from risky to profitable, which is what investors like to see. And that's when everyone else started to pile on. I can invest in. But who can actually touch this kind of cash and offshore wind farm can cost $34 billion, even more if it's really huge? Very few companies have the credibility with lenders to borrow that kind of money. So to convince those lenders to hand it over, it's helpful to have a track record of building massive energy projects. That's where the oil companies came in. When they started to see wind as a stable investment, it was a signal to lenders. They knew big oil wouldn't be messing with offshore wind if it wasn't going to make them money. When you look at the list of companies that develop offshore wind farms, there are a couple that only do renewable energy, like Iberdrola, a Spanish firm that's the world's biggest wind company. But then there's Orsted, the company that used to be Danish oil and natural gas. Ecuador, the company that used to be Statoil. There's also BP, formerly British Petroleum, which now says that stands for Beyond Petroleum, and Shell, which is still just Shell. This marriage of convenience between capitalism and climate solutions will make environmentalists squeamish. But that may be a necessary cost. And here we have to say that if we want to do something that avoids the emission of billions of tons of CO2 per year, it does take huge corporations that do it. And that is what it's all about. Henrik Steastle invented a technology that can now actually move the needle on climate change. For that to happen, he had to leave the world of cozy startups and go corporate. Henrik says that tradeoff felt uncomfortable at first, but he made peace with it. He gave me an analogy for how he thinks about it. It may be just a story, but there's a story that Churchill said in his prime minister said, "Now I'm an ally of Stalin. "I've always been opposed to communism, "but I'll sleep with the devil to bring down Hitler." The actual quote itself is a little less quotable than Henrik's memory of it. Churchill said, "If Hitler invaded hell, "I would make at least a favorable reference "to the devil in the House of Commons." Basically, the enemy of my enemy is my finance partner. After the break, what does it mean to invite the devil into your bed or whatever the metaphor was? This is Windfall from Outside In. I'm Annie Ropeak. And I'm Sam Evans-Brown. The financial cost of tackling climate change is daunting, but doable. So let's say we do it. Hit the Paris targets. Completely change everything about the global economy in a matter of years. It's a big if to put it mildly, but if we pony up the cash to make it happen, there will still be other costs, especially for certain people. I want to tell you about this one fisherman who helped us to get our heads around this idea of a more human cost to fixing climate change. I first met him at the contentious public meeting in Rhode Island. You pick the best squid fishing grounds on the eastern seaboard. His name is Jason Jarvis. He lives in Westerly Rhode Island in a little house, not far from the shore, with sunflowers planted along the road. When I got there, there was a small boat up on a trailer in the yard. And at Jason Jarvis' house, the coffee is not for the faint of heart. It's hot and it's strong. So be careful. Thanks Dr. I've been fishing just catching fish my whole life. That's what we did, you know, as a family. My brother's a fisherman. My nephew's still a fisherman. My dad was a shipbuilder. My grandfather, my mom's side, was a fisherman in the Bahamas. So it's genetic, I guess, you know. That's how it happens. Jason used to be a crew member on bigger fishing boats. Now, most mornings, he drives his own little boat down the river to the sea. He fishes close to shore, and sells his catch straight off the dock. So when the turbines start to go up miles off shore, he won't contend with them. The fishermen who will, though, they're his neighbors, his community, and he's worried about them. Fishing is precarious work, often low-wage, long hours, dangerous conditions, subject to regulations that change all the time. And fish and fishing jobs are moving, disappearing, often because of climate change. And that's a lot of stress to take home. Fishermen have high rates of depression, addiction, anxiety, and suicide. Resilient group of humans, man. Bounce back every time. But I think a lot of people are afraid. There will be no bouncing back. So when it comes to offshore wind, a lot of people, businesses, governments, are rooting for it to be a cornerstone of a huge energy transition. And Jason is worried his town will be left behind. And he's angry because it's not a hurricane or a bad haul. If his community suffers, it will be because powerful people who control billions of dollars of wealth didn't listen to people like him. Or they did, and they just didn't care. My favorite word for it is the boondoggle. So instead of Danish oil and natural gas, now it's orsted. Instead of what's the other one? BP oil is now BP wind. And you have people that say, "Oh, well, you know, they're an energy company." "No, they're corporate thugs." I feel like you see these ads from BP that are like, "Oh, BP means beyond petroleum, and I just want to throw up." But I guess we could think of it more in the sense of the renewable economy is the economy of the future. So we should feel assured that that fight is. In some ways, we don't have to make that fight anymore. The transition is already occurring. This is Mijin Cha, a professor of environmental policy at Occidental College in Los Angeles. The fight is for us to make it just, and this is a fight that has been, you know, throughout history, how to make those society more just. How to make it more just, more equitable, more fair. Mijin is talking about this concept called the just transition. If you've never heard this term, first, picture its opposite, an unjust transition. A manufacturing hub gutted by outsourcing and automation. A black neighborhood split by the interstate highway system. These unjust transitions happen when the people impacted are basically considered collateral damage or not considered at all. Mijin has studied those unjust transitions. The kind of thing Jason Jarvis fears is going to happen to his little fishing town. And Mijin says moving to an emissions-free economy is shaping up to be a bigger change than any other. If we think about how unjust previous transitions are, the energy transition is on a scale that we just haven't seen before, because if we think about all the things that use fossil fuels, if all of those workers are unjustly transitioned, I mean, we think we're at record inequality now, but we just want, like, the levels of devastation and communities that will be lost and workers that will be lost. I think we'll just be on a scale that we've just never seen before. So the just transition for climate change is a tall order, one that will be easier said than done. It includes fossil fuel workers. It means new union jobs for coal miners, but also economic aid for their towns, considerations for gas station owners, car mechanics, home heating technicians who work with oil and propane. It also includes so-called fan-flying neighborhoods, people who live and go to school next to petrochemical refineries in places like Houston and Louisiana. It means taking care of those neighborhoods when those factories shut down and helping them get healthy after years of being ignored. It means using the climate response to root out inequality, using it to balance the scales. And as we transition to a clean energy future, we must ensure that workers who have thrived in yesterdays and today's industries have as bright a tomorrow in the new industries. Since the day we dropped the first episode of this show, New Jersey has announced it will pay for two massive new wind farms off of Atlantic City, the project's developers, a former and current oil major, Orsted and Shell. The Biden administration also wants to open the Gulf of Mexico to wind, the California coast, too. Up in the North Atlantic, Maine is working on wind turbine platforms that float so they can go into deeper waters with stronger winds. But if there's one thing we've learned about this industry, it's that nothing's certain until there's steel in the water. So just or unjust, too fast for some or too slow for the climate. Whatever happens, this transition is already underway. Whether you see them or not, the blades will be whirling just over the horizon. [MUSIC] [MUSIC] Thank you for listening to Windfall. If you missed any part of this series, go back and listen to the whole thing. They're now all out on your podcast platform of choice. This episode of Windfall was written by me, Sam Evans Brown, Jack Rodelico, and Annie Ropeek. It was mixed by Justin Paradise, fact-checked by Sarah Sneath, and produced by Jack Rodelico. It was edited by Jack Rodelico, Eric Janek, Annie Ropeek, Justin Paradise, Felix Poon, Taylor Quimbee, and Hannah McCarthy. Graphics for Windfall were created by Sarah Plord. Eric Janek is our executive producer. Special thanks to Sandy, Pi, Bo Quinn, Sammy Roth, and Kim Delphino. Music in this episode was by Blue Dot Sessions, Ben Cosgrove, and Break Master Cylinder. Windfall and outside in are productions of New Hampshire Public Radio, which is supported by you, our listeners. If you like what you're hearing, make a donation to support us. There's a link in the show notes, or at our website, windfallpodcast.org. [MUSIC] That's a wrap on Sam, everybody. Oh, my God. You're never going to read a German microphone again. So, Justin, please keep this up. I'm sorry. Okay.