By J. Paul Forrester*
Offshore wind ("OSW") project development in the United States continues its rapid pace, and, in addition to the significant "E" (environmental) factors already present in such projects, several recent OSW solicitations undertaken and executive orders released during the COVID-19 pandemic have included specific "S" (social) factors.
For example, New York's most recent OSW solicitation1 required:
3.2.8 Community Engagement and Prioritizing Disadvantaged Communities Through this solicitation, NYSERDA seeks to actively support the outcomes envisioned by New York's State's nation-leading climate legislation, the CLCPA,2 including its target of delivering at least 35 percent of the overall benefits from New York State's climate programs to Disadvantaged Communities. The Proposal must present a reasonable community engagement plan with a thoughtful approach to build Project support and respectfully respond to opposition. Proposers awarded a contract are encouraged to consult with NYSERDA before and during the implementation of their community engagement plans and will be required to update NYSERDA on their community engagement progress and plans in their quarterly progress reports. Thoughtful community engagement plans may include: a description and analysis of affected communities; a plan for regionally targeted education and marketing strategies that include advertisements and/or direct mailings, outreach events and activities such as exhibiting at local events, hosting open houses, and targeted engagement with local community groups. Community engagement plans should seek to describe how the Proposal offers benefits related to economic development and the creation of local jobs, reduced energy burden, avoided health costs, added climate resiliency, avoided environmental costs/added enviro benefits, low-income and Environmental Justice population participation, avoided social costs. Community engagement plans may also comprise community benefits agreements and opportunities to build not only community opportunity and capacity in regard to the Project's development, construction, and operations but also opportunities to build community equity in a project and where all such community expenditures would constitute eligible economic benefit claims to support a project's evaluation under this RFP (see Section 3.3). Community engagement plans should also demonstrate alignment with the CLCPA and this solicitation's stated prioritization of benefits, including job creation, to Disadvantaged Communities.
Similarly, New Jersey's 2020 OSW solicitation3 required the following:
Subsection 3.16 Economic Development Plan (14:8:6.5. (a).11)
The Economic Development Plan should provide detail and a narrative description of the applicant's plan for investments in infrastructure, supply chain, workforce development, and other offshore wind cluster-building programs, and the associated economic benefits for the State. The intent here is not to create an additional set of requirements, but to provide an opportunity for the applicant to provide context for its cost-benefit analysis, outline other expected economic development impacts not captured in the cost-benefit analysis (i.e., impacts that are difficult to quantify), and show how the developer and proposed project plan can attain and deliver the economic benefits described in the application as required under N.J.A.C 14:8-6.5.
The Economic Development Plan should thus reflect and summarize the economic impacts of the proposed project over 20 years as noted in the project's Cost-Benefit Analysis with a focus on investments and impacts in five key areas of economic development: (a) blue-collar workforce development, (b) white-collar workforce development, (c) marshaling ports, (d) manufacturing ports, and (e) O&M ports. The Plan should clearly differentiate what are the direct, indirect, and induced impacts on both jobs and output, and provide rationale for supporting assumptions. Consistent with N.J.A.C 14:8-6.5 (11), The Economic Development Plan should include details of the location, type and salary of employment opportunities to be created by the project with job totals expressed as full-time equivalent positions assuming 1,820 hours per year.
For reference, the cost benefit analysis under N.J.A.C 14:8-6.5.(a).(11) requests that net economic benefits for the state be calculated to include at a minimum:
In-State impacts or benefits that need to be included in the cost-benefit analysis include, but are not limited to:
- Indirect business taxes; and
- Output, with a "particular emphasis" on manufacturing
employment. Output refers to the sales of sectors or industries
that would be supplying the offshore wind project with materials
(such as turbines, steel and cement for support structures, wire
for transmission cables) and services (such as construction and
installation services, as well as engineering, legal, finance, and
other professional services); In addition, The Economic Development
Plan can include descriptions of other programs, initiatives, or
support that the applicant is committing to, but which may be
difficult to quantify in the Cost Benefit Analysis. Examples of
these sorts of efforts could include:
- Bringing offshore wind R&D into the State (private or with universities)
- Catalyzing an offshore wind cluster in New Jersey
- Actively attracting other supply chain companies to locate in NJ (or supporting State government in these efforts)
- Participating in/sponsor offshore wind 'ecosystem building' activities (e.g., conferences, supplier networking, start-up company mentorship)
- Partnering with local universities, community colleges, or K-12 education
- Participation in workforce development programs
- Providing investment or technical assistance in industry infrastructure development
- Other corporate responsibility commitments
The Economic Development Plan shall also propose consequences if claimed benefits do not materialize, and the employment impact may become conditions of any OREC award.
Applicants shall also provide information on any State grants or other subsidies from the New Jersey Economic Development Authority or other agencies associated with the proposed wind project that was included as part of the project cost-benefit analysis.
* J. Paul Forrester, a partner in the Chicago office of Mayer Brown, focuses his practice on structured credit, including collateralized loan obligations, energy (including oil and gas, utilities, shipping, refinery, and pipeline) financings and project development, and financing (especially concerning renewable energy, industrial, petrochemical, power, and transportation projects and infrastructure). Mr. Forrester may be contacted at firstname.lastname@example.org.
2 Namely, the New York State Climate Leadership and Community Protection Act (2019).
Originally Published by Pratt's Energy Law Report
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