Offshore wind’s in trouble if Trump wins By Benjamin Storrow
Offshore winds are in trouble because they aren’t a good investment and can’t survive without subsidies.
Offshore wind’s in trouble if Trump wins
By Benjamin Storrow | 03/05/2024 06:42 AM EST
Former President Donald Trump attacked wind power in his first term. He might stunt the fledgling industry if he returns to the White House.
Former President Donald Trump delivers remarks in Maryland last month. Francis Chung/POLITICO
Offshore wind survived Donald Trump once. Whether it would again is an open question.
The prospect of the former president returning to the White House has become an urgent matter for the nascent industry. Permitting of new projects ground to a halt during Trump’s four years in the Oval Office, a theme that was punctuated by the Interior Department’s unexpected decision to call for additional environmental review of the country’s first major sea-based wind farm, planned off the coast of Massachusetts. The move threatened to sink the project.
The election this year comes as the industry is at a crucial juncture. Two projects are in advanced construction, and the owners of two more are set to begin building them in the water later this spring. Yet offshore wind’s long-term outlook remains uncertain after a spike in inflation, supply chain bottlenecks and rising interest rates prompted developers to cancel power contracts and pause some projects planned along the East Coast.
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If Trump wins the Republican nomination and goes on to beat President Joe Biden, the industry could be thrust into a potentially perilous position. Trump has seized on unsubstantiated claims that wind projects are killing whales and pledged to repeal clean energy subsidies available to wind developers. Analysts say his ability to gum up permits for new projects could cause even greater headaches. Industry officials are reluctant to talk about the former president publicly, but privately some say they are deeply concerned by the prospect of him winning a second term.
One industry official who was granted anonymity to avoid attracting attention to their company described a potential Trump victory as “terrifying” and added, “I think anyone who is telling themselves that they’ll find a way around it is kidding themselves.”
The Trump campaign did not respond to a request for comment.
The idea of Trump returning to the White House was something of an industry parlor game until recently, the type of topic that got chewed over during conference happy hours and in private conversations. But with the former president cruising toward the Republican presidential nomination and leading Biden in many polls, a second Trump term is entering into some companies’ corporate calculus.
When Ørsted, the Danish wind giant, hosted a recent event for financial analysts, its executives were asked how they would respond if Trump won.
“Trump has been quite vocal about his dislike for offshore wind,” Ørsted CEO Mads Nipper responded. He called permitting “the biggest risk in case of a Trump administration,” and indicated that his company would focus on projects that have already secured federal permits.
Mads Nipper, CEO of Orsted (left) speaks with David Hardy, CEO of the Orsted Americas region. | Jennifer McDermott/AP
Nipper added that Ørsted would seek to avoid the situation it found itself in during Trump’s term when “the Bureau of Ocean Energy Management was almost stripped of resources and, therefore, close to a standstill on permitting.”
BOEM is a division of the Interior Department charged with reviewing offshore wind projects.
‘A death knell’
Offshore wind has the potential to be a flashpoint between Democratic-led states and a second Trump administration. Liberal states, particularly in the Northeast, anticipate that large increases in offshore wind power will help them meet their climate goals. Yet the presidency has an unusually powerful role in deciding what gets built in federal waters.
Biden has sought to assist his blue state allies, pledging to permit 16 projects by the end of his first term and opening portions of the West Coast and Gulf of Mexico to wind development. Trump, by contrast, loathes wind. Over the years, he has falsely claimed that wind turbines cause cancer, drive whales crazy and “kill all the birds.”
Those assertions are already being used by the Biden campaign to mobilize Democratic voters.
“Trump’s been more than clear: If he’s elected, he’ll undo efforts to combat climate change and kill jobs along the way by repealing the Inflation Reduction Act, the largest climate investment in history,” said Seth Schuster, a Biden campaign spokesperson. “Safe to say, the guy who openly calls climate change a ‘hoax’ and seriously thinks windmills cause cancer will not be good for offshore wind — or the climate at all.”
A senior administration official tasked with overseeing infrastructure approvals recently offered a grave assessment about what a Trump victory could mean for offshore wind.
“What we saw during the last Trump administration is that offshore wind essentially stood still,” Eric Beightel, executive director of the Federal Permitting Improvement Steering Committee, recently told the POLITICO Energy podcast. “And what we’ve had to do since coming in was to pick that up. If we had to do that again, coupled with the previous supply chain issues that we’ve already had to reconcile, that could be a death knell to this nascent industry.”
Republicans in Congress have called for a moratorium on offshore wind development, citing unsubstantiated claims that activities to survey the seafloor are leading to a spate of whale deaths.
Trump has seized on that argument. Speaking at an event in September, he said wind development is causing whales “to die in numbers never seen before.” There is no evidence to support that claim.
David Bernhardt, Trump’s second Interior secretary, slowed down permitting of Vineyard Wind. | Susan Walsh/AP
The Trump campaign has offered few details about how it would approach offshore wind development. Trump’s so-called Agenda 47 makes no specific mention of offshore wind but does promise to end “insane wind subsidies.” Similarly, a proposed executive order floated by a group of conservative organizations only references offshore wind in regard to repealing a Biden conservation initiative, saying the administration is closing swaths of ocean to fishing while promoting wind development. The document, known as Project 2025, also calls for repealing the Inflation Reduction Act, which provides subsidies to clean energy technologies like offshore wind.
Tom Pyle, president of the conservative Institute for Energy Research, echoed those arguments, saying the IRA would be “first on the chopping block.” But he also said offshore wind developers should be more worried about their own economic woes.
“Biden is in office. They couldn’t have a more favorable situation other than when the Democrats ran the House as well,” Pyle said. “Even with all the political winds in their direction, they still can’t make the economics work.”
David Bernhardt, who served as Trump’s second Interior secretary, declined in an interview to speculate how his old boss would approach offshore wind if he were to win in November.
But he added: “Elections have consequences. President Trump has a very, very robust vision for energy dominance, and his priorities in respect to that for America are different than Biden’s hostility to all sources of energy.”
‘Degrees of negative’
Industry analysts said there are reasons to be bullish on offshore wind even if Trump wins.
States remain the key drivers of offshore wind by offering electricity contracts to developers. Many have been unfazed by the recent uptick in the cost of offshore wind, and some have even doubled down by offering new power contracts to developers that are indexed to inflation. States like New Jersey and New York have recently awarded new power contracts to developers, while three New England states are accepting bids for new contracts this year.
“These states have their own climate, renewable targets,” said Kevin Beicke, an analyst who tracks the industry at Morningstar. “They’re going to go for it and try to get these offshore wind projects done no matter what the federal government wants to do.”
Still, Trump could pose a considerable obstacle. Projects that haven’t received federal permits are most at risk, said Tim Fox, an analyst at ClearView Energy Partners. A second Trump administration could divert personnel and resources away from permitting offshore wind projects and steer them instead toward fossil fuel projects, he said.
Wind turbine blades for South Fork Wind are stored at State Pier in New London, Connecticut. | Seth Wenig/AP
There are also potential risks for projects that already have their permits. In a worst-case scenario for developers, a second Trump administration could theoretically agree to reconsider existing permits that have been challenged by opponents in court, Fox said, though he cautioned that such a scenario was less likely.
“I would measure it in degrees of negative,” he said. “It’s nearly assured that a Trump administration would not treat wind as favorably as the Biden administration has.”
The Trump administration initially cast a favorable eye on offshore wind. Ryan Zinke, who served as Trump’s first Interior secretary, spoke about the industry in glowing terms in newspaper op-eds and at industry conferences. But the tune changed with the ascension of Bernhardt, who called for the country’s first major offshore wind project to undergoadditional rounds of environmental review.
Bernhardt later said the review was intended to steel the project against possible legal challenges. But the argument did little to assuage industry officials and blue state politicians, who said it seemed like an attempt to kill a project that the president didn’t like.
That project, a 62-turbine development known as Vineyard Wind, ultimately withdrew its permit application in the waning days of the Trump administration — then refiled once Biden took office. It was approved and the project is now under construction in waters to the south of Martha’s Vineyard in Massachusetts.
But other developments are still dealing with the fallout of the permitting delays.
Lost electrons
Two projects planned in New York are a case in point. Empire Wind 1 and Sunrise Wind were initially planned to begin operating in 2024 after winning power contracts from the state in 2019. Instead, they are only now finishing the federal permitting process and bidding on new power contracts from New York.
The permitting delays left Empire Wind and Sunrise Wind particularly vulnerable to the spike in inflation following the Covid-19 pandemic and Russia’s invasion of Ukraine, said the industry official, who worked on one of the projects during the Trump years. Had permitting moved faster, developers would have been able to tie down contracts for installation vessels and turbine components sooner, insulating them from rising costs, the person said.
“It’s fair to say we would have major projects out in the ocean spinning today if not for the permitting delays,” the official said.
Many wind developers are loath to speak publicly about a potential Trump victory. E&E News asked seven developers, as well as trade groups like the American Clean Power Association and Turn Forward, how a Trump win would impact their projects. They all declined to comment or did not respond to inquiries.
Yet some companies have started to contemplate what a Trump win might mean for their businesses. A financial analyst asked BP CEO Murray Auchincloss during a recent earnings call how a change in American clean energy incentives “for whatever reason” would impact the oil company’s U.S. offshore wind project.
“We’ll just have to pragmatically react to how the United States decides to move these things forward,” Auchincloss responded.
BP recently scaled back its offshore wind ambitions, breaking off a joint venture on three projects with the Norwegian oil company Equinor. BP walked away from the breakup with one project, but company executives have signaled they don’t have immediate plans to move forward with the development.
Ørsted has been the largest player in the U.S. offshore wind market. At one point, the company had seven projects planned in waters that stretched from New England to Maryland. But the company is downsizing after canceling two developments in New Jersey and terminating the power contract for two more in Maryland. Instead, Ørsted is now focusing on building a hub in the Northeast, where it has three projects in development.
South Fork Wind, a 12-turbine project that will serve Long Island, is nearing completion. Revolution Wind, a 65-turbine development that would send power to Connecticut and Rhode Island, is expected to begin operating next year. Sunrise Wind, the 94-turbine project that is bidding for a new contract in New York, is expected to receive its final federal permit in the coming months.
Trump looms particularly large over Ørsted’s decision to bid in an offshore wind solicitation in New England this spring. The company owns a lease area south of New England but has yet to embark on permitting a project there. Nipper said Ørsted would “mitigate any commitments” if it chose to bid in New England in order to “be proactively prepared for the risks” posed by a change in federal support.
In a statement, a company spokesperson did not mention Trump, but he left the door open to building new projects in New England. The company’s three existing projects in the Northeast means it has a trained workforce, port infrastructure and vessels that can “help differentiate future potential bids,” said Tory Mazzola.
“We continue to help build an American offshore wind industry, as South Fork Wind nears completion and Revolution Wind will begin offshore construction in the spring,” he added. “Together these have created local jobs and helped stand up a U.S. supply chain, extending from New England and New York to Louisiana and Texas, while delivering American energy.”
This story also appears in Energywire.
They are awful and not worth the cost. They will be the bigger ecological disaster than that they proclaim to solve.