Political uncertainty clouds US offshore outlook

Whatever your take on Trump and on renewable energy, the US offshore wind industry is facing considerable uncertainty, primarily due to the upcoming presidential elections, which could lead to two vastly different development scenarios. If he is to be believed, he will ‘kill’ offshore wind on day one of a new administration. Some observers, me included, believe he would hamper offshore wind in the US, but not kill it, not least because the industry is in a very different place now than it was in his first administration. A lot of jobs and economic development would be lost if he did.

As analysts at Intellatus noted recently, depending on who is the next President of the US, two very different development scenarios could unfold. In the first, offshore wind continues on its current pathway, towards more than 90 GW of identified project capacity. The second scenario will see the US shift away from offshore wind and the energy transition with, potentially, the immediate cancellation of federal plans for lease auctions in eight wind areas between 2025 and 2028; the removal of federal review resources that could immediately impact ~15 GW of projects that are in the permitting pipeline; and a halt to permitting of projects with leases where federal review has yet to commence. Executive Orders that halt specific projects or a create a moratorium on offshore wind development in specific areas could follow.

The National Ocean Industries Association (NOIA) – which represents interests in offshore oil and gas and renewables – says it is committed to ensuring the next administration – regardless of party or candidate – understands the vital contribution domestic – offshore – energy makes to prosperity and security. “Our message to policymakers remains clear,” says NOIA. “A balanced and forward-thinking approach to energy policy is essential. This includes supporting the full spectrum of offshore energy resources, including oil and gas and wind.”

Analysts at Aegir Insights believe Trump’s greatest ‘lever’ would be to slow down lease sales and redirect funding at BOEM away from renewable energy to oil and gas. Equally, Mr Trump could target the Inflation Reduction Act, which provides tax incentives for renewable energy projects, but Aegir Insights believes a moratorium on offshore wind or the creation of an environment in which endless litigation holds up projects are less likely because of the economic repercussions and job losses that would result. Less mature projects that do not already have an approved construction and operations plan or a lease could be adversely affected. As Aegir Insights notes, it would take ‘extraordinary action’ to halt projects that are already under construction. BOEM has already approved about 12 GW of capacity and there is around 20 GW of mature projects in total that will keep offshore wind in the US ticking over for the next four years.