Offshore Wind and the Energy Dominance Agenda
The offshore wind industry is struggling, and now federal support has turned to deep opposition. President Donald Trump—a longtime critic of offshore wind—issued a day one executive order that halted leasing and permitting in federal waters. And on April 16, his administration issued a stop work order to Empire Wind—a fully permitted project already under construction. Blocking offshore wind projects creates challenges for states pursuing renewable energy options to meet growing demand. And halting a fully permitted project undermines sanctity of contract and regulatory stability for all energy projects.
The past few years have not been kind to offshore wind. Rising interest rates increased borrowing costs for an industry with large up-front capital expenditures, and supply chain snags, rising costs for supporting infrastructure, and project delays harmed project economics. After a burst of enthusiasm at the start of the decade, these challenges took their toll. Starting in 2023, several developers cancelled proposed projects, while others sought to renegotiate offtake terms that were no longer viable. Companies including Orsted, BP, and Equinor were forced to take substantial write-downs. A dramatic accident last year at Vineyard Wind resulted in a broken turbine blade. Then Trump’s January executive order not only halted new federal leasing indefinitely, but even suggested the government could terminate or amend existing wind energy leases.
U.S. Offshore Wind Projects: Operating, Under Construction, or Halted
Source: NREL, project sites, media reports
The recent stop work order for Empire Wind I sent a shockwave through the offshore wind industry. The 810 megawatt (MW) project offshore Long Island, operated by Norway’s Equinor, includes 54 wind turbines that will send power via subsea cables to New York City. Equinor estimates it will power up to 500,000 homes. After finalizing its federal lease during the first Trump administration in 2017, Empire Wind was nearly eight years into its permitting timeline. Yet Interior secretary Doug Burgum argued the Biden administration rushed through its approval process. Equinor’s chief executive called the order “unlawful” and the company is considering legal action.
It is no surprise that offshore wind is in Trump’s crosshairs. The industry has been a bugbear for Trump for more than a decade, since he lost a long legal battle to block a wind farm near his golf course in Scotland. He frequently claims that wind turbines kill wildlife, ruin coastal views, and raise electricity prices for consumers. And because the Bureau of Offshore Energy Management controls energy development in federal offshore waters, the sector is uniquely vulnerable to shifts in federal policy and regulations.
However, there are wider consequences to killing offshore wind projects. First, the federal government is intervening in state policies designed to cut emissions and lower energy prices for consumers. New England and the mid-Atlantic states see offshore wind as a promising resource. New York, for example, has offered five offshore wind solicitations as it pursues an extremely ambitious goal of generating 70% of its electricity from renewable energy by 2030 and developing 9,000 MW of offshore wind capacity by 2035. States in New England have similar aspirations for offshore wind as they seek to add generating capacity and curtail some of the country’s highest electricity prices. In Trump’s first term, states and cities continued to pursue climate goals even as Washington changed tack. This time around, the White House is blocking what it labels “state overreach.” In response, 18 states have now sued the Trump administration over its halt to wind permitting.
Second, the leasing and permitting suspension for offshore wind closes off access to an emerging energy source just as data centers, AI, and manufacturing contribute to soaring electricity demand. The North American Electric Reliability Corporation estimates that peak winter demand could rise by 18% in the next decade. The International Energy Agency estimates that electricity demand from data centers globally will more than double by 2030, to 945 terawatt hours. Policymakers and utilities have concerns about powering these strategically important industries. It seems unwise to block developments that could help ensure resource adequacy.
Third, this is a matter of U.S. competitiveness. Despite the current travails of offshore wind, other countries are moving ahead with projects. Global offshore wind capacity additions could reach 19,000 MW this year, with China accounting for some two-thirds of that total. With most industries, capital efficiencies take time. Short-circuiting project developments in the United States could mean that these efficiency gains happen elsewhere, to the benefit of non-US projects and operators.
Finally, even the harshest critics of offshore wind—who point to the industry’s high capital costs and dependence on tax incentives—should abhor the move to block a fully permitted, under-construction project. Stable investment terms, contract sanctity, and rule of law are essential to attracting investment in all types of energy projects. If certain projects and energy sectors are targeted arbitrarily, investor confidence will suffer.
The United States has unmatched energy wealth, from oil and natural gas reserves, to solar and wind resources, to the entrepreneurship and capital markets that enable resource development. Politicians and pundits frequently urge an “all of the above” energy strategy, but for the past decade, politicians of all stripes have politicized certain energy sources, inhibiting their development. To meet rising energy demand and ensure economic competitiveness, it’s best to pursue all options, while keeping a strong focus on emissions reductions. That is the surest path to energy dominance.
About the Author
Ben Cahill is Director for Energy Markets and Policy at the Center for Energy and Environmental Systems Analysis, University of Texas at Austin.
