The US Administration dealt a potential blow to emerging offshore wind segment by ruling out energy development along the East Coast. The move will bar not only offshore oil and gas drilling but coastal wind farm development in equal measure. The broad reach of the President’s recent orders, which was confirmed by the Interior Department agency that oversees offshore energy development, comes as renewable developers are spending hundreds of millions of dollars snapping up the rights to build wind farms along the US East Coast.
At issue are recent Trump memos ruling out new oil and gas leasing along Florida, Georgia and South and North Carolina from July 1, 2022 until June 30, 2032, issued after the opposition pressed for a drilling ban and as the president courts voters concerned about the environment. In the latest development, the President has stated that the government would expand the offshore energy moratorium to include Virginia, though it has not yet issued a directive encompassing the territory.
The ban on offshore oil and gas drilling is a shift in policy for the Trump administration, which in 2017 began opening the offshore continental shelf for drilling as part of “America First” programs. The ban on leases for energy development has been a difficult political issue for the administration. Shortly after taking office, Trump ordered the Interior Dept. to consider scheduling new sales of drilling rights along the US coast. The agency in January 2018 responded with a draft plan opening the door to selling drilling rights in more than 90 per cent of US coastal waters. A year later, though, administration officials decided to delay their plan to expand oil leasing until after this year’s election, amid pushback from Republican leaders in the Southeast and elsewhere concerned about losing votes if they supported the sale of new drilling rights.
REGlobal’s Views: The US offshore wind sector remains severely underdeveloped, with the country’s sole offshore commercial wind farm, the Block Island Wind Farm, generating just 30 MW of electricity. In sharp contrast, the country has a total installed wind generation capacity of 107,443 MW after adding another 1,800 MW during the first half of 2020. According to the US Department of Energy, offshore wind resources in US have enough potential to generate more than 2,000 GW of electricity annually–nearly double the nation’s current electricity consumption. The latest decision by the government may jeopardize the sector’s growth potential.