Can the Biden Administration Meet Its Offshore Wind Goals?
Since this article was first published in October 2021, the Biden administration has issued a Record of Decision for a second commercial offshore wind farm, the South Fork Wind Farm off New England, which will provide 132 MW of offshore wind to residents of Long Island, New York, for the first time. Congress passed and President Biden signed into law the Infrastructure Investment and Jobs Act (Pub.L. 117-58), which provides $17 billion for ports, including $450 million a year for the Port Infrastructure Development Program (with a preference for wind ports) and codifying the FAST-41 process for expediting permitting of major infrastructure projects, discussed further below. The House of Representatives also passed the Build Back Better Plan, which will extend the Investment Tax Credit and the Production Tax Credit through 2031 and create a new manufacturing tax credit for all wind parts manufactured in the United States (except vessels). The Senate is expected to take up the Build Back Better Plan for further changes and could send it to President Biden for his signature by the end of the year. Stay tuned for more updates in the next issue of Mainbrace and Blank Rome’s maritime alerts.
In the first week of his presidency, President Biden, by Executive Order, set a goal of doubling offshore wind by 2030—an ambitious goal to help put the United States on a path to meet its commitments under the Paris Climate Accords, which President Biden rejoined. To implement the general goal, the three lead departments—Interior (“DOI”), Energy (“DOE”), and Commerce (“DOC”)—subsequently committed to working towards a specific 30 gigawatts (GW) goal by 2030 while protecting biodiversity, promoting ocean co-use, and creating tens of thousands of jobs. (See FACT SHEET: Biden Administration Jumpstarts Offshore Wind Energy Projects to Create Jobs.) This article describes the progress made thus far in meeting this goal and discusses any remaining impediments.
Current Progress on Offshore Wind in the United States
To date, the Biden administration, along with previous administrations, have:
- Approved 18 offshore wind leases in federal waters;
- Approved the largest offshore wind farm to be constructed in federal waters (i.e., the Vineyard Wind project off the coast of Massachusetts);
- Identified five new Wind Energy Areas (“WEAs”) for potential leasing in the area of the New York Bight;
- Began the process of identifying additional WEAs in the Gulf of Mexico and off California; and
- Issued several notices of intent to begin the environmental review process under the National Environmental Policy Act (“NEPA”) for additional wind farms off New York, North Carolina, and South Carolina.
These steps alone have moved the administration closer to meeting or even exceeding its 30 GW goal with a total of 35,000 megawatts (MW) plus in the pipeline, according to a recent definitive report from the DOE’s National Renewable Energy Laboratory. (See Offshore Wind Market Report: 2021 Edition Released.)
The entire offshore wind leasing and permitting program in the United States is based on a modest amendment to the Outer Continental Shelf (“OCS”) Lands Act (“OCSLA”) enacted in 2005, which granted the Secretary of the Interior the authority to lease areas of the OCS for renewable energy, in addition to his existing authority for oil and gas leases. With this single stroke of the legislative pen, the DOI, with authority delegated subsequently to the Bureau of Ocean Energy Management (“BOEM”), undertook a strategic plan to open up the OCS for offshore wind leasing. As noted above, this has resulted in the 18 already awarded leases.
Experienced European Developers Have Made a Difference
With the exception of the Coastal Virginia Offshore Wind (“CVOW”) project off the coast of Virginia managed by the state’s utility, Dominion Energy Virginia, the rest of the leases have gone to experienced developers from Europe. These include Ørsted, Avangrid Renewables and Copenhagen Infrastructure Partners (joint partners in Vineyard Wind), Renexia, Equinor, and BP. In fact, Europe has far outpaced the United States when it comes to offshore wind, already producing 25 GW of offshore wind with a goal of 300 GW by the middle of the century. (See Europe’s Offshore Wind Sector Saw $31 Billion of Investment in 2020.) Europe’s commitment to renewable energy and the Paris Climate Accords has remained steady due to strong public support and perhaps less access to oil and gas supplies. (See Fact Sheet | Offshore Wind: Can the United States Catch up with Europe?) U.S. progress has unfortunately experienced fits and starts.
The Leasing and Permitting Process Can Take Two to Four Years
The leasing process is just the first step of a lengthy four-step program consisting of planning and analysis, leasing, site assessment, and finally construction and operations, as laid out on the Regulatory Roadmap tab of the BOEM’s Regulatory Framework and Guidelines. The most critical and time-consuming part of the process remains the NEPA review process. Typically, BOEM issues an Environmental Assessment followed by a comprehensive Environmental Impact Statement (“EIS”) for major offshore wind (“OSW”) projects. In the case of the Vineyard Wind project, which would be the largest offshore wind project on the U.S. East Coast, an additional or Supplemental EIS was issued in June 2020, prompting Vineyard Wind to withdraw its application from BOEM last year and resubmit to the Biden administration. This delay and restart allowed the Biden administration to issue a final Supplemental EIS on May 11, 2021, and a final Record of Decision greenlighting the project. (See Vineyard Wind Receives Record of Decision for First in the Nation Commercial Scale Offshore Wind Project.) Production of wind power will commence in 2023.
Criticality of State Law Support
State laws and policies promoting clean energy are critical to supporting offshore wind projects, even in federal waters. The wind power eventually must come to shore through underwater cables and fed into state grids and power purchase agreements. This is certainly true in the case of the Virginia Clean Economy Act, which called for 5200 MW of offshore wind as being in the public interest. (See Governor Northam Signs Clean Energy Legislation.) The CVOW project will contribute about half of this goal. New legislation was just signed by California Governor Newsom to promote offshore wind, an important first step to help resolve use conflicts off that state’s coast where floating wind farms are expected to soon be the norm. The California bill would direct state agencies to set strategic goals for offshore wind and develop a strategic plan to achieve large scale projects by 2045. (See New Offshore Wind Bill Passes California State Legislature, Next Stop Governor's Desk.) Without strong state law support, renewable energy from the OCS would simply blow away in the wind.
Ongoing Impediments to the Future of Offshore Wind
One initial impediment or challenge was determining which laws apply to offshore wind leasing on the OCS. The 2005 amendment to the OCSLA did not spell this out. In 2020, Congressman John Garamendi (D-CA) sponsored an amendment to help resolve this issue and ensure that all U.S. laws that applied to oil and gas leasing would also apply to renewable energy development on the OCS. The Garamendi amendment went into effect on January 1, 2021, as part of the FY2021 National Defense Authorization Act and it clarified and confirmed that all federal law, including the Jones Act and other coastwise laws, apply to all offshore energy development on the OCS, including wind energy. P.L. 116-283 § 9503. In his accompanying press release, the congressman stressed the application of the Jones Act to the OCS. (See Congress Passes Garamendi Amendment Requiring Jones Act Enforcement in Offshore Wind.)
Subsequent to enactment of this law, U.S. Customs and Border Protection (“CBP”) has begun to issue rulings applying the Jones Act to offshore wind operations. This should start providing assurance to developers, vessel owners, and other stakeholders as to where the dividing line is drawn. It also allows foreign-flag vessels to continue the heavy lifting of turbine foundations and turbines installed on the OCS because CBP does not interpret this activity as transportation under the Jones Act. In addition, a coastwise-qualified, turbine-installation vessel (“TIV”)—Charybdis—is under construction at the Keppel AmFELS shipyard in Texas and financed by Dominion Energy Virginia. (See 472-foot Ship ‘Charybdis’ to Install Wind Turbines out of New London.)
Expediting the Review Process through FAST-41
As noted above, the NEPA process can be the longest part of the BOEM approval process. This was certainly true in the case of the Vineyard Wind project. One avenue to expedite this process is to use the FAST-41 process created by the 2015 highway bill, the “Fixing America’s Surface Transportation Act” (“FAST Act”). The FAST Act established a coordinated review process for major infrastructure projects, with a designated lead agency, and a goal of two years to complete the review. (See FAST-41 for Infrastructure Permitting.) To review any project subject to the FAST-41 process, one only needs examine the FAST-41 dashboard. Several offshore wind projects are subject to this process, including the now-completed Vineyard Wind project and the pending CVOW project. Congress is working to codify this process for all major infrastructure projects in the Senate-passed Bipartisan Infrastructure Plan (H.R. 3684), which is now pending in the House of Representatives.
Conflicts with Other Environmental Laws
But, even a coordinated process cannot legally supersede individual environmental laws that still apply to offshore wind projects on the OCS. These include the Magnuson-Stevens Fishery Conservation and Management Act, the Marine Mammal Protection Act, the Endangered Species Act, the National Historic Protection Act, and the federal consistency provisions of the Coastal Zone Management Act—all applicable to the BOEM permitting process. (See Guidelines for Information Requirements for a Renewable Energy Site Assessment Plan.)
One of the most difficult conflicts to resolve at the moment involves offshore wind and commercial fishing. Recently, the Responsible Offshore Development Alliance (“RODA”), a fishing industry association, filed suit in the First Circuit Court of Appeals challenging BOEM’s approval of the Vineyard Wind project. (See Responsible Offshore Development Alliance Sues BOEM.) RODA is clearly unhappy with the spacing between platforms that BOEM approved in its Record of Decision, which was, in turn, based on the U.S. Coast Guard’s recommendation to leave one nautical mile between the proposed 62 wind turbines. We do not expect the litigation to conclude any time soon. So, despite FAST-41, litigation over permit decisions may remain until the courts and/or Congress steps in to resolve the disputes. Another alternative is for the Biden administration to appoint an offshore wind czar to work out these use conflicts, perhaps employing the offices of the Council on Environmental Quality, which is housed in the Executive Office of the President.
A remaining issue is the opposition of some local residents to offshore wind farms, commonly referred to as NIMBY—“Not in My Backyard.” Public comments on OSW projects often include local residents or local officials who do not want their views disrupted by large turbines miles off their coast despite the fact that most turbines will be sited more than 25 miles from shore. Recently, a coalition of Nantucket residents, calling themselves the ACK Residents Against Turbines, sued BOEM and the National Oceanic and Atmospheric Administration to block the construction of the Vineyard Wind project, claiming that it would interfere with migration of the endangered right whale. (See Group files lawsuit to try to block construction of wind farm off Nantucket, Martha’s Vineyard.) This lawsuit is pending in federal district court in Boston.
Offshore Wind Farm Financing
The construction costs of an offshore wind farm can reach hundreds of millions or even billions of dollars, but such costs are coming down sharply as larger wind turbines are deployed. (See above NREL report.) Financing a large offshore wind farm can certainly present a serious challenge. However, the recent close of $2.3 billion of senior debt for the Vineyard Wind project by nine international and U.S. banks should provide an incentive for other banks and financial institutions or even pension funds to support other offshore wind projects. (See Vineyard Wind 1 Becomes the First Commercial Scale Offshore Wind Farm in the US to Achieve Financial Close.)
U.S. Supply Chain Support
Lack of a U.S. supply chain for major components of offshore wind farms remains a logistical problem. In the case of CVOW, for example, most of the largest parts of the project are coming from Europe. The United States has not yet developed its own manufacturing base for major OSW components, like turbines, nacelles, and offshore substations, although major U.S. companies like General Electric are certainly stepping up to the plate and trying hard to compete with or restrict competition from European turbine manufacturers, as exemplified in a recent patent dispute with Siemens Gamesa. (See GE Wins First Round in Siemens Gamesa Wind Turbines Fight.)
Maritime Industry Support
Many states and ports along the East Coast have stepped up to the plate to establish new locations devoted to wind farm staging and manufacturing areas. For example, the Port of Virginia just entered into a leasing agreement with Dominion Energy Virginia to lease 72 acres as a staging area for offshore wind. (See Dominion Energy to lease 72 acres from Port of Virginia for offshore wind project.) Congress has also recognized the important role that ports play in commerce and the new OSW industry by significantly increasing funds for the Port Infrastructure Development Program to $17 billion in the Senate-passed infrastructure bill.
One area missing from any congressional attention is the Title XI Federal Ship Financing Program administered by the U.S. Maritime Administration. This program can play an important role in financing new vessel construction for the burgeoning offshore wind trade. Congress could improve the Title XI program by setting aside funds for and establishing a new expedited approval process to finance U.S. vessels dedicated to transport equipment and crews and install turbines and platforms.
Finally, the Biden administration is dedicated to creating thousands of construction and service jobs in the OSW industry with as many as possible being well-paid union jobs. A recent agreement between Dominion Energy Virginia and national and state Building Trade Unions to identify, train, and deploy union workers and veterans in the CVOW project pays tribute to this goal. (See Dominion Energy, Trade Unions Announce Coastal Virginia Offshore Wind Partnership.)
The Biden administration is well on its way to meeting its 30 GW goal with new commercial wind farms coming soon off the U.S. East Coast and possibly someday soon off the coast of California. Nonetheless, a number of challenges remain to continued growth of the U.S. offshore wind market. Although the streamlined review process is helpful, projects continue to face ocean-use conflicts and NIMBY opposition. That said, the industry is gaining significant support from states, consumers, the Biden administration, and U.S. businesses and developers, and we can expect the growth to produce thousands of jobs in the near future.
This article has been updated from its original publication in Maritime Reporter and Engineering News on October 15, 2021. Reprinted with permission.
This article is one in a series of articles written for Blank Rome's MAINBRACE: December 2021 edition.