With Monday’s confirmation of energy executive Chris Wright to serve as secretary of Energy, President Donald Trump now has his full team of energy and climate policy disrupters complete. Wright now joins EPA Administrator Lee Zeldin and Interior Secretary Doug Burgum to form the administration’s proverbial three-legged stool who will seek to affect a sea change in federal energy and climate policy over the coming four years.
One of the biggest issues this troika must now address is the reining-in of the profligate, wasteful federal subsidization of costly, environmentally disruptive renewable energy projects based on transparently unsustainable business plans. Trump acted early in his first days in office to invoke a freeze on permitting and construction of new wind projects on federal lands and waters, including the northeast Atlantic, where a set of Biden-subsidized boondoggles have created rapidly rising utility costs for New England residents, allegations of deadly impacts on whales and other marine mammals and conflict with the region’s commercial fishing industry.
The history of this subsidized-into-existence sector is too littered with examples of project delays, cancellations, renegotiations of ever-higher guaranteed power rates, demands for more and more subsidies, and billion-dollar corporate write-downs to enumerate here. The latest examples came in January when Shell pulled its planned $1 billion investment in the Atlantic Shores project off the coast of New Jersey. A few days later, New Jersey’s Board of Public Utilities abandoned plans for a fourth offshore wind solicitation for bids, effectively killing Atlantic Shores.
On Monday, Democratic New Jersey Gov. Phil Murphy, while referring to offshore wind as a “once-in-a-generation opportunity to create tens of thousands of jobs, drive an entirely new manufacturing supply chain, and secure energy independence,” agreed with the Board’s action, saying that the “offshore wind industry is currently facing significant challenges, and now is the time for patience and prudence.”
Shell’s withdrawal from Atlantic Shores came just a few weeks after big Danish wind developer Orsted was forced to take a $1.69 billion impairment charge related to its Sunrise Wind project off the coast of New York. Then-CEO Mads Nipper claimed the project was not being cancelled, but merely delayed for several years due to changing economic and market factors. But the company admits that assessment did not account for potential impacts from the Trump executive order, and last week decided to replace Nipper with a new CEO, Rasmus Errboe.
“The impacts on our business of the increasingly challenging situation in the offshore wind industry … mean that our focus has shifted,” Orsted Chair Lene Skole said in a statement. “Therefore, the board has today agreed with Mads Nipper that it’s the right time for him to step down.”
The reality is that the Trump order is a threat to the survival of the offshore wind industry in the United States. Jason Grumet, CEO of the American Clean Power Association, said in a recent interview with Jael Holzman that Trump’s pause could impact “probably more than half” of all wind projects currently under development in the U.S. “If in fact the federal government stops issuing approvals, a significant amount of the pipeline would be interrupted,” Grumet said.
As part of the Trump efforts to reconstruct U.S. federal energy policy, Burgum, Zeldin and Wright will form an inter-agency National Energy Council (NEC) with Burgum as Chairman. The charge for the NEC is to, in Trump’s words, “oversee the path to U.S. ENERGY DOMINANCE.”
Getting to that goal will require finding ways to end the profligate waste of taxpayer money going into hundreds of “green” energy startups and projects with unsound business models that require frequent injections of additional subsidies and tax incentives to remain in business. Unfortunately for the offshore wind business in the United States, that general description appears to apply to most, if not all of the projects mounted to date.
Trump’s NEC will have to undertake many different initiatives but should make ensuring the halt of new tranches of federal subsidies targeting these unsustainable projects a top priority. Offshore wind is a failed experiment that should be allowed to fail.
David Blackmon is an energy writer and consultant based in Texas. He spent 40 years in the oil and gas business, where he specialized in public policy and communications.
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