Soaring costs, supply chain issues and rising interest rates are taking a toll on the offshore wind industry. In the face of these challenges, the industry is asking for more support from taxpayers, and its requests have received generally positive support from renewable energy proponents.
It’s a very different reaction to the oil and gas industry, which doesn’t receive nearly the subsidies that wind companies enjoy but is up against the same challenges.
Despite the impacts of supply chain issues and higher interest rates, the petroleum industry has remained profitable in the recovery years following the pandemic. Rather than recognize the industry as a success story, they’ve been criticized for making too much money.
Throughout 2022, oil companies were reporting record profits. They were accused of “price gouging” and Congressional Democrats sought to impose more taxes on them to give some of those high earnings to the federal government. California even passed a price gouging law in response to the success of oil and gas.
“It's not that the government is picking energy winners and losers. It’s that the government keeps picking losers,” Tim Stewart, president of the U.S. Oil and Gas Association, told Just The News.
The news Tuesday that Danish wind developer Orsted is canceling Ocean Wind, a major 2.2-gigawatt wind project off the New Jersey shore — and likely forfeiting $100 million in the process — was just the latest in a string of troubles for the wind industry.
“Wind power receives billions in taxpayer support, yet we see project after project failing. In this case, it’s the people of New Jersey left holding the bag,” Daniel Turner, executive director of Power The Future, an energy advocacy group, said in a statement.
Turner pointed out that New Jersey Gov. Phil Murphy praised the project when his state and Orsted finalized agreements for the Ocean Wind. Murphy was highly critical of the company’s decision to cancel the project.
“Today’s decision by Orsted to abandon its commitments to New Jersey is outrageous and calls into question the company’s credibility and competence,” Murphy said in a statement.
The U.S. Department of Energy and the International Energy Agency consider development of offshore wind projects vital to transitioning the grid off of fossil fuels. In the face of the recent setbacks, governments are open to piling on more support, which would be in addition to what the industry already receives in taxpayer money.
On the same day that Orsted announced the end of the Ocean Wind project, the Biden administration approved the Coastal Virginia Offshore Wind project, which will include 176 turbines off the coast of Virginia.
“Today’s approval of the largest offshore wind project in U.S. history builds on the undeniable momentum we are seeing,” Secretary of the Interior Deb Haaland said in a statement.
Despite billions of dollars in support under the Inflation Reduction Act, wind developers Orsted, Norway-based Equinor and France’s Engie requested changes to tax credits in September to lower the bar for eligibility.
Six governors of East Coast states, including New Jersey’s Murphy, wrote a letter to President Joe Biden in September supporting the request. The letter also requested more be done to expedite the permitting process, as local opposition — ironically from many environmentalists — and the federal requirements under the National Environmental Policy Act make project development a long process.
Over in Europe, the offshore wind industry is having just as much trouble and getting just as much support from European governments. The European Commission is proposing a package to back the wind industry, which includes expedited permitting, improved auction systems, access to finance, and support for stable supply chains.
With billions in losses, Siemens is in talks with the German government in hopes of getting more aid. German Chancellor Olaf Scholz, Reuters reported, called the industry “very important” as the talks were underway.
Although facing many of the same problems as the wind energy industry, the outcomes this year have been far better in the petroleum industry. Earnings are down from their records of 2022, but the companies are still doing well in 2023. ExxonMobil is expecting to deliver an operating profit of between $8.3 billion and $11.4 billion in the third quarter, according to Reuters.
Results in the quarter for Chevron were also down from last year’s highs, but still historically strong.
The British energy giant BP fell short of expectations this quarter, but the company still delivered a profit.
Shell also saw "strong operational and financial performance" in the third quarter, according to Shell CEO Wael Sawan. Shell announced earlier this month it was cutting 15% of the workforce in its low-carbon solutions division.
For the oil and gas industry, the increasing support of offshore wind despite widespread failures several months after condemning oil companies for making too much money represents a global failure in energy policy. “Orsted is another cautionary tale in a long string of cautionary tales about government mandates and subsidies. Americans were told for decades the future is all renewable and, if a government mandate was combined with enough subsidies, then everyone would have cheap, abundant renewable energy. That hasn't happened,” the U.S. Oil and Gas Association's Stewart said.
Larry Behrens, western states director for the Power The Future, told Just The News that Biden declared a war upon oil and gas, while rushing to spend billions on these green solutions. We’re now suffering the consequences. “From car manufacturers hitting the brakes on electric vehicles to wind projects failing on a massive scale, it’s clear Joe Biden’s agenda is an unsustainable boondoggle that will continue to cost taxpayers and grow our national debt,” Berhrens said.
“Failed leaders have failed priorities and there is no doubt Biden is failing” he added.
The question remains as to how long renewable energy supporters’ patience will hold out. Should the industry get the added support it seeks and continues to see losses, it’s unlikely that more supporters — and voters for that matter — will offer another round of bailouts.