Orsted scraps NJ offshore wind project.
Offshore Wind Giant Abandons New Jersey Projects, Dealing Blow to Biden’s Climate Goals
Renowned offshore wind developer Orsted has recently announced its decision to scrap two massive projects off the coast of New Jersey. Citing supply chain issues, inflation, and rising interest rates, among other factors, the Danish company’s move poses a significant setback to the Biden administration’s ambitious plan of utilizing offshore wind to combat climate change.
The administration’s goal was to generate 30 gigawatts of energy from fixed-bottom offshore wind farms by 2030, which could power 10 million homes, and 15 gigawatts from floating offshore wind infrastructure by 2035, potentially providing power to 5 million homes.
New Jersey Governor Phil Murphy, a Democrat who has made offshore wind a key focus of his climate agenda, expressed his anger and disappointment at Orsted’s decision.
While opponents of offshore wind in the Atlantic celebrated, those resisting similar projects on the Pacific coast found encouragement.
These opponents argue that the federal government is rushing to “industrialize the ocean” without adequately studying the impact of offshore wind on marine life and the environment.
The IRA Was Not Enough
Orsted claims that despite receiving substantial tax subsidies from the Inflation Reduction Act (IRA), which offers up to a 30 percent credit for projects commencing construction before 2026, the New Jersey project is no longer financially viable.
“Macroeconomic factors have changed dramatically over a short period of time, with high inflation, rising interest rates, and supply chain bottlenecks impacting our long-term capital investments,” stated David Hardy, Orsted’s Group Executive Vice President and CEO of Americas, in a media release.
The company reported a $4.02 billion loss in asset value during the third quarter, with $2.8 billion of that attributed to its Ocean Wind 1 project.
“As a result, we have no choice but to halt the development of Ocean Wind 1 and Ocean Wind 2,” Hardy added.
New Jersey had made significant efforts to support Orsted and help overcome its financial challenges in completing the project.
In July, Governor Phil Murphy, a Democrat, backed a bill that allowed Orsted to retain additional federal tax credits that would have otherwise been passed on to New Jersey utility ratepayers.
“Today’s decision by Orsted to abandon its commitments to New Jersey is outrageous and raises concerns about the company’s credibility and competence,” expressed Governor Murphy in a statement.
“Just a few weeks ago, the company publicly affirmed the viability and progress of the Ocean Wind 1 project.”
The governor’s administration views Orsted’s decision as a setback in their pursuit of achieving 100% clean energy by 2035.
Orsted’s Ocean Wind 1 and 2 projects would have generated 2.2 gigawatts of energy, enough to power approximately 1 million homes. Governor Murphy’s administration is currently exploring legal options to compel Orsted to fulfill its obligations.
Meanwhile, opponents of this massive project are celebrating the news.
Battling a Boondoggle?
Congressman Jeff Van Drew (R-N.J.) criticized the wind farms, stating, “These Green New Deal-style wind farms were bad for our economy, our environment, and would have been a complete disaster for hardworking middle-class families in South Jersey.”
He further accused Orsted of repeatedly seeking additional taxpayer funds and tax breaks while burdening ratepayers with soaring utility costs.
The project faced numerous legal challenges, with Cape May County and Ocean City, New Jersey, filing multiple lawsuits against federal and state agencies in an attempt to block the projects. Plaintiffs argued that the projects would harm the environment, the local economy, and increase energy expenses.
The lawsuits accused federal agencies, including the Bureau of Ocean Energy Management (BOEM) and National Marine Fisheries Service, of disregarding and violating laws designed to protect the environment and marine life, as well as neglecting to consider the negative impacts on the Jersey Shore’s tourism industry.
Congressman Van Drew praised the efforts of Cape May County and the local community, stating, “Orsted’s offshore wind projects could not have been stopped without the help of Cape May County and all the fantastic grassroots efforts that emerged along the way, and most importantly, the people of South Jersey.”
“While we welcome this news, we must continue to build on this momentum and ensure that the remaining projects off the coast of New Jersey meet the same fate,” he added.
West Coast Battle Brewing
Meanwhile, opposition is growing against an even larger offshore wind project on the Pacific coast. The Bureau of Ocean Energy Management (BOEM) recently concluded a 60-day public comment period on proposals for two floating offshore wind projects in Oregon, and the reactions have been predominantly negative.
Two affected counties and one city have formally opposed the projects, garnering strong support from local residents and those employed in the fishing and tourism industries.
“It’s clear to all of us that the numbers simply don’t add up, but developers and the administration have been desperately trying to tell a different story,” remarked Heather Mann, Executive Director of the Midwater Trawlers Cooperative in Oregon.
“When it comes down to real money, these offshore wind energy dreams will crumble.”
“I hope that Oregon Governor Tina Kotek will recognize Orsted’s decision for what it is—a major warning sign urging us to proceed with caution,” added Mann. “Rushing into this boondoggle is not the right path forward.”
How can the concerns raised by opponents of offshore wind be addressed through research and mitigation measures?
Xt-base”>Federal Study Raises Alarms About Offshore Wind Power’s Impacts on Fishing Industry and Marine Life
