‘Congress missed a chance to speed gigawatts of US offshore wind to grid’

‘Congress missed a chance to speed gigawatts of US offshore wind to grid’

Going into December, prospects seemed strong that the US Congress would finally approve using tax policy to jump-start offshore wind energy off the nation’s coasts.

An American delegation to the COP25 climate talks in Madrid promised the country was “still in” the climate crisis fight. And clean energy tax credits were the remaining opportunity of the year to act on the climate change.

A five-year, 30% investment tax credit (ITC) dedicated to launching more offshore wind projects in the United States was included in a draft of the Growing Renewable Energy and Efficiency Now Act (Green) issued in November by the House Ways & Means Committee.

But late Monday night, 16 December, after the House Rules Committee returned from a dinner break, only a one-year extension of the wind production tax credit (PTC) and a credit for biodiesel had made it into the budget bill now headed to the floor.

Solar power, having been left battered by the trade war with China, would suffer again by being left out, along with electric vehicles, reportedly a nonstarter for the White House.

And offshore wind has still not received the dedicated long-term ITC we’ve worked for years to achieve, to put thousands of companies in the US supply chain to work, though we expect the US Atlantic projects currently in development to continue through the process and stay on track for their operational due dates.

Some early US offshore projects in 2020 may be able to qualify in time to use the alternative PTC, used mostly by onshore projects, which go up faster and generate revenue earlier.

The PTC was extended in the budget deal at 60% of its value for wind energy developments that start construction by the end of 2020. Offshore projects that qualify would be allowed to use an existing loophole to convert it into an 18% tax credit for their investment, which improves on the previous opportunity to convert a 40%-value PTC to a 12% ITC.

Good for those early projects, but not the 30% credit for projects launched through 2024 that the House Ways & Means Committee had supported. While we are disappointed, we will continue to work next year with our bipartisan champions in the House and the Senate to pass a 30% ITC. Meanwhile, the looming expiration of the existing federal tax credit will place additional demands on states.

So far, the only operations US offshore wind project is off Block Island, Rhode Island. More are now under development along the east coast and in Lake Erie – over 9GW’s-worth so far – and developers are eyeing the deep waters off the west coast for floating project.

Federal tax credits not only encourage investment and keep costs down for ratepayers, they help ease the additional costs of establishing a new industry in a country without an established supply chain. Once again it is critical that states lead our energy and economic growth and fill the void left by the federal government by funding regional and state-level programs to develop that supply chain.

States like New Jersey, Rhode Island, Connecticut, Virginia, New York, Massachusetts, and Maryland must accelerate their investments in workforce development, job training, and port infrastructure.

According to the government’s Wind Vision – launched under the Bush administration and updated in 2015, wind power can become the leading source of electricity in America by mid-century, with over a fifth of that located off both coasts and in the Great Lakes.

Turbines will be placed over 10 miles offshore to harness the heavy, steady winds that blow almost continuously over open ocean. Barely visible from shore, but still close to major cities hungry for affordable electricity at peak hours, these offshore power plants offer clean, reliable energy that will help reduce global heating.

As it stands, Congress is forgoing thousands of well-paying steady jobs in port cities that need them, and business opportunities for US companies eager to supply this rapidly emerging national and global industry.

But if the ITC for offshore wind is added to the final federal budget, Congress will not only be acting on climate, it will be unleashing a $1trn in investment over the next 20 years in a new American industry.

· Liz Burdock is CEO of the Business Network for Offshore Wind, a nonprofit advocating for the US offshore wind energy industry at state, federal, and global levels.