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Global energy developer Orsted abruptly canceled two major offshore wind projects off New Jersey's coast in a blow to President Biden's green energy goals which call for a rapid development of wind energy.
The Denmark-based energy firm said its board of directors voted to ax its high-profile Ocean Wind 1 and Ocean Wind 2 twin projects in response to changing macroeconomic factors, including high inflation, supply chain bottlenecks and rising interest rates. The projects had been personally backed by Democratic New Jersey Gov. Phil Murphy and cited by the White House as proof of "Bidenomics" working.
"We have no choice but to cease development of Ocean Wind 1 and Ocean Wind 2," said David Hardy, Orsted's group executive vice president and Americas division CEO. "We are extremely disappointed to have to take this decision, particularly because New Jersey is poised to be a U.S. and global hub for offshore wind energy."
"We remain committed to the U.S. renewable energy market, building clean power that will create jobs across technologies and states from the Northeast to Texas," Hardy continued. "Offshore wind energy remains an integral solution to helping the U.S. meet its clean energy ambitions, including job creation, a domestic supply chain and a reinvigorated maritime industry."
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After the now-canceled Ocean Wind 1 project was federally approved in July, White House national climate adviser Ali Zaidi said it was "Bidenomics in action." (Drew Angerer/Getty Images | John Moore/Getty Images)
The sudden move, according to Hardy, is part of Orsted's ongoing review of its U.S. offshore wind portfolio. High inflation and other economic headwinds have threatened to sink the nascent offshore wind energy sector, with several developers in addition to Orsted announcing plans in recent weeks to reassess their existing projects.
Ocean Wind 1 — which was the first of the two projects and was first proposed years ago after the Bureau of Ocean Energy Management awarded wind energy development leases during the Obama administration — received formal approval for construction by the Biden administration in July. The project was used by the White House as an example of Biden's successful clean energy goals and economic plan.
"Today’s announcement gives the green light for construction of another. This project, off the coast of New Jersey, will supply enough energy on its own to power nearly half a million homes. This massive expansion in clean energy construction didn’t just happen. It’s not an accident. It’s Bidenomics in action. Big, bold, and building things," White House national climate adviser Ali Zaidi said on July 5.
"Thanks to President Biden’s leadership, the United States will keep seizing opportunities for offshore wind and other clean energy technologies, strengthening our energy security and advancing our climate goals, all while creating good-paying jobs up and down the manufacturing supply chain," he continued.
President Biden points to a wind turbine size comparison chart during a meeting about the Federal-State Offshore Wind Implementation Partnership on June 23, 2022. (Drew Angerer/Getty Images)
Interior Secretary Deb Haaland added that approving Ocean Wind 1 was a key milestone in the administration's "efforts to create good-paying union jobs while combating climate change and powering our nation."
Additionally, the White House issued a fact sheet on July 20, highlighting how Ocean Wind 1 was an example of Bidenomics in action.
"From day one, the Biden-Harris Administration has used every available tool to advance the growing American offshore wind industry, and we are seeing the results," White House spokesperson Michael Kikukawa said in a statement. "Since President Biden signed the Inflation Reduction Act, investments in the U.S. offshore wind industry have increased by $7.7 billion."
"While macroeconomic headwinds are creating challenges for some projects, momentum remains on the side of an expanding U.S. offshore wind industry — creating good-paying union jobs in manufacturing, shipbuilding, and construction; strengthening the power grid; and providing new clean energy resources for American families and businesses," he continued.
Kikukawa noted other projects that the Interior Department has recently approved.
But Orsted's announcement could ultimately disrupt the Biden administration's aggressive goal of deploying 30 gigawatts of offshore wind energy by 2030, the most ambitious goal of its kind worldwide.
Just two tiny pilot offshore wind farms are currently operational, while several commercial-scale projects along the East Coast are in various stages of development and permitting. Even if all the currently proposed projects under development were to be completed by 2030, the administration would remain far short of its 30-gigawatt goal.
"The Interior Department is committed to the Biden-Harris administration’s all-of-government approach to the clean energy future, which helps respond to the climate crisis, lower energy costs, and create good-paying union jobs across the manufacturing, shipbuilding and construction sectors," Interior Secretary Deb Haaland said Tuesday. (Shannon Finney/Getty Images)
In October, the New York State Public Service Commission rejected requests from a group of offshore wind energy developers who asked to renegotiate existing contracts amid rising persistent inflationary pressures, a decision that could make the projects impracticable.
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"When green dreams run into hard reality, the results are never pretty," Daniel Turner, founder and executive director of energy group Power The Future, said in a statement. "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," Turner said. "Governor Murphy can rage all he wants about getting back money from the company for coffers in Trenton, but the truth is the green agenda pushed by him and other militant leftists that made today happen. That’s cold comfort to Garden State families staring down a long cold winter with soaring energy costs."
Orsted's Ocean Wind 1 and Ocean Wind 2 projects together would have consisted of nearly 200 wind turbines across 161,000 acres in the Atlantic Ocean off the coast of Cape May County. According to the county, the turbines would be as close as nine miles from its coastline and would be visible from every beach in its jurisdiction.
The Biden administration aims to approve 30 gigawatts of offshore wind energy by 2030. However, the development plans have received local pushback over environmental and economic impacts. (Getty Images)
The project would also have two transmission line corridors with one substation in Cape May County. Ocean Wind 1 had been expected to enter operations by 2025 while Ocean Wind 2 would have been operational years later.
"Today’s decision by Orsted to abandon its commitments to New Jersey is outrageous and calls into question the company’s credibility and competence," Gov. Murphy said in a statement Wednesday. "As recently as several weeks ago, the company made public statements regarding the viability and progress of the Ocean Wind 1 project."
"I have directed my Administration to review all legal rights and remedies and to take all necessary steps to ensure that Orsted fully and immediately honors its obligations," he continued.
A coalition of stakeholders led by Cape May County also sued the Biden administration last month, arguing it had approved Ocean Wind 1 too quickly and without properly assessing negative impacts.
"This is a great day for the Atlantic Ocean. This is a great day for the whales and dolphins. The massive, reckless experiment known as Ocean Wind One has been stopped and Ocean Wind Two abandoned," said County Commission Director Len Desiderio. "There were many who consistently told us that we were wasting our time, that there was nothing we could do about the project being built."
"Well, I am happy that the County Board of Commissioners and so many in our business community and the grassroots groups that have been protesting did not listen to the naysayers," he continued. "We are a small county down here at the southernmost point of New Jersey, but we knew all along that our economy, our environment, our very way of life was at stake."
New Jersey Gov. Phil Murphy said Wednesday that Orsted's announcement "calls into question the company’s credibility and competence." (Aristide Economopoulos/Bloomberg via Getty Images)
And Rep. Chris Smith, R-N.J., who represents a coastal New Jersey congressional district, said the project cancelations was a "victory" for his constituents.
"Turns out that despite huge taxpayer subsidies and credible predictions of big increases to ratepayers, Orsted has concluded that they will still lose money," Smith said in a statement. "Orsted’s decision was a first step in exposing the economic unsustainability and environmental dangerousness of ocean wind turbines — each the size of the Chrysler Building in New York City — and Orsted’s pulling out of the deal may help slow and eventually halt similar projects off New Jersey’s coast."
"Orsted’s withdrawal marks a victory for local residents, environmentalists, and NJ commercial and recreational fishermen who have worked alongside me and Rep. Jeff Van Drew to expose the dangers inherent in the massive ocean industrialization plans slated for the Jersey Shore," he added. "It also marks a major failure for the Biden and Murphy Administrations who tried to push it through and throw billions of taxpayer dollars at the unsound, improperly vetted projects."
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Another congressman who represents a coastal district in New Jersey, Rep. Jeff Van Drew, R-N.J., also welcomed the announcement.
"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," said Van Drew. "From the beginning, these projects were all about lining the pockets of foreign-owned offshore wind companies."
"While we welcome this news, we must continue to build on this momentum and see to it that the remaining projects off the coast of New Jersey meet the same fate."
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