Daily on Energy: Keeping an eye on offshore wind’s troubles

The projects—key to President Joe Biden’s goal of reaching 30,000 GW offshore wind capacity by 2030— are struggling to come online as developers hit unforeseen snags, including supply chain delays, soaring materials costs and high interest rates.

Equinor, Orsted, BP, Shell and other major developers have either canceled or amended planned offshore projects because of these problems. And more projects could be at risk.

Orsted, a Danish company, warned this month that it could shutter its U.S. projects completely if it does not receive more federal support. “We are still upholding a real option to walk away,” Orsted CEO Mads Nipper told Bloomberg in an interview.

Just weeks prior, Orsted warned of impairments of up to $2.3 billion on its U.S. projects due to the higher costs and its inability, at least for now, to qualify for the IRA’s domestic credits.

States are calling for more federal funds to help cover the higher costs of development: Six governors asked Biden last week to boost federal support for offshore projects, pleading for the administration to act urgently and “utilize every federal tool available” to help prevent projects from going under.

In the letter, the governors of New Jersey, New York, Connecticut, Maryland, Massachusetts, and Rhode Island urged the administration to provide a clear pathway for developers to receive the IRA’s 30% tax credit for offshore projects, as well as the bonus 10% credit available to developers who use U.S.-made materials,

“Absent intervention, these near-term projects are increasingly at risk of failing,” they said.

The states are facing more pressure from offshore developers to update their power purchase agreements and reflect the higher costs— which could push prices onto consumers unless the federal government steps in to help.

Nipper said it’s “inevitable” that PPAs will need to be adjusted so U.S. offshore projects can continue.

“And if they don’t, neither we nor any of our colleagues are going to build more offshore,” Nipper said. “It’s very simple.”

Welcome to Daily on Energy, written by Washington Examiner Energy and Environment Writers Breanne Deppisch (@breanne_dep) and Nancy Vu (@NancyVu99). Email [email protected] or [email protected] for tips, suggestions, calendar items, and anything else. If a friend sent this to you and you’d like to sign up, click here. If signing up doesn’t work, shoot us an email, and we’ll add you to our list.

FAIN RAMPS UP DEMANDS AS STRIKE CONTINUES: UAW president Shawn Fain threatened to ramp up strike activity if automakers do not come forward with a better offer in their contract negotiations, saying Sunday that workers are “fed up with falling behind” as car companies rack in massive profits.

“We are prepared to do whatever we have to do,” Fain said on “Face the Nation.” “The membership is ready.”

Fain is seeking wage hikes of 40% for UAW workers, commensurate with what he says are the average salary increases of Ford, GM, and Stellantis.

The UAW rejected a 21% wage increase proposal from Stellantis this weekend, the highest offer yet. “It’s definitely a no-go,” Fain said when asked about the proposal. “We’ve made that very clear to the companies.” While just 12,700 union workers are on strike, UAW could call for broader action and up the pressure on automakers.

GOP presidential hopefuls also hit the Sunday show circuit, seeking to hit Biden on his EV targets: Former Vice President Mike Pence told CNN that UAW is “pushing back rightly” in going on strike, echoing their concerns on EV production, which he argued will benefit China.

The U.S. investment in EV manufacturing is “understandably causing great anxiety among UAW members,” Pence said.

…Meanwhile, Biden dispatched White House adviser Gene Sperling and acting Labor Secretary Julie Su to Detroit today to aid in the contract negotiations..

NATURAL GAS BILL HEADS TO RULES: The House Rules Committee is scheduled Monday to consider a bill that would repeal restrictions on the export and import of natural gas. The White House released a statement voicing its opposition to the bill – but stopped short of saying it would veto the measure.

The bill, introduced by Republican Rep. Bill Johnson of Ohio, would rescind certain restrictions under the Natural Gas Act, including restrictions related to free trade agreements. The legislation would also grant the Federal Energy Regulatory Commission the exclusive authority of overseeing facilities’ operations to export or import natural gas.

The White House came out in opposition to the bill Monday, arguing that the measure would eliminate consideration of whether certain exports of natural gas are consistent with public interest.

“Doing so would strip vital consumer, domestic manufacturing, and energy security safeguards, and would eliminate an important check that export to non-FTA countries will be consistent with U.S. law and policy,” the White House said in a statement of administrative policy. “The Administration believes that the critical protections current law provides, which this legislation would repeal, should be retained to protect residential and industrial consumers and national and energy security.”

MEETING WITH ERDOGAN AND MUSK: Turkish President Tayyip Erdogan is asking Tesla CEO Elon Musk to build a Tesla factory in Turkey, according to the country’s communications directorate on Monday.

As Reuters reports, the directorate cited Musk saying that Turkey was among the most important candidates for its next factory, with many Turkish suppliers already collaborating with the electric vehicle company.

Erdogan also stated that Turkey was open to working on artificial intelligence and Starlink, the satellite internet venture of Musk’s SpaceX. Musk also stated that SpaceX was willing to work with Turkish authorities to obtain the necessary license to offer Starlink satellite services in Turkey. More on that here. 

BIG CLIMATE MOVES FROM THE GOLDEN STATE: California has been making a number of climate-related moves, topping off with a lawsuit filed on Friday against some of the biggest oil companies and their allies.

The Golden State – a top oil producing state – accused five of the world’s largest oil companies and their subsidiaries, along with the industry trade association the American Petroleum Institute, of waging a campaign to mislead the public about the dangers of burning fossil fuels.

The most recent move will have California joining mostly Democratic-led states, including New Jersey, Massachusetts, and Minnesota, in issuing lawsuits that look to hold fossil fuel companies accountable for the effects of climate change.

Democratic Gov. Gavin Newsom argued that the industry has lied about its contribution to global climate change over the last half century.

“It has been decades of damage and deception,” Newsom said during a Sunday press conference. “Wildfires wiping out entire communities, toxic smoke clogging our air, deadly heat waves, record-breaking droughts parching our wells. California taxpayers shouldn’t have to foot the bill.”

On a related note: Newsom also stated that he would sign legislation into law requiring major companies to disclose their carbon emissions. The state legislature passed the bill last week, leaving the ultimate say to the California governor. The bill would require companies earning more than $1 billion a year in the state to measure and disclose their direct and indirect emissions.

Other bills that passed: 

• A bill that would require companies making more than $500 million annually to report financial risks related to climate change. Newsom said that he would also support this bill. 

• A bill that would target orphan wells in California, and prohibit well owners from transferring ownership of the well to someone else unless they file for a bond that would fully cover site restoration, plugging and its abandonment. 

OIL NEARS $95 A BARREL: Global oil benchmark Brent Crude neared $95 a barrel this morning, touching the highest price since November as the industry grapples with a supply deficit after Saudi Arabia and Russia extended supply cuts.

Brent Crude rose to $94.71 at 11:20 a.m. EST, up $0.73 from the previous day. U.S. West Texas Intermediate rose to more than $92 a barrel today, up from $90.93 on Sunday.

Barrel prices from the two oil grades have climbed for three consecutive weeks, and could be on track for their biggest quarterly increases since Russia’s invasion of Ukraine back in the first quarter of 2022, according to Reuters. 

Citigroup Inc. predicted that prices could rise as high as $100 for a short period of time, but should ease as a result of an increase in supply from countries other than Saudi Arabia and Russia.

EU MARITIME INDUSTRY BILLED FOR CARBON – Ships carrying anything in and out the European Union will soon face hefty emissions bills, as the maritime industry will join the group’s emissions trading system in January and force big ships to start paying for their carbon emissions.

Some major shipping companies, such as MSC Mediterranean shipping company SA and A.P. Moller-Maersk A/S, could see bills running into the hundreds of millions of dollars, according to Bloomberg. 

The new system is the world’s first large-scale process of carbon charging for international shipping, and part of the group’s efforts to tackle climate change. Although the fees may run high, the charges are unlikely to be high enough to force an immediate shift to cleaner marine fuels, which are more expensive. More on that here.

The Rundown

The Hill Thousands of climate activists march in NYC, calling on Biden to declare climate emergency

Bloomberg SocGen Plans to Halt New Oil, Gas Loans in Strategy Update

E&E News Dems bet on transmission bill as bridge to permitting deal