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Offshore wind leases can and should bring revenue to states

Guests tour the five turbines of America’s first offshore wind farm, owned by the Danish company, Orsted, off the coast of Block Island, R.I., as part of a wind power conference, Monday, Oct. 17, 2022.

Posted on December 13, 2023

For centuries, the power of the wind over the open ocean has inspired adventurers, poets, songwriters and dreamers. Today, it’s also inspiring a highly promising industry — offshore wind energy — that could help U.S. coastal states harness new tax revenues to invest in coastal infrastructure and resilience while advancing the country’s transition to a clean energy economy.

To help fulfill the promise of this nascent industry in the United States, policymakers should create a welcoming environment that establishes market certainty and supports domestic manufacturing. They can do that by backing policies such as the Reinvesting in Shoreline Economies and Ecosystems (RISEE) Act, which was introduced in the House by Rep. Lizzie Fletcher (D-Texas) with bipartisan support, and in the Senate by Sens. Sheldon Whitehouse (D-R.I.) and Bill Cassidy (R-La.).

The RISEE Act would significantly bolster coastal conservation and restoration efforts, which would help communities better withstand the effects of a changing climate — including coastal flooding, sea-level rise and damage from extreme weather events.

Importantly, the RISEE Act would signal to states, industry and capital markets that Congress and the federal government see the strong potential of the offshore wind industry.

With a national goal of generating 30 gigawatts of energy from offshore wind by 2030 — which would power approximately 10 million homes a year — a U.S.-based industry could attract $12 billion in direct private investment annually while reducing overall emissions, according to the Department of Energy.

But to better realize offshore wind potential, the market needs to see policies that support infrastructure investments, particularly those that fortify the supply chain. Such policies and investments — including the RISEE Act — could lead to the creation of up to 49,000 manufacturing and supplier jobs, a significant increase from the just under 1,000 workers the industry employed last year.

Already as of May of this year, industry and government had invested $2.6 billion in 12 offshore wind ports and manufacturing facilities across the country. These facilities will produce wind turbine components such as blades, towers, floating platforms and cables for years to come. Even more supply manufacturing facilities have been announced across a dozen states, which will boost economies from Massachusetts to Texas once they come online.

In just one example, Virginia is establishing its Portsmouth Marine Terminal as an offshore wind hub for the central and southern U.S. Atlantic coastline. The state has invested $223 million to redevelop a portion of the port to function as a staging and pre-assembly area for turbines. The federal Department of Transportation is also providing an additional $20 million for this project from its Port Infrastructure Development Program.

Encouraged by these investments, Virginia-based Dominion Energy, the developer of Coastal Virginia Offshore Wind, or CVOW — the largest U.S. offshore wind project — has leased the staging and pre-assembly area from the state for $44 million over 10 years.

The RISEE Act promises other benefits to states. At the heart of the act is a provision to send 37.5 percent of the revenue from any offshore wind development in federal waters to states adjacent to the project. That would be a change from current federal law, which — unlike offshore oil — requires offshore wind lease revenue generated in federal waters to be sent to the U.S. Treasury.

Having more than a third of this revenue go to states instead — a proportion that will total hundreds of millions of dollars within 10 years, according to the Congressional Budget Office — would be a welcome development, given that some states are weathering significant drops in tax revenue. What’s more, under the RISEE Act, the funds could be used for a suite of actions that are proven to help communities and local economies, such as supporting coastal restoration, hurricane protection or infrastructure improvements, mitigating damage to fish, wildlife and other natural resources and implementing federally approved marine, coastal or conservation management plans.

And because wind energy revenue-sharing under the legislation would be retroactive to the start of last year, money from recent lease sales in the New York Bightoff the Carolinas and in the Gulf of Mexico would provide eligible states a near-term injection of new funding if the RISEE Act passes. States would also benefit from future federal lease sales, such as those proposed off of Oregon and in the Central Atlantic and the Gulf of Maine.

Critically, the bill would also dedicate money to the National Oceans and Coastal Security Fund, which provides grants to coastal and Great Lakes communities to respond to coastal erosion and sea level rise, restore coastal habitat and make improvements to coastal infrastructure, regardless of whether wind energy facilities are built off their coasts.

Wind will continue to course over our ocean, bays and coastal waterways, forever the faithful muse to Americans’ pioneering and creative spirit. By passing the RISEE Act in this Congress, the House and Senate can accelerate America’s transition to clean energy, bolster and protect coastal communities and economies, conserve vital habitats and improve climate resilience. And what could be more inspiring than that?

Laura Lightbody directs The Pew Charitable Trusts’ energy modernization project.

John Szoka, a retired lieutenant colonel in the U.S. Army who served five terms in the North Carolina House of Representatives, is CEO of the Conservative Energy Network.


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