Presumptive Republican presidential nominee Donald Trump made headlines recently by pledging to halt offshore wind development on his first day back in office through an executive order, if he wins the November election.
But what would such an order entail? How likely is Trump to fulfill this promise, made during a rally in Wildwood, N.J.? Would he also pursue other anti-wind energy policies?
Analysts have been predicting his actions based on his long history of opposing the wind industry. At a recent fundraising event, Trump reportedly said, “I hate wind.”
Trump’s statements on wind energy should be taken “seriously, but not literally,” said James Lucier, an analyst and founding partner at Capital Alpha Partners, a policy research and political forecasting firm.
Lucier noted that while he doesn’t believe Trump has a specific executive order planned, one that mandates a comprehensive review of offshore permitting could still significantly hinder offshore wind development, even without specific actions or a pause during the review.
At the Wildwood rally on May 11, Trump assured supporters they “won’t have to worry about Gov. Murphy’s 157 windmills,” referring to Democratic New Jersey Gov. Phil Murphy’s support for an offshore project with 157 turbines, backed by Shell New Energies and EDF Renewables. Trump promised to end it on his first day through an executive order.
Offshore wind projects face challenges such as high costs and environmental and permitting issues, requiring active presidential support to succeed, Lucier said. He suggested that Trump could impede offshore projects through inaction, which may be the most likely outcome. Onshore wind projects, meanwhile, would continue successfully if they avoid using Chinese components, with many being built on farmland in red states.
Retaliating Against Biden
A second Trump administration might handle offshore wind development by either “refocusing” or “retaliating,” according to Timothy Fox, managing director at ClearView Energy Partners.
In the “refocus scenario,” Trump officials would prioritize conventional energy sources without hindering ongoing offshore wind projects. They would defend previously approved lease sales and project reviews against legal challenges.
In the “retaliate scenario,” the Trump administration might respond to legal challenges by voluntarily suspending prior approvals.
Fox explained to MarketWatch that these legal challenges could allow Trump to retaliate against Biden’s energy policy, an underappreciated risk. While it’s uncommon for a new administration to disrupt already approved projects, Trump’s team has shown a willingness to defy norms, Fox noted.
Concerns about potential reversals in offshore projects under a second Trump administration might already be causing an “uncertainty discount” for developers, according to Fox. The Biden administration plans to hold four lease sales this year, but there are signs of potentially weak demand.
If Biden wins the upcoming election, Fox expects continued strong support for offshore wind, noting the current administration’s goal of installing 30 gigawatts of offshore wind power by 2030, enough to power 10 million homes.
Why wind stocks have floundered
Wind-energy stocks, as represented by the First Trust Global Wind Energy ETF (FAN), have increased by 14% in the last month after experiencing declines over the previous three years. Their most recent high point was in January 2021, coinciding with Biden’s inauguration.
According to Capital Alpha’s Lucier, the surge up to January 2021 followed by a downturn illustrates a “buy the rumor, sell the news” scenario, where markets rise in anticipation of a positive event but fall once the event happens because the expectations were already factored in.
In 2021, Biden and the Democrats pushed for more extensive clean energy funding, but they didn’t secure enough support, resulting in a scaled-down legislation. The Inflation Reduction Act includes tax credits but lacks mandates for wind energy, which could have been included with more legislative support, Lucier explained.
High interest rates have also contributed to FAN’s decline by increasing borrowing costs, which negatively affect clean-energy projects.
Despite this, ClearView’s Fox believes there are still significant long-term opportunities for offshore wind, although growth may be slower than initially anticipated by the Biden administration and some states. States like Maryland, New York, and Rhode Island, which are mostly Democratic, have set targets for offshore wind development and are unlikely to change their policies due to elections, unlike the federal government. Virginia, however, is an exception.
