At a glance
“Offshore Wind Power Examined: Effects, Benefits, and Costs of Offshore Wind Farms Along the US Atlantic and Gulf Coasts,” by Daniel Shawhan, Sally Robson and Ethan Russell. Resources for the Future, Oct., 2, 2024.
This report from Resources for the Future (RFF), an independent, nonprofit research organization, analyzes 32 proposed offshore wind farms along the Atlantic and Gulf coasts of the United States. The findings suggest a pivotal role for offshore wind in the global energy transition. These wind farms would have a combined capacity of 35 gigawatts, enough to supply about 2.5 per cent of electricity needed in the U.S. and Canada by 2035. Using advanced simulation tools, the report forecasts these projects could cut annual greenhouse gas emissions by 41 million tons. By displacing coal and natural gas, offshore wind combats climate change and enhances public health. With a robust 14-to-1 benefit-to-cost ratio, the projects assessed in the report also promise substantial savings on electricity and natural gas bills. Policymakers in the U.S., where offshore wind has been slower to develop, should take note.
Organizations
Key findings
- Significant emission reductions: The offshore wind farms are projected to cut U.S. and Canadian power sector emissions by five per cent, preventing 41 million tons of greenhouse gas emissions annually by 2035.
- Public health benefits: These projects are expected to prevent 520 premature deaths each year by improving air quality through reduced air pollutants from fossil fuel plants.
- Strong economic returns: Offshore wind farms boast a robust 14-to-1 benefit-to-cost ratio, indicating substantial net economic and environmental gains.
- Lower energy costs: The introduction of offshore wind is anticipated to decrease electricity and natural gas bills by approximately US$36 per megawatt-hour.
- Global climate impact: By reducing greenhouse gas emissions, offshore wind could prevent an estimated 1,600 climate-related deaths annually worldwide.
- Displacement of fossil fuels: Offshore wind farms will disproportionately replace fossil fuel generation, displacing about 55 per cent of total fossil fuel output in the regions they serve.
Bigger picture
The findings highlight the transformative potential of offshore wind in the global shift to sustainable energy. By significantly reducing emissions and improving air quality, offshore wind simultaneously addresses climate change and enhances public health, particularly in densely populated coastal regions. The potential savings on energy bills is another positive, especially in the current context of the energy crisis and increasingly likely disruptions to oil and gas supplies from the Middle East.
Although these insights consider the U.S. and Canada, they can inform strategies in Europe and Asia, where offshore wind is already making strides, and Africa and South America where offshore wind remains nascent. The report highlights how industries reliant on substantial energy supplies — such as shipping, steel production, and data centres — will benefit from the influx of clean offshore energy. As technology advances and costs decline, offshore wind could also be crucial for meeting rising energy demands while reducing reliance on fossil fuels.
The maturing of the offshore wind sector positions it to play a pivotal role in shaping future energy markets. The report suggests current projects could catalyze further advancements in technology and cost efficiency, paving the way for broader adoption. Policymakers and investors who prioritize offshore wind now will contribute to a cleaner environment and position themselves strategically within the evolving global energy economy. Recognition of the importance of offshore wind could help stimulate more R&D into the recyclability of turbine blades, encourage policymakers to invest in supply chain bottlenecks such as installation vessels, and address other pressing issues like grid connectivity.
Challenges and opportunities
Key barriers to energy transition progress via offshore wind:
- Policy and regulatory uncertainty: Fluctuating U.S. federal and state policies, including tax incentives and leasing regulations, create instability for offshore wind developers. Policymakers must reassess recent decisions that have led to project cancellations or renegotiations.
- Economic constraints and rising input costs: Increasing material and financing costs pose significant challenges for offshore wind development. The report urges policymakers to address financing gaps and consider long-term subsidies to stabilize investment.
- Infrastructure and transmission challenges: Upgrading grid infrastructure is essential for connecting offshore wind farms to population centres. Collaboration between government and industry is critical to facilitate necessary transmission expansions.
- Delays in permitting and environmental reviews: Lengthy approval processes hinder project timelines. Streamlining permitting while maintaining environmental safeguards is essential for accelerating offshore wind deployment.
To address these challenges, the report recommends:
- Innovative financing models: The report advocates for public-private partnerships and green bonds as strategies to enhance financing for offshore wind projects. Expanding tax credits for developers could also help offset rising costs.
- Technological advancements in wind turbine design and energy storage: Continued investment in R&D for turbine designs and energy storage solutions is vital for optimizing offshore wind performance. Innovations in storage could significantly enhance energy reliability.
- International collaboration: The U.S. can leverage lessons from established offshore wind markets in Europe, where costs have decreased through technological advancements. Policymakers should promote cross-border collaboration to share best practices.
- Integration into broader decarbonization strategies: Offshore wind should be incorporated into comprehensive grid modernization efforts that include energy storage and flexible grid solutions. Policymakers are encouraged to integrate these projects into clean energy standards.
- Equitable energy transition: Offshore wind has the potential to benefit disadvantaged communities by improving air quality and reducing energy costs. Policymakers should prioritize projects that deliver these equity benefits to ensure marginalized populations gain from the transition.
In their own words
…the offshore wind farms [analyzed here] reduce annual estimated U.S. premature deaths from airborne particulate matter and ground-level ozone by 520 per year. Black, Hispanic, and low-income Americans account for a disproportionately large share of the premature deaths avoided, as do residents of the New York City area.
Offshore Wind Power Examined: Effects, Benefits, and Costs of Offshore Wind Farms Along the US Atlantic and Gulf Coasts, by Daniel Shawhan, Sally Robson, and Ethan Russell. Resources for the Future, Oct., 2, 2024.
Final thoughts
As countries strive to meet net-zero targets, the findings in this report demonstrate how offshore wind can significantly contribute to decarbonization, especially in coastal areas. The authors acknowledge the limits of their analysis, in that it does not take into account the “value of learning by doing and economies of scale achieved by building offshore wind turbines instead of relying on older technologies,” or the economic benefit that an individual state could gain through being an early adopter. On the costs side, the report could have more deeply assessed problems facing the industry, such as supply-chain constraints, installation bottlenecks due to lack of appropriate vessels, grid connectivity and recyclability of turbine blades.
The report also lacks discussion of potential policy frameworks that could further incentivize offshore wind development. U.S. policymakers could have gained valuable insights from drawing parallels with successful strategies in Europe and Asia, such as the U.K.’s Contracts for Difference (CfD) program to drive investment in renewable energy projects and changes to Japan’s Ports and Harbour Act that enabled offshore wind farm developers to occupy zones within Japanese territorial waters close to existing ports. International collaboration and innovation will be necessary for offshore wind to reach its full potential.
Download the full report originally published by Resources for the Future on Oct. 2, 2024.
