House Passes Budget Bill With Historic Incentives for Offshore Wind
On Friday, the U.S. House of Representatives passed a package of climate, energy and health care funding proposals, drawn in large part from the Biden administration's defeated "Build Back Better Act" budget reconciliation bill. Though much slimmed down from the original multi-trillion-dollar plan, the rebranded Inflation Reduction Act of 2022 (IRA) will have sweeping effects on the development of the clean-power industry in the U.S. - including the offshore wind industry. President Biden is expected to sign the Act into law shortly.
The American Clean Power Association, the lobbying group for offshore wind, onshore wind and solar power, estimates that the IRA will underwrite enough power generating capacity to "fuel every home in America" by 2030. This means tripling the amount of clean energy on the grid.
"The average American will pocket over $1,000 per year in energy savings. It will more than double the clean energy workforce, creating 550,000 jobs and employing nearly one million Americans by 2030. Along with these benefits, we will reduce our greenhouse gas emissions 40 percent below 2005 levels," predicted ACP CEO Heather Zichal.
A substantial share of that power will come from offshore wind, thanks to a package of substantial tax incentives designed to help attract investment financing.
"The House passed the IRA bill today with a resounding 'yes,' showcasing the overwhelming support for a nationwide strategy to build out a domestic offshore wind supply chain," said Liz Burdock, president and CEO of the Business Network for Offshore Wind. "Now, with President Biden's signature imminent, we are one step away from ensuring that the benefits of a clean energy transition are felt by all Americans."
The most impactful measure for offshore wind might be the extension of an existing investment tax credit of 30 percent, which was set to expire in 2025. The Act keeps that credit going forward and supplements it with a broad array of supportive tax measures, like extra deductions for US-made content utilization and worker apprenticeship programs.
The Act also introduces a "advanced manufacturing production credit" for a range of American renewable-energy manufacturing, including offshore wind shipbuilding. Yards like Keppel's Texas branch will now be able to deduct 10 percent of the sale price of a wind-related vessel. The list includes similar subsidies for the production costs of critical minerals, nacelles, tower foundations, inverters and other key ingredients in the offshore wind supply chain.
The IRA also reopens the door to offshore wind leasing off the southeastern U.S. coastline. It also expands the geographic reach of OCSLA to include U.S. territories for the first time, opening up the possibility of offshore wind projects off Guam, Puerto Rico and the USVI.
Other maritime sectors will also benefit. Seaports will receive grant monies totaling $3 billion for electric-powered equipment, reducing reliance on fossil fuels and cutting emissions.
"This bill will help fund innovative projects at ports to boost resiliency and 'plug in' more cargo and passenger operations," said the American Association of Port Authorities in a statement. "From cranes to cold chain to cruise tourism, the government's investment in port modernization will begin to unlock tens of billions of dollars for projects in the pipeline."