Last month, President Trump shocked the entire oil industry after extending the existing moratorium on oil drilling along Florida’s, Georgia’s and South Carolina’s coasts. The announcement marked a complete 180 from White House’s previous stance that sought to open up those areas to oil drilling and caught many industry officials, congressional aides, and lobbyists, who have been working on the same issue, completely off-guard. It also went contrary to the sentiment of voters in those regions--including the majority of Democrats-- who say they are ‘‘more likely to vote for a candidate who supports access to oil and gas produced in the U.S.’’
Under normal circumstances, Trump’s stance would have been a big win by the clean energy camp and environmentalists who have been opposed to drilling activity in threatened areas. Unfortunately, it turns out that the renewables energy sector will be just as severely impacted by the moratorium.
Trump’s decision to rule out energy development along the East Coast will bar not only offshore oil and gas drilling but coastal wind farm development in equal measure.
The Interior Department agency has confirmed the broad reach of Trump’s latest orders and is likely to significantly impact U.S. wind development, a sector that has lately been recording the fastest growth amidst the Covid-19 pandemic.
$1Trillion Offshore Wind
Last year, Paris-based International Energy Council (IEA) forecast that supplies from turbines will prove to be the next great energy revolution.
The IEA has forecast that the offshore wind sector will experience impressive growth over the next two decades to eclipse the $1 trillion mark in cumulative investments by the end of the forecast period. That would entail a 15-fold growth in investment compared to 2019 levels.
As expected, Europe has again been projected to lead the charge, managing to grow its offshore wind capacity from 20 gigawatts to nearly 130 gigawatts by 2040, driven by a huge demand growth by green hydrogen-powered by wind energy. China, however, is expected to record the biggest growth with its offshore capacity set to rise from 4 gigawatts in 2019 to 110 gigawatts by 2040, a nearly 28x jump. The Middle Kingdom could do even better, with the IEA saying it could grow its capacity to 170 gigawatts if Beijing adopts more stringent climate targets.
Well, the IEA might have been spot on with its predictions, if early results are any indication.
Related: Oil Prices Stuck In Limbo As Uncertainty Mounts
Despite the Covid-19 slump that has negatively impacted virtually all energy sectors, offshore wind has been experiencing phenomenal growth. The Guardian has reported that global offshore wind investments reached $35 billion in the first half of 2020, representing the most growth by any energy sector during the Covid-19 crisis. That was a sizzling 4x growth and already surpassed investments for the entire 2019.
Source: The Guardian
Offshore wind has enormous potential and can, in fact, generate more energy than the world needs.
Detailed studies of the world’s coastlines have found that offshore wind farms alone could power the entire globe--even if they are only built in windy regions in shallow waters near the shore. The IEA has revealed that if wind farms were built across all useable sites no further than 60km (37 miles) off the coast and coastal waters depths not exceeding 60 meters, they could generate 36,000 terawatt-hours of renewable electricity a year, thus easily meeting our global demand for electricity of 23,000 terawatt-hours.
That’s an eye-opening revelation considering that offshore wind currently provides just 0.3% of global power generation.
Unfortunately, Trump’s ban might make an already dire situation worse for the United States.
The U.S. offshore wind sector remains severely underdeveloped, with the country’s sole offshore commercial wind farm, the Block Island Wind Farm, generating just 30MW of electricity. In sharp contrast, the country has a total installed wind generation capacity of 107,443 MW after adding another 1,800MW during the first half of 2020. That’s really sad since the DOE says U.S. offshore wind resources have enough potential to generate more than 2,000 GW of electricity annually--nearly double the nation’s current electricity consumption.
Hopefully, that could change with the right policies in place: The Special Initiative for Offshore Wind has projected a $70 billion business pipeline in the U.S. by 2030.
By Alex Kimani for Oilprice.com
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Alex Kimani
Alex Kimani is a veteran finance writer, investor, engineer and researcher for Safehaven.com.
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