President Trump recently issued executive orders to ban new oil and gas leasing along the coasts of Florida, Georgia, South Carolina, and North Carolina from July 1, 2022 until June 30, 2032. Trump intends to expand the offshore energy moratorium to include Virginia. However, President Trump is not only blocking offshore oil and gas drilling, but his orders also affect the future sale of renewable energy rights in U.S. coastal waters. Existing offshore energy leases are not affected by the orders, including existing wind farm rights off the coasts of Virginia and North Carolina.
Trump’s Moratoria on Offshore Development
On September 8, 2020, President Trump signed a memorandum prohibiting drilling in the waters off both Florida coasts, and off the coasts of Georgia and South Carolina for a period of 10 years—from July 1, 2022, when the current Congressional moratoria ends, to June 30, 2032. Trump’s authority for issuing the presidential memorandum is through the Outer Continental Shelf Lands Act, which President Obama used to withdraw many Arctic areas from drilling before leaving office. Federal courts have so far upheld Obama’s memorandum, but the Trump administration is challenging that ruling. The issue is now before a three-judge panel of the Ninth Circuit Court of Appeals, which heard arguments in the case in June.
Shortly thereafter, North Carolina Senator Thom Tillis asked President Trump to include his state in the moratorium. President Trump said, however, that he would expand the ban on exploratory drilling to include the coasts off of both North Carolina and Virginia.
The memorandum that President Trump signed “prevents consideration of this area for any leasing for purposes of exploration, development, or production during the 10-year period beginning on July 1, 2022, and ending on June 30, 2032.” The ban on leasing does not apply if it is for “environmental conservation purposes, including the purposes of shore protection, beach nourishment and restoration, wetlands restoration, and habitat protection.”
Note that the withdrawal includes all energy leasing beginning on July 1, 2022. That includes conventional and renewable energy, according to a Department of Interior spokesperson. Existing offshore energy leases are not affected by the orders, including existing wind farm rights off the coasts of Virginia and North Carolina. But the offshore energy bans could stop a new wave of offshore wind development.
Offshore wind developers with active leases off the U.S. East Coast include Avangrid Inc., Mayflower Wind Energy, Equinor Wind US LLC and Vineyard Wind LLC. Many of these developers are non-U.S. companies that are profiting from U.S. subsidies and mandates for building wind energy off U.S. shores.
Offshore wind energy is one of the most expensive technologies being considered in the United States, with only one small wind farm actually operating off the coast of Block Island, Rhode Island. According to the Energy Information Administration, the levelized cost of offshore wind is over three times higher than the levelized cost of natural gas combined cycle or onshore wind technologies. In the case of Block Island, the wind farm was cost competitive with the inefficient diesel generators the island had previously used to generate electricity, getting the diesel from floating tankers ferried across 18 miles of water.
Conclusion
President Trump has issued memoranda halting offshore development off the coasts of Florida, Georgia, South Carolina, and North Carolina, and he intends to do so off the coast of Virginia. The moratoria are for any development including oil, natural gas, and renewable energy (wind) and covers the 10-year period from July 1, 2022 to June 30, 2032, but does not cover existing leases.
