In a significant development following President Donald Trump’s actions against offshore wind energy, Shell, the prominent oil and gas company, is discontinuing its involvement in a large offshore project near New Jersey.
In a statement to media outlets, Shell indicated that it is revoking its commitment to this initiative due to a variety of factors, including heightened competition, project delays, and shifts in the market environment. Natalie Gunnell, a representative from Shell, mentioned that regulatory factors also played a crucial role in their decision.
Shell is a co-partner in the Atlantic Shores project, which already has most of its requisite permits and, if fully developed in two phases, could provide power to approximately one million homes — roughly a third of New Jersey’s residences. However, it remains uncertain whether Shell’s exit will definitively end the project, as their partner EDF-RE Offshore Development has expressed a continued commitment to seeing Atlantic Shores completed.
On his very first day in office, Trump implemented an executive order that targeted offshore wind projects, instituting a temporary freeze on all lease sales in federal waters alongside a halt on various approvals and permits. The order notably instructed officials to scrutinize existing offshore wind energy leases and identify potential legal reasons for terminating them.
Offshore wind farms have been operational for about thirty years across Europe and, more recently, in parts of Asia. Experts consider these initiatives vital for combating climate change since they can replace fossil fuel plants when partnered with innovative battery storage solutions. In alignment with climate goals, New Jersey aims to achieve 100% of its energy from clean sources by the year 2035.
Although the Biden administration greenlit plans for building the Atlantic Shores project in two phases last October, construction activities have not commenced. Oliver Metcalfe, a wind research leader at BloombergNEF, commented that the current uncertainty surrounding the lease could influence other developers who are closely monitoring the situation with Atlantic Shores. “We’re in uncertain territory here,” he noted.
Opponents of offshore wind, especially those in New Jersey, greatly applauded Shell’s decision to withdraw. New Jersey Congressman Jeff Van Drew, who worked with the Trump administration on the executive order, labelled Shell’s departure as a significant victory for the state’s coastline and economy while asserting that the struggle against offshore wind development would continue.
Robin Shaffer, the president of Protect Our Coast NJ, speculated that with Shell’s financial investment now absent, the project may have little chance of revival, describing it as “dead in the water.”
Shell’s withdrawal represents a nearly $1 billion financial loss for the company. This announcement coincided with a report of a 16% drop in its full-year earnings, which were recorded at $23.7 billion, down from $28.3 billion in the previous year. The majority of Shell’s operations are still focused on oil and gas.
Meanwhile, Danish wind energy firm Orsted was preparing to launch two offshore wind projects in New Jersey but opted to cancel its plans in October 2023, citing economic inefficiencies.
While there are many affordable clean energy options, offshore wind projects still rank among the more expensive renewable options. This financial aspect can deter investors, especially without robust policy backing, as mentioned by Coco Zhang, a vice president at ING focusing on environmental, social, and governance research. “The potential uncertainty that the executive order has brought to the market cannot be overlooked,” she remarked.
The current administration has made it a priority to expand offshore wind capabilities as a remedy for climate change, establishing national objectives for offshore energy deployment, conducting lease sales, and approving numerous commercial-scale wind energy projects.
