Defense bill lifts industry with COVID aid, clarity for offshore wind
With the flip of the calendar to 2021, passage of the National Defense Authorization Act (NDAA) delivered pandemic relief to U.S. maritime interests and needed clarity concerning the Jones Act and offshore wind development.
First, there was the response to COVID-19, with the Maritime Transportation System Emergency Relief Program authorizing the U.S. Maritime Administration (MarAd) to provide financial assistance to the industry during emergencies and natural disasters.
Michael Roberts, president of the American Maritime Partnership, said the relief program provides a bridge to keep key infrastructure intact through the pandemic, with vessel owners and operators, shipyards and maritime training facilities among the eligible participants. More than 30 maritime industry groups lobbied Congress and the Biden administration to include financial assistance for the maritime sector in COVID-19 relief.
As critical as the emergency relief program is, arguably the most significant provision of the NDAA is one that confirms that all American laws, including the Jones Act, apply to renewable energy development on the U.S. Outer Continental Shelf. Because the Jones Act requires that all goods transported by water between U.S. ports be carried on U.S.-flagged ships constructed in the United States, and be owned and crewed by U.S. citizens, the clarification is both a job creator and a green light to American investors in clean energy.
“No one wants to invest big money when there’s uncertainty,” Roberts said. “Almost everyone suspected that U.S. laws, including the Jones Act, would apply to offshore wind, but it wasn’t crystal clear. There was a split on how federal agencies interpreted it. The Department of Interior saw the Jones Act as applying while the Coast Guard did not. And the Trump administration was not moving aggressively to get offshore wind development underway. With the Biden administration, that mindset has changed dramatically.”
Jennifer Carpenter, president and chief executive officer of the American Waterways Operators (AWO), chaired the domestic maritime industry subcommittee that lobbied for clarification of regulations that had been written before the era of renewable energy.
“We had federal agencies saying to us that they absolutely want American law applying to 3.1 miles off the coast of the United States — they just weren’t sure that the statutory language specifically contemplated renewable offshore energy,” Carpenter said. “Having the clarity that, yes, federal law including the Jones Act applies is just huge in terms of providing the certainty that vessel owners need to invest in what in many cases will be purpose-built vessels to serve this new market. The Jones Act is the foundation to not only securing the jobs that are there now, but as we see in this case, with providing companies some assurance to place some big bets on emerging markets.”
Even before passage of the NDAA, Keppel AmFELS began construction in Brownsville, Texas, of the first Jones Act-compliant offshore wind turbine installation vessel for Dominion Energy. Construction alone for the $500 million project is employing 700 people. The vessel, which will be based out of Hampton Roads, Va., is anticipated to be able to support installations off the coast of Virginia and North Carolina by the end of 2023.
“Offshore renewable energy is a multibillion-dollar market that is opening up,” Carpenter said. “We have already seen hundreds of millions of dollars of investment begin to be unlocked, and I think there is much, much more to come. Offshore renewable energy is really a generational opportunity for the domestic maritime industry.”
Members of the AWO see prospects in the entire life cycle of offshore wind energy, from preparing sites and transporting equipment to maintaining and servicing wind turbines.
Great Lakes Dredge & Dock Corp. is building the first Jones Act-compliant inclined fallpipe vessel for subsea rock installation, a critical step forward for offshore wind. And Crowley, based in Jacksonville, Fla., recently announced a New Energy division to focus on offshore wind and liquefied natural gas.
“The timing couldn’t be better,” Carpenter said. “We are in the early days of a new administration that is excited about American jobs and ‘Made in America’ and about renewable energy. We saw it from President Biden, on day five in office, when he signed the ‘Made in America’ executive order and specifically highlighted the potential for offshore wind.”
Carpenter summarized the opportunities awaiting maritime stakeholders on the Outer Continental Shelf: “It’s a sweet spot: American jobs and clean energy.”