Jones Act Could Impede US Offshore Wind Projects - Global Trade Magazine
  May 11th, 2017 | Written by

Jones Act Could Impede US Offshore Wind Projects

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  • A massive offshore wind energy project in Europe will require 4,000 vessels to being to fruition.
  • The Jones Act places limitations on the vessels that can be used for offshore wind projects.
  • The pendulum is now swinging in the direction of greater enforcement of the Jones Act.

Statoil Wind US, a wind-energy company and subsidiary of the Norwegian mostly government-owned oil company, is looking for projects to invest in the United States.

Statoil is already involved in massive offshore wind energy projects in Europe, one of which will require the deployment of 4,000 vessels to being to fruition.

“But because of the Jones Act there are limitations on the vessels we can use” in a comparable project in the US, said Knut Aanstad, the company’s president. Aanstad suggested that those legislative requirements could impede a company such as his to go all-in on a wind project because of the scale that such a project would require to make it worthwhile. Aanstad spoke speaking at a program on renewable energy at Columbia University in New York last week.

The Jones Act, passed in 1920, prohibits a foreign vessel from transporting merchandise between points in the United States. The act also applies to shipments from points on the North American continent to installations on the Outer Continental Shelf, hence its applicability to offshore wind installations. A violation of the Jones Act may result in the assessment of a civil penalty equal to the value of the merchandise. A waiver may be obtained, under limited circumstances, from the Secretary of Homeland Security.

Although the Trump administration appears to be rolling back renewable energy goals set by former president Barrack Obama, many states and even private utilities have their own renewables programs. New York State has a goal of 35 percent renewables for the electric grid by 2030. In cooperation with the US government, New York State has designated a 79,000-acre area 11 miles off of Long Island for wind power generation. Statoil is a bidder on that project which is in the early permitting stages.

There have been attempts to repeal or reform the Jones Act for decades, all without success. If anything, the pendulum is now swinging in the direction of greater enforcement, with the creation last year within US Customs and Border Protection of the Jones Act Division of Enforcement (JADE). JADE was stood up, primarily, it is presumed, to catch Jones Act violators in the offshore oil and gas industries, but it could just as easily be used in connection with wind farm operators. Just recently the Department of Justice settled a case which included payment by a shipping company of the biggest Jones Act penalty ever, $10 million.

While the Jones Act may be one hurdle, disarray in US government energy policy is probably the biggest challenge for producers like Statoil. “The greatest danger to business is the lack of predictability,” said Aanstad. “The market needs clarity to see when and where capacity needs to be made available.”

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