Not only is offshore wind energy better for the planet than oil and gas, but it’s also better for taxpayers. That’s according to a new analysis from the Center for American Progress, a nonpartisan policy research institute.
“Americans are getting far more return on investment from offshore wind lease sales than from oil and gas lease sales” per acre, said Michael Freeman, conservation policy analyst for the Center and author of the report. .
Offshore leases are essentially parcels of public waters leased by the Bureau of Ocean Energy Management for power generation – a process governed by the National Environmental Policy Act, or NEPA. Money from these leases goes to the US Treasury Department and, through government program funding, goes back into the pockets of taxpayers.
From 2019 to 2021, the average winning bid for offshore oil and gas lease sales was $47 per acre. In contrast, the average winning bid for a wind lease sale was 125 times higher – just over $5,900 per acre. And that number is likely to grow further given that the U.S. wind industry is still in its infancy, said Jenny Rowland-Shea, director of public lands at the Center for American Progress.
With such a high return on investment, the new analysis suggests that the potential for new offshore wind leases could be a promising source of government revenue compared to oil and gas leases, while also reducing energy and fuel costs. Freeman said that this money could be redistributed to taxpayers in the form of funding for federal agencies or funding for health and education programs: “The expansion of offshore wind energy is good for [taxpayers’] drive, for their pocketbooks, for the air they breathe.
And of course, there are also environmental benefits. Power produced by offshore wind does not have the same climate consequences as offshore oil and gas power generation, which releases up to 87 metric tons of carbon dioxide per active acre into the Gulf of Mexico. That’s roughly the equivalent carbon pollution of 19 cars driven for a year. And according to the report, the social cost of carbon emissions per acre for oil leases is more than $16,000 and about $2,800 for natural gas leases. Meanwhile, the social cost of carbon emissions from offshore wind power is “essentially zero” per acre, Freeman said. “Clean energy is really clean.”
Offshore wind power still has a long way to go before it can approach the scale of its oil and gas equivalent, but the United States has announced big plans for the industry. In early 2021, the Biden administration set a goal of producing 30 gigawatts of offshore wind power by 2030, enough to power 10 million homes. Last August, Biden signed into law the Curbing Inflation Act, which tied the Bureau of Ocean Energy Management’s ability to issue offshore wind leases to oil and gas leases, effectively linking offshore wind expansion to the expansion of offshore oil and gas energy production.
Prior to the Cut Inflation Act, the Bureau of Ocean Energy Management had sold only two offshore wind leases to U.S. operators, which contribute less than 1% of the energy needed to meet the 30 gigawatts.
While energy analysts say offshore wind lease sales create a better return on investment for the government and produce more energy per acre than offshore oil and gas, the latter is, at least for now , more profitable. This is due to the high start-up costs associated with the relatively new offshore wind industry. Nonetheless, Freedman said he expects offshore leases to move away from oil and gas in the future.
The report shows that leasing offshore wind power is a valid way to harness the energy resources of the oceans, Rowland-Shea said, and at a crucial time. “What’s at stake is acting on the climate emergency and our transition to a clean energy economy.”