U.S. Congress receives another bill aiming to secure offshore wind revenue for GOM states

After a bill on the U.S. coastal states’ revenue from offshore wind projects in the federal waters of Gulf of Mexico (GOM) was introduced last year in the U.S. Senate, a similar bill has now been introduced in the House, seeking not only a revenue share for the states from offshore wind but also an increase in what the GOM states get from offshore oil and natural gas projects.

On 20 July, Congressman Steve Scalise (R-LA) and Congressman Troy Carter (D-LA) introduced the Budgeting for Renewable Electrical Energy Zone Earnings (BREEZE) Act, a bipartisan legislation that updates the Gulf of Mexico Energy Security Act (GOMESA) to increase coastal states’ share of oil and natural gas revenue and allows Louisiana and other coastal states to collect revenue from future offshore wind development.

The funds from the revenues would go toward coastal protection and restoration projects, and improving South Louisiana’s resiliency against hurricanes, similar to what is planned under the bill introduced in 2021, called Reinvesting in Shoreline Economies & Ecosystems (RISEE) Act.

The 2021 bill, which is still moving through the Senate and is currently before the Committee on Energy and Natural Resources, also seeks to amend the GOMESA Act to create a new dedicated stream of funding from future offshore wind development for coastal protection and resiliency.

Among the amendments to the GOMESA Act, the bill is making oil and gas leases from 2000-2006 eligible for future GOMESA payments to Gulf coast states and the National Oceans and Coastal Security Fund. Currently, only leases from 2007 to present are eligible for GOMESA payments. 

When it comes to offshore wind, the bill in the Senate would enable the coastal states to get 50 per cent of the revenue that the country makes from offshore wind farms built in federal waters – and the same is now being put before the House.

The House bill establishes a revenue sharing structure for coastal states for wind lease sales and production on the Outer Continental Shelf (OCS), with 12.5 per cent of the revenue going to the U.S. Treasury, 37.5 per cent to the North American Wetlands Conservation Fund, and 50 per cent to each eligible state.

The bill also increases states’ share of revenue from oil and natural gas production in the Gulf of Mexico from 37.5 per cent to 50 per cent, and eliminates the annual cap on funds received by GOM states under GOMESA.

“As nearly 50 percent of refining and 15 percent of production domestically occurs along the Gulf Coast, investing in coastal restoration not only serves Gulf states, but further doubles as an investment in stabilizing energy prices nationwide. Moreover, the BREEZE Act captures the crosswinds of the energy sector by establishing revenue-sharing provisions for offshore wind, facilitating a future for clean industrial hydrogen,” said Michael Hecht, President and CEO, Greater New Orleans (GNO), Inc.

The bill introduced in the Senate last year is also sponsored by a representative from Louisiana, U.S. Senator Bill Cassidy (R-LA), alongside the lead sponsor Sheldon Whitehouse (D-RI).

At the time of its introduction, offshore wind development in the Gulf of Mexico was still largely discussed, but without any concrete moves made yet.

Now, Louisiana is on the brink of seeing its first offshore wind farm being developed.

At the beginning of this year, the state set a target of 5 GW of installed offshore wind capacity by 2035 in its first ever Climate Action Plan.

Last month, U.S. President Joe Biden announced that the Department of the Interior was advancing the development of offshore wind areas in the Gulf of Mexico and the Southern Atlantic.

In response to President Biden’s call, the Bureau of Ocean Energy Management (BOEM) is seeking input on the identification of two potential wind energy areas (WEAs) in the Gulf of Mexico Outer Continental Shelf (OCS): one located off the coast of Galveston, Texas, and one off the coast of Lake Charles, Louisiana.

According to earlier information, BOEM plans to designate WEAs for leasing by the end of this year and to hold its first lease sale for Gulf of Mexico in early 2023.

Furthermore, this June, Louisiana Governor enacted a legislative measure on offshore wind leasing, including the size of the wind lease areas and leasing rules.

The new law sets the maximum acreage for offshore wind at 25,000 acres and adds wind energy as a source for which the State Mineral and Energy Board may enter into operating agreements for the state to receive a share of revenues.

The co-sponsor of the bill, Rep. Joseph Orgeron, also sponsored a resolution on offshore wind that was adopted by Louisiana’s House of Representatives on 2 May and which facilitates building the state’s first offshore wind farm by 2026.

The resolution cites findings by the National Renewable Energy Laboratory (NREL) that Louisiana has the fourth highest offshore wind energy potential of any U.S. state and that a single 600 MW offshore wind farm has the potential to create 4,470 jobs and bring USD 445 million in gross domestic product during construction.