Biden’s offshore energy boss says climate crisis is opportunity

Offshore wind Source: Aker Solutions

The US government is moving urgently to nurture new offshore wind and carbon storage industries despite some economic hurdles, according to the nation’s newly minted ocean energy regulator.

The tasks of overseeing the buildout of those nascent industries falls to Liz Klein, an environmental lawyer and clean energy champion just appointed director of the Bureau of Ocean Energy Management.

Klein takes over at a critical time, as her agency makes decisions about where to install ocean wind farms, how to safely store carbon dioxide under the sea floor and the future of oil drilling in the Gulf of Mexico.

“The president has been clear that we are in a climate crisis, we have a responsibility as the federal government to do something about that and we can turn that into an opportunity to transition to cleaner sources of energy,” Klein told Bloomberg in her first interview in the new role. At the same time, the focus will be on doing it in a “way that really supports communities” while tapping American smarts and innovation, she added.

Those opportunities converge in the Gulf of Mexico. The bureau is on track to sell the first-ever offshore wind development rights in the Gulf later this year. And it’s writing rules that will govern the storage of carbon dioxide under the sea floor — including how the government makes the area available to companies eager to take advantage of newly expanded tax credits to pump captured emissions underground.

Meanwhile, the agency is working to finalize an overdue five-year plan for offshore oil leasing and hold two auctions of drilling rights in the Gulf of Mexico that were mandated by the sweeping climate-and-tax law enacted by President Joe Biden last year. The administration’s initial offshore oil leasing proposal left open the possibility the government could hold as many as 11 auctions in US coastal waters between mid-2023 and mid-2028 — or none at all.

Under the Inflation Reduction Act, the government’s ability to issue renewable energy rights is tied to the sale of oil leases — potentially forcing some of those auctions. “We have new statutory requirements” so that “if we are to continue offshore wind leasing, we also need to continue offshore oil and gas development,” Klein said.

Klein is a veteran of the Interior Department, having previously worked in the agency under former Presidents Bill Clinton and Barack Obama. She’s drawn fire from fossil fuel advocates for some of her work in the private sector, including as deputy director of the nonpartisan State Energy and Environmental Impact Center at New York University, which helped state attorneys general challenge federal government environmental policies, including bids by former President Donald Trump to dial back rules.

Klein cast that work as an asset, saying it gave her perspective on state interests that is valuable in federal government.

Klein is consulting with counterparts in other countries to swiftly establish a new regulatory regime overseeing carbon storage under the ocean floor. With carbon capture and storage initiatives supercharged by the Inflation Reduction Act, and just a few offshore storage projects globally — in the North Sea — it’s a chance to cultivate a brand new industry in the US.

The opening may be greatest in the Gulf of Mexico, which has for decades been a hub of US offshore oil development — providing about 15 per cent of domestic production. In contrast to other US waters, there’s more data about the ocean bottom and what lies beneath it, as well as a chance to leverage the existing network of subsea pipelines and their proximity to petrochemical facilities in Louisiana and Texas.

“It presents a great opportunity,” Klein said. “It is the perfect example, in many ways, of what the president talks about when he says we have an opportunity to turn this climate crisis into job growth, economic development and supporting communities.”

Klein said she remains “aggressively positive” about offshore wind’s potential US build out, even as mounting supply chain and inflation woes threaten to delay or derail some projects. Concerns about the industry’s impacts on fishing and endangered whales also bedevil its prospects.

Any new energy development can expect challenges, but the US has the tools and innovative chops to work through them, Klein said. "Very smart engineers and scientists" are "committed to see this happen."

© 2023 Bloomberg L.P.

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