A gust of momentum for offshore wind in Louisiana?

How can one of the country’s largest oil-and-gas producing states become an offshore wind powerhouse? C2ES gathered 60 local leaders from across Louisiana to try to answer that question in a full-day roundtable in mid-March. Attendees included project developers; vessel builders and operators; manufacturers; educational institutions; economic development organizations; community advocates; nonprofits; and local, state, and federal government officials.

With the Gulf of Mexico’s first offshore wind lease sale on the horizon, the time is ripe to consider how Louisiana can proactively seize the economic opportunity the offshore wind industry could bring. Louisiana’s role in the industry could extend beyond hosting local projects in the Gulf, to leveraging the state’s workforce, maritime companies, and manufacturing capacity for projects across the country. Already, Louisiana companies have been central to completing flagship projects in other parts of the country, such as Block Island in Rhode Island. In fact, about a quarter of all U.S. contracts in offshore wind are going to businesses in Louisiana and other Gulf states, according to the Business Network for Offshore Wind.

Given this early success, it’s no surprise that roundtable attendees expressed enthusiasm and optimism about the economic opportunity from offshore wind. Still, they were clear-eyed about what remains to happen to help Louisiana seize that opportunity. Here are some of the major points we heard that need to be addressed to help Louisiana secure its role in the emerging U.S. offshore wind industry:

  • A long-term project pipeline is essential to unlocking supply chain and workforce investments. Vessel and manufacturing companies in Louisiana are already capitalizing on opportunities in offshore wind, but there’s significant uncertainty about future demand for their workers and products. While several lease sales have been announced in the Gulf, and projects are moving forward in other states, companies need more clarity about long-term U.S. prospects to justify investments with high upfront cost and potentially high risk. Shipbuilders, for instance, would not invest millions in building a new vessel for a single project. Likewise, Louisiana’s career and technical colleges have offshore wind curricula ready, but they need industry assurances about future job availability to determine their investment in those programs. Assurance of a steady demand for their expertise can help Louisiana’s companies and workforce system better prepare for, and meet the needs of, the growing offshore wind industry.
  • It’s time to move away from state-to-state local content requirements and toward a coordinated regional or national offshore wind supply chain. The U.S. offshore wind industry has, to date, been characterized by a patchwork of local content requirements, differing from state to state. While this approach could be effective in localizing the industry’s benefits, it could also potentially undermine offshore wind’s viability by duplicating supply chain investments in multiple states. That could drive unnecessary overinvestment (i.e., establishing facilities in states that aren’t well-suited to host them). Roundtable participants expressed that, while Louisiana companies have expertise and capacity to help establish projects in other states (as they did with Block Island), those states’ local content requirements may inhibit them. Pursuing regional supply chain mapping efforts, including detailed analysis of each state’s unique advantages, can help regions better collaborate to build offshore wind supply chains, empowering Louisiana companies to participate in the national industry.
  • Louisiana’s status as a right-to-work state raises uncertainty about its participation in the offshore wind industry. While other states and project developers have made significant commitments to using union labor in projects, Louisiana is likely to take a different approach, given its low rates of unionization. However, labor’s impact on Louisiana’s participation in the national offshore wind industry remains to be seen. Roundtable participants from the maritime industry viewed a non-unionized workforce as a potential advantage in competing for contracts, saying Louisiana companies may be able to complete work for less than their unionized competitors. Pro-union advocates saw the opposite, noting competitiveness for contracts in projects requiring union workers or project labor standards (e.g., prevailing wages and use of apprentices). With recent federal tax credits also providing additional incentives to companies meeting such requirements, some participants wondered whether Louisiana companies would be able to reap the full benefit of these federal programs.
  • It may all come down to having a plan for the power. A significant question among the group was whether Louisiana’s Public Service Commission (PSC) would ultimately approve the wind project’s connection to the state’s electric grid. Participants expressed that uncertainty about regulators’ approach to offshore wind can hinder project development in the Gulf. To sidestep the potential challenges of grid connection, some participants suggested using offshore wind electricity to generate green hydrogen, supporting decarbonization of the state’s large industrial sector. Such a step might not require PSC approval. Other participants wanted offshore wind benefits to reach a wider customer base and worried that using wind power solely for industry could result in community political backlash against offshore wind. Who uses offshore wind power in the state—and how—may ultimately be the most important questions that can be answered to expedite project development in Louisiana waters.

It’s clear that Louisiana has a unique role in the growth of offshore wind and that the industry can be a significant economic contributor in the state. However, more needs to be done to seize that potential. By addressing the uncertainties and challenges presented here, Louisiana’s leaders can leverage the state’s energy expertise to advance both decarbonization and local economic development.