Keeping Up with the Jones’

Jones Act Challenges to US Offshore Wind Development

By Iain MacIntyre

A lack of Jones Act compliant vessels threatens to hold back the development of U.S. offshore wind. In a feature from Issue 5 of Breakbulk Magazine, we look at how workarounds and government subsidies to help boost building could fast-track ship supply.

Stakeholders have expressed mixed views to Breakbulk as to how efficiently the U.S. offshore wind industry can develop given the current shortage of Jones Act-compliant supporting vessel capacity.

Expressing confidence that the maritime industry can collaboratively rally and adapt to current challenges is 3D Marine USA (Brookes Bell) head Martin Twomey, whose Houston-based firm provides marine surveying and insurance services to the sector.

“We see the U.S. offshore wind industry providing growth opportunities for our operations,” he told Breakbulk. “There are various hurdles to overcome, but I see an overall progression in the development of the U.S. offshore market. As more projects come online, the supporting infrastructure will develop.”

However, in contrast, Heiko Hinrichs from the chartering department of Schulte & Bruns does not see the sector advancing efficiently given the current legislative impositions.

“The U.S. does not have the capacity to build the ships in time needed for their offshore projects,” he said. “Given the high demand for wind turbine installation vessels, or WTIVs, elsewhere in the world there will be a shortage of ships which consequently will delay their green energy developments.

"There is one under construction in Houston currently which will be the first to be Jones Act-compliant. But that vessel won’t be able to meet the high demand – more will have to be built – and meanwhile, more feeder solutions will be necessary.”

Hinrichs said that as it is “way too expensive” to build tonnage in the U.S., as required to comply with the Jones Act, his Groningen, Holland-headquartered fleet-operating and chartering firm has no plans to enter this market. “Because of the Jones Act, the number of carriers allowed in that industry is limited. We don’t have any vessels that comply with these regulations, we can therefore only engage in projects that involve transporting components from overseas ports – primarily Canada and Europe – to American ports.”

Exploring Workarounds

While acknowledging the current tonnage situation, Twomey countered that U.S. operators are actively gearing up to address the capacity shortage. “Demand for offshore wind vessels will ultimately depend on how many of the U.S. projects get final approval and progress to the development phase. Growth plans are ambitious but not all projects may come to fruition.”

He also observed that “workarounds” are being explored, such as local operators contracting in foreign-flagged WTIVs and using feeder vessels or tug-and-barge applications to transport the various components of the wind turbines to installation sites.

“Several U.S. operators are already working in this area and are in the process of building or modifying existing tonnage to service the U.S. offshore wind market. The above particularly applies to East Coast projects where turbine installations are mounted on fixed foundations in relatively shallow waters. Whereas floating offshore wind turbine installations are being proposed for the U.S. West Coast projects. The advantage of floating offshore turbines is that they can be constructed near shore and towed to the installation site, allowing existing U.S. tonnage to service the industry with offshore construction and tug solutions.”

Twomey also remained optimistic that other obstacles – such as labor issues and a lack of shore-based infrastructure to function as staging grounds – will equally be proactively navigated.

“U.S. operators and service providers are gearing up to deliver various projects that will assist growth, but it will require significant investment to achieve these ambitions.

“The U.S. Department of Energy is focused to develop this industry and reduce the costs of these projects. So perhaps government support and subsidies may need to be provided to scale up the U.S. offshore wind industry to the required levels to progress with these projects.”

In this vein, he noted a further round of offshore wind lease auctions are planned this year, including one in the Gulf of Mexico in August.

“The present administration aims to deploy 30GW of offshore wind energy by 2030. The rapid growth in the U.S. offshore wind pipeline reflects strong federal and state government commitment to clean energy expansion and the industry’s response to those goals.”

Despite the encouraging progress to date, some challenges and barriers do remain, he added, including rising project costs, lengthy and unclear permitting processes, and regulatory restrictions. “A strong, collaborative approach between industry stakeholders and government bodies will help tackle these obstacles.”

Positives and Negatives

Highlighting the Jones Act itself, Twomey sees more positives than negatives. “Jones Act-compliant vessels are generally more expensive to construct and operate, which adds to the overall cost of a project. However, the Jones Act benefits and supports U.S. jobs and U.S. companies.”

He noted that there are currently over 30 new or retrofit vessels ordered or under construction at U.S. shipyards.

“The majority of these are crew transfer vessels, however, there are also three service operation vessels ordered or under construction and one WTIV. Several other vessels at the conception design phase are likely to advance to confirmed U.S. Jones Act-compliant orders.” It’s not just U.S. shipyards that benefit from the growth in offshore wind developments, but so too does the wider supply chain and economy, he added.

Hinrichs, however, described the legislation as an “obstacle” to efficient development of the country’s offshore wind sector. “The basic idea of the Jones Act is to ensure that maritime commerce between U.S. ports is conducted using vessels that are built in the U.S., owned by U.S. citizens and crewed by U.S. citizens or permanent residents.

“But given the fact the U.S. does not have any suitable vessels to deliver and install their offshore windfarms they should either scrap the Jones Act or at least lift it for offshore wind projects in order to save U.S. taxpayers’ money.”

The readiness of breakbulk to support the buildout of new projects worldwide will be discussed during a main stage panel session at Breakbulk Americas 2023. “Project Outlook – Are We Ready”, moderated by the EIC’s Amanda Duhon and featuring expert speakers from Roll Group, Bertling Logistics, Global Shippers Association and Georgia-Pacific LLC, will take place on September 27 from 12:20pm–1:10pm.

Check out the full main stage agenda for this year’s event, happening on 26-28 September at the George R. Brown Convention Center in Houston, Texas.

TOP PHOTO: Schulte & Bruns’ Symphony Provider feedering pin piles offshore to the Zhong Neng Offshore Wind Farm Project in Taiwan. CREDIT: Schulte & Bruns