Blowing in the wind: why harnessing seas of turbines isn’t the definitive answer to climate change just yet

The offshore wind sector has long emerged as part of the solution to climate change, distinguishing itself from traditional fossil fuels by providing a cleaner, renewable energy source that mitigates environmental threats.

Costs have fallen in recent years, making the technology more affordable. Additionally, digitalisation has optimised wind energy output. It has improved the design of turbines and wind farms, facilitated easier maintenance, and extended equipment lifetimes.

In 2023, the global weighted average cost of electricity from newly-commissioned renewables projects across most technologies dropped from the year before: for onshore wind by 3 percent, for offshore wind by 7 percent, according to a September 24 report by the International Renewable Energy Agency (IRENA).

Still, significant challenges persist in the industry’s global supply chain amid concerns that weather instability can affect offshore installations’ vulnerability further and that new and old conflicts over the marine space, particularly with other industries like fishing, can limit growth.

“Restrictions in grid capacity, port capacity and vessel availability are also hindering the expansion of offshore wind,” according to WindEurope, an industry lobby that advocates wind energy policies for Europe on behalf of more than 450 member companies. “It is now clear that a number of bottlenecks will impact the installation rates over the rest of this decade, and these are particularly relevant for offshore wind energy projects,” the lobby said in its Autumn 2024 report.

Moreover, questions remain about the consequences of the ongoing shift in influences and resources within the industry.

Europe stands at the forefront of offshore wind technology and innovation, but to realise its climate ambitions effectively it must tackle significant macroeconomic and policy challenges. The path forward will depend on collaborative efforts across borders and sectors to build a resilient and competitive offshore wind supply chain that can address future uncertainties.

If there are no doubts that "the European offshore wind industry is world leading in terms of technology, innovation and implementation," this advantage is now threatened by intensifying competition from Asia “for some of the components required for installations," particularly critical elements like blades and towers, notes Megan Richards, a senior advisor at Rud Pedersen Public Affairs in Brussels.

This realignment matters because it not only puts pressure on European manufacturers to keep costs under control, but also raises issues regarding supply chain resilience and the potential for the Old Continent to eventually lose its edge.

In response to the industry’s challenging landscape, the European Union has set ambitious goals for offshore renewable energy. Its Offshore Renewable Strategy aims to increase the EU's production from 12 gigawatts (GW) to over 60 GW by 2030 and 300 GW by 2050. This strategy is not just about expanding capacity; it also seeks to facilitate nearly 800 billion euros in investments by creating a supportive legal framework and smoothing investment pathways.

Richards, a former Director of Energy Policy in the European Commission’s DG Energy, emphasises that EU policies such as the “Fit for 55” legislation are designed to encourage local manufacturing of essential wind energy components. Yet she acknowledges that these policies need to be complemented by effective measures to address existing bottlenecks in the supply chain.

A critical aspect of this landscape is the EU’s Carbon Border Adjustment Mechanism (CBAM). Designed to prevent carbon leakage —where companies relocate production to countries with less stringent emissions regulations— the mechanism imposes a carbon-based levy on certain imports into the EU starting from January 2026.

Richards notes that "the CBAM should have an important impact on steel components imported to EU," underlining its relevance for key materials used in offshore wind installations. By placing a price on embedded greenhouse gas emissions, CBAM aims to level the playing field between EU producers who face stringent carbon pricing and non-EU suppliers who do not.

As the CBAM is fully implemented, it will cover sectors most at risk of carbon leakage, including iron and steel, aluminium, cement, fertilisers, electricity, and hydrogen—many of which are crucial for renewable energy infrastructure. The mechanism is expected to generate substantial revenue for the EU member states while encouraging other countries to adopt similar measures.

However, it also raises concerns about increased costs for imported goods and potential retaliatory measures from trading partners outside the EU.

To effectively address these challenges, Richards advocates for a balanced approach without imposing overly restrictive local content requirements. She points out that "ensuring adequate supply sources at reasonable cost would be most important," underscoring the need for flexibility in sourcing components while maintaining favourable pricing.

The EU's commitment to offshore wind is further reinforced by recent initiatives such as the Wind Power Package, which outlines immediate actions to enhance competitiveness within the sector. This includes fast-tracking permitting processes and strengthening spatial planning to ensure sustainable coexistence with other maritime industries.

"Competition between fishing, sailing, local populations' use of offshore will continue," Richards warns. Securing a skilled workforce is also a critical issue as the industry scales up. “There is always the challenge of getting labor and people with the right skills to work in the sector,” Richards notes.

“In addition, rising weather instability due to climate change may make offshore installations more vulnerable in future,” she concludes.

As governments, businesses, and consumers grapple with the impact of climate change, it has still to be determined whether the definitive answer lies in wind energy.