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On Friday, U.S. President Joe Biden hosted leaders from Latin America, the Caribbean, and Canada at the inaugural Americas Partnership for Economic Prosperity Leaders’ Summit, which aimed to enhance economic ties, fortify U.S. investments in the region, and tackle immigration challenges. Veronica Villafane narrates this report by Paula Diaz.
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The cancellation of two large offshore wind projects in New Jersey is the latest in a series of setbacks for the nascent U.S. offshore wind industry, jeopardizing the Biden administration’s goals of powering 10 million homes from towering ocean-based turbines by 2030 and establishing a carbon-free electric grid five years later.

The Danish wind energy developer Ørsted said this week it’s scrapping its Ocean Wind I and II projects off southern New Jersey due to problems with supply chains, higher interest rates and a failure to obtain the amount of tax credits the company wanted.

Together, the projects were supposed to deliver over 2.2 gigawatts of power.

The news comes after developers in New England canceled power contracts for three projects that would have provided another 3.2 gigawatts of wind power to Massachusetts and Connecticut. They said their projects were no longer financially feasible.

In total, the cancellations equate to nearly one-fifth of President Joe Biden’s goal of 30 gigawatts of offshore wind power by 2030.

Despite the setbacks, offshore wind continues to move forward, the White House said, citing recent investments by New York state and approval by the Interior Department of the nation’s largest planned offshore wind farm in Virginia. Interior’s Bureau of Ocean Energy Management also announced new offshore wind lease areas in the Gulf of Mexico.

“While macroeconomic headwinds are creating challenges for some projects, momentum remains on the side of an expanding U.S. offshore wind industry — creating good-paying union jobs in manufacturing, shipbuilding and construction,” while strengthening the power grid and providing new clean energy resources for American families and businesses, the White House said in a statement Thursday.

Industry experts now say that while the U.S. likely won’t hit 30 gigawatts by 2030, a significant amount of offshore wind power is still attainable by then, roughly 20 to 22 gigawatts or more. That’s far more than the nation has today, with just two small demonstration projects that provide a small fraction of a single gigawatt of power.

Large, ocean-based wind farms are the linchpin of government plans to shift to renewable energy, particularly in populous East Coast states with limited land for wind turbines or solar arrays. Eight East Coast states have offshore wind mandates set by legislation or executive actions that commit them to adding a combined capacity of more than 45 gigawatts, according to ClearView Energy Partners, a Washington-based research firm.

“I think very few people would argue that the U.S. will have the gigawatts the Biden administration wants” by 2030, said Timothy Fox, a ClearView vice president. “But I do think eventually we will have it and will likely exceed it.”

Offshore wind developers have publicly lamented the global economic gales they’re facing. Molly Morris, president of U.S. offshore wind for the Norwegian company Equinor, said the industry is facing a “perfect storm.”

High inflation, supply chain disruptions and the rising cost of capital and building materials are making projects more expensive while developers are trying to get the first large U.S. offshore wind farms opened. Ørsted is writing off $4 billion, due largely to cancellation of the two New Jersey projects.

David Hardy, group executive vice president and CEO Americas at Ørsted, said it’s crucial to lower the levelized cost of offshore wind in the United States so Americans aren’t debating between affordability and clean energy. Hardy spoke at the American Clean Power industry group’s offshore wind conference in Boston last month on a panel with Morris.

“We’re probably a little bit too ambitious,” he said. “We came in hot; we came in fast, we thought we could build projects that were inexpensive, large projects right out of the gate. And it turns out that we probably still need to go through the same learning curve that Europe did, with higher prices in the beginning and a little slower pace.”

In May, there were 27 U.S. offshore wind projects that had negotiated agreements with states to provide power before the brunt of the cost increases hit, according to Walt Musial, offshore wind chief engineer at the National Renewable Energy Laboratory, an arm of the Energy Department. The delay between signing purchase agreements and getting final approval to build allowed unexpected cost increases to render many projects economically unfeasible, he said.

Musial called Ørsted’s announcement a setback for the industry but “not a fatal blow by any means.”

On Tuesday, the Biden administration announced approval of the nation’s largest offshore wind project. The Coastal Virginia Offshore Wind project will be a 2.6 gigawatt wind farm off Virginia Beach to power 900,000 homes. And even as Ørsted announced the New Jersey cancellations, it said it was investing with utility Eversource to move forward with construction of Revolution Wind, Rhode Island and Connecticut’s first utility-scale offshore wind farm, a 704-megawatt project.

The current outlook from S&P Global Commodity Insights is 22 gigawatts by 2030, though that will be revised due to the recent industry announcements.

New York state, meanwhile, recently announced the award of 4 gigawatts of offshore wind capacity as it seeks to obtain 70% of its electricity from renewable sources by 2030 and 9 gigawatts of offshore wind by 2035. That announcement came shortly after New York regulators rejected a request for bigger payments for four offshore wind projects worth a combined 4.2 gigawatts of power.

Any delay in offshore wind means continued reliance on fossil fuel-burning power plants, according to environmental advocates. “The quicker they come online, the quicker our air quality improves,” said Conor Bambrick, director of policy for Environmental Advocates NY.

New Jersey, under Democratic Gov. Phil Murphy, has established increasingly stringent clean energy goals, moving from 100% clean energy by 2050 to 100% by 2035. Murphy cast Ørsted’s decision as “outrageous” and an abandonment of its commitments, but the two-term Democrat said New Jersey plans to move forward with offshore wind.

The first U.S. commercial-scale offshore wind farms are currently under construction: Vineyard Wind off Massachusetts and South Fork Wind off Rhode Island and New York. 
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This week, the U.S. State Department confirmed that Washington’s plan to refurbish and extend the Lobito Corridor — a railway that will run through mineral-rich Zambia and the Democratic Republic of Congo to an Atlantic port in Angola — is moving full steam ahead.

Such ambitious infrastructure investments by other powers in Africa have been derailed in the past. For years, China has tried with mixed results to increase its influence in Africa and boost trade connectivity by investing in ports and railways.

Debt-incurring or unfinished projects undertaken as part of Beijing’s Belt and Road Initiative, or BRI, have been criticized, prompting what analysts see as a new focus on what Chinese President Xi Jinping has called a “small and beautiful” approach.

Now the West is stepping in, with the U.S., European Union, the three African nations and two financial institutions signing a memorandum of understanding last month to develop the partially existing Lobito Corridor.

Plans were outlined in an online media briefing this week, and a six-month feasibility study is expected to start before the end of the year, said Helaina Matza, the acting special coordinator for the Partnership on the Global Infrastructure Investment, or PGII. The intention is to get the 800 kilometers (500 miles) of new track built within five years at an estimated cost of more than $1 billion, she said.

When asked how the U.S. plans to sustain the project long-term and avoid the mistakes made by other foreign powers pursuing infrastructure projects on the continent, Matza was optimistic.

“It’s not all concessional financing going directly to governments,” she said, noting that a private partner, the Africa Finance Corp., is involved and will be putting “forward a plan for operation and maintenance and putting forward a plan around capacity development.”

While not mentioning China directly, she said: “I think we’ve learned from mistakes and projects that over the years, frankly, we’ve helped bail out because they needed refurbishment a little too quickly.”

Liu Pengyu, China’s Embassy spokesperson in Washington told VOA in an emailed response that there is “broad space for cooperation in the field of global infrastructure, and there is no question of various relevant initiatives contradicting or replacing each other.”

Liu also denied the frequent criticism that Beijing is using BRI and its projects to create spheres of influence.

“Any calculation to advance geopolitics in the name of infrastructure development is not welcome and doomed to fail,” he said.

Lessons from the BRI?

One of China’s largest BRI investments was the $4.7 billion Standard Gauge Railway in Kenya, which started operating in 2017 and connects the capital, Nairobi, with the port city of Mombasa.

The railway was supposed to connect to neighboring Uganda, as a way of bringing critical minerals to the coast, but it never got that far, leaving the cargo side of the business struggling. This week the Kenyan government announced a sharp increase in fares for passengers, citing rising fuel prices.

The announcement came on the heels of President William Ruto’s visit last month to China, where he was seeking a $1 billion loan to complete unfinished infrastructure projects. Some Kenyans have also criticized the project for not hiring enough locals to operate the railway.

Asked whether the existence of the BRI will help inform the new US/EU initiative, Yunnan Chen, a researcher at the global think tank Overseas Development Institute, said it has already had an impact.

“While the BRI can be criticized on many areas, one success it’s certainly had is to raise the profile of infrastructure in development, and crowded in greater interest — and welcome competition — in this space,” she said, noting the G7 now has the Partnership for Global Infrastructure and Investment and the E.U. has the Global Gateway. The first Global Gateway forum was held last month in Brussels, where the Lobito Corridor memorandum of understanding was signed.

“The fact that U.S. has taken such a deep interest in Angola — a major BRI partner and one of the largest recipients of infrastructure lending from China — is a clear sign they want to ramp up the competition directly in China’s spheres of interest,” she said.

While some of the Chinese projects have faced “legitimate criticism,” Chen said, railway projects can be difficult to make profitable based on passengers and freight if they are not linked to the mining sector.

“The Lobito Corridor may do better than some of the East African projects, since they will likely be directly connected to minerals/mining projects that justifies the freight, but it will be a test to see how the U.S. and EU will tackle the challenges that rail construction brings,” she said.

These challenges include social and environmental impacts and management of the railway once completed, all problems the Chinese have faced. Chen said it will be interesting to see how the West now fares “given the emphasis on higher standards.”

Matza, the acting PGII coordinator, said, “Our ethos for any sort of infrastructure we invest in is that the project is transparent.”

She said the U.S. wants to ensure that “the whole corridor is successful and that people who live along that corridor can participate not only in commerce but in other activities that really benefit the economic development of themselves and their countries.”

View from Africa

So who do ordinary Africans trust more when it comes to infrastructure investment, the U.S. or China?

VOA put that question to Johannesburg residents this week to see what they think.

Musician Luyolo Yiba, 29, was cynical as he sipped a drink at a sidewalk cafe.

“Both are looking at taking minerals, so it’s tricky to say this one is better than that one,” he said, adding that he doubts the U.S. is primarily concerned with helping the African people and that he expected the money to be lost to government corruption in Africa.

Zoyisile Donshe, an entrepreneur in his 40s, said he doesn’t think there needs to be competition for influence in Africa at all.

“They see that Africa is the future,” he said. “I love America, I love China as well. They’re creating opportunities in Africa. … I think most Africans would prefer them to cooperate.”

Asked whether the Lobito Corridor could end up being linked to any Chinese-built railways in the region, Matza said it was too soon to say but did not rule it out.

“There’s a lot of work happening, there’s maybe a Tazara refurbishment,” she said, referring to a railway linking Zambia and Tanzania. 

“There’s a lot of talks about an additional rail line that can continue south and maybe out through Mozambique,” she said. “We’re taking this on one piece at a time knowing what we can finance, support and help design.”
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U.S. President Joe Biden will host leaders from Latin America and the Caribbean at the White House on Friday to discuss economic issues and migration as he seeks to bolster ties in the region to counter China and other global competitors.

Leaders from Barbados, Canada, Chile, Colombia, Costa Rica, the Dominican Republic, Ecuador, Peru and Uruguay are expected to attend Friday’s gathering, as well as representatives from Mexico and Panama.

The inaugural Americas Partnership for Economic Prosperity, or APEP, Leaders’ Summit comes as Biden’s foreign policy agenda is dominated by the Israel-Hamas conflict in Gaza and Ukraine’s bid to repel Russian invaders.

The United States will announce new economic tools together with the Inter-American Development Bank and private donors to aid countries hosting migrants in the Western Hemisphere, with a goal of expanding economic cooperation and curbing migrant arrivals at the U.S-Mexico border, senior administration officials said.

“When the countries are working together on a common economic agenda … it has the potential to significantly shift the economic dynamics in a region that has been moving slower than its peers on the adoption of technology, on taking advantage of the nearshoring trends,” a senior administration official said.

Biden remained convinced that targeted economic investment in refugee and migrant host countries “is critical to stabilizing migration flows,” a second official said.

Six APEP countries — Costa Rica, Ecuador, Colombia, Peru, Chile and Panama — have offered legal status to millions of people displaced in the Western Hemisphere, the official said.

“They have stepped up in big ways, and we are stepping up for them. APEP is a big part of that,” the official said.

U.S. Treasury Secretary Janet Yellen hosted a breakfast meeting for the leaders at the Treasury on Friday, telling them that the U.S. would work closely with the IDB to support efforts to better integrate the region’s supply chains.

She said Treasury strongly supported efforts by Inter-American Development Bank President Ilan Goldfajn to reform its private sector arm, IDB Invest, and would work with the bank’s other shareholders to enable a “significant” capital increase for IDB Invest.

The IDB, the region’s largest development bank, will unveil a new financing platform to serve middle- and higher-income countries, potentially mobilizing billions of dollars for investment in renewable energy, officials said.

The effort was focused on bolstering the region’s ability to compete globally in the clean energy, semiconductor and medical supplies sectors, one of the officials said.

The summit follows a similarly themed meeting of Western Hemisphere leaders in Los Angeles last year, part of a broader push aimed at strengthening regional economic ties and reducing China’s influence in the region.

At the “Summit of the Americas,” the U.S. and 19 other countries signed a nonbinding declaration agreeing to a set of measures to confront the migration crisis.

Record numbers of migrants have crossed illegally through the U.S.-Mexico border in recent years, with hundreds of thousands of people heading north after traversing a perilous jungle region known as the Darien Gap between Colombia and Panama.
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