If there was one European company that epitomized the black-to-green transition, that took the moral and environmental high ground in the post-Paris Agreement years, it was Orsted.
As late as 2009, the year Copenhagen hosted the COP15 climate summit, Orsted, Denmark’s main power producer, was mostly burning coal to keep the lights on. Soaked in black guilt, it would embark on a campaign to ditch its coal burners and reinvent itself as the world’s biggest offshore wind developer.
By 2015, the year of the Paris climate summit, when countries agreed to limit the rise in global average temperatures to 2 degrees C over preindustrial levels, and ideally 1.5 degrees, Orsted was well on its way eliminating coal and becoming the poster child of the energy revolution. The company was also evident proof that going green did not mean sacrificing shareholder returns. Orsted was a stock market darling; at one point, it had a market value of more than US$95-billion.
Then came Donald Trump, the leading proponent of the “Drill, baby, drill” philosophy, hater of the UN-sponsored climate summits and spiritual loather of wind power. Within hours of entering the White House, on Monday, he announced “We are not going to do the wind thing. Big ugly windmills. They ruin your neighbourhood.”
Never mind that Orsted’s neighbourhood is the open ocean. The shares went into near free fall. Since Monday, they have lost almost 15 per cent, taking their one-year decline to 30 per cent. The sell-off is not entirely Mr. Trump’s fault. Orsted shares had been in shallow decline since peaking in 2021. But Mr. Trump’s election seems to have eliminated the possibility that they would reverse course, allowing Orsted to recoup some of its former glory. There will be more victims besides Orsted.
Even after the turn of the century, when the general public was well aware that coal was the single greatest propellant of rising temperatures, Orsted was intent on expanding its coal-burner fleet and began building an enormous coal plant in Germany, one that met with mass protests.
At that point, Orsted, then known as Dong Energy, decided to wean itself off fossil fuels. In 2016, Dong became Orsted and listed on the Copenhagen stock exchange in what was the world’s second-biggest initial public offering. It sold its oil and gas portfolio in the North Sea and began shutting its coal plant as it pivoted to offshore wind power. In time, it billed itself as “the greenest energy company in Europe,” which was no exaggeration.
Its success was so compelling that it went where no offshore wind company had gone before – the United States. Its offshore projects on the east coast got off to a good start, then ran into trouble during the COVID-19 pandemic, when inflation took off, interest rates rose and global supply chains broke down.
In 2023, it abandoned two offshore projects off the New Jersey coast and took a write down of about US$4-billion. A few months later, it suspended its dividend, eliminated hundreds of jobs and abandoned offshore wind markets in Spain, Portugal and Norway. But it remained committed to two big projects as well as the ones in the waters off Britain, Germany, Netherlands and Poland. In spite of the setbacks, Orsted was still the offshore wind leader and Joe Biden’s lavish support for renewable energy when he was president gave the company the hope that it could make a big splash in the U.S. offshore market.
Mr. Trump destroyed that hope overnight. Within hours of his inauguration, he signed a flurry of executive orders that unwound Mr. Biden’s infrastructure funding, potentially putting hundreds of billions of dollars of projects at risks, from battery plants for electric vehicles to offshore wind developments.
Rystad Energy, a Norwegian energy research firm, said that almost two-thirds of U.S. offshore wind projects on the books are unlikely to go ahead, though Orsted gave no indication that it would kill off either of its main surviving American construction projects, known as Sunrise Wind and Revolution Wind. Still, on the very day of Mr. Trump’s inauguration, the company took another write down, this time totaling US$1.7-billion. The company blamed high interest rates, supply chain problems and “uncertainties” affecting the value of its seabed leases.
Shares of Vestas, the European maker of wind turbines, plummeted along with those of Orsted. An Italian company called Prysmian Group killed off plans to build a factory in Massachusetts that would have made cables for the offshore wind industry. Suddenly, the future does not look bright for renewable energy in the United States.
Mr. Trump does not seem to care that he has put the U.S. clean-energy business into reverse. He plans to yank the United States out of the Paris Agreement and end EV mandates and federal funding for EV chargers. His oil-first campaign puts the United States out of step with much of the rest of the world, especially China, which will be happy to fill the clean-energy gap left by the Americans. Orsted will survive, but its growth will come from more enlightened countries.