Europe's Offshore Wind Agreement: A Strategy to Reduce US Gas Dependence

Europe's Offshore Wind Initiative

By Ron Bousso

Background and Context

LONDON, Jan 27 (Reuters) - European countries have agreed to jointly develop a vast offshore wind network, marking a pivotal step in the region's push to both trim its dependence on U.S. natural gas imports and tackle rising renewable energy costs.

Economic Implications

At the North Sea Summit on Monday, ministers from Britain, Belgium, Denmark, France, Germany, Iceland, Ireland, Luxembourg, the Netherlands and Norway signed an agreement to develop 100 gigawatts (GW) of offshore wind capacity in shared economic waters. That’s enough to supply more than 50 million households.

Challenges Ahead

The deal builds on a 2023 pledge to construct 300 GW of offshore wind by 2050, conceived after the energy‑price shock triggered by Russia’s 2022 invasion of Ukraine and the subsequent disruption of gas flows to Europe.

While this latest announcement is years in the making, it lands at a delicate moment for Europe’s relationship with the U.S., given the recent transatlantic spat over Greenland.

U.S. President Donald Trump’s transactional diplomacy and his pursuit of “energy dominance” have sharpened European concerns about their heavy reliance on U.S. liquefied natural gas (LNG), which replaced most of the volumes previously supplied by Russia.

U.S. gas accounted for 57% of all LNG imports into the EU and Britain in 2025 and around a quarter of the region’s total gas imports.

Wind power has long been the cornerstone of Northern Europe’s strategy to slash its fossil fuel dependency, with onshore and offshore wind generating 19% of EU electricity in 2025, according to industry group WindEurope. Yet the region currently operates only about 37 GW of offshore wind across 13 countries, meaning the planned 100 GW expansion would profoundly reshape Europe’s power market.

Investor enthusiasm for clean energy globally has waned in recent years due to rising capital costs, supply‑chain constraints and unease over China’s dominant position in renewables manufacturing. Trump’s explicit hostility toward green energy - especially wind power - further dented sentiment as the U.S. government scrapped numerous projects this past year.

Meanwhile, Europe’s cost‑of‑living crisis, which has been intensified by high energy prices, has turned climate policies into political flashpoints, fuelling resistance to net‑zero plans.

ECONOMIES OF SCALE

Cost concerns were clearly as much a driver of the European offshore wind pact as worries about overreliance on the U.S.

The new plan thus contains several elements that could reduce development costs and ultimately lower consumer electricity prices.

The most important of these is the scale of the commitment, which can help trim costs by providing the offshore wind supply chain with greater demand certainty. This, in turn, should encourage investment in homegrown manufacturing.

WindEurope says industry players have pledged to cut costs by 30% between 2025 and 2040, predicting the plan will create 91,000 jobs and generate 1 trillion euros ($1.19 trillion) in economic activity.

A key feature of the agreement is its blueprint for connecting wind farms to multiple countries through a network of bidirectional cables and interconnectors. This should allow power to flow where it is needed most, improving efficiency by giving operators flexibility to respond to changing supply‑and‑demand patterns across several markets.

Such cross‑border “arbitrage” should also help reduce episodes of “negative pricing” – periods when excess wind power forces operators to curtail output and governments to compensate them.

"When it is windy in Germany, it may not be windy in the UK, so if Germany can't use all of the power, the UK can take some instead of wasting it," said Jordan May, senior analyst at consultancy TGS 4C.

What’s more, the multi-nation plan will cover multiple time zones, meaning countries will peak at different hours. This should make it easier to match supply with demand, potentially reducing the need for gas‑fired power, May added.

Finally, Europe may gain from Trump’s antipathy toward wind. The U.S. sector has experienced a dramatic downturn under this administration. The International Energy Agency last year cut its 2030 U.S. offshore wind forecast by more than 50%. Reduced American demand for vessels, components and engineering services could ultimately lead to lower prices for European operators.

Still, unlocking these efficiency gains will require European governments to develop complex new regulations to align different national subsidy regimes and power market rules. That process could take years and face political resistance in some countries.

UNPREDICTABLE COSTS

The cost of switching to renewables has become a point of contention in Europe. But these costs are highly uncertain, as forecasting in this area is hardly a science, whether one is looking at fossil fuels or green energy.

Offshore wind demands heavy upfront investment but tends to have lower long‑term operating costs. Gas‑fired plants, on the other hand, are cheaper to build but are also exposed to volatile global gas prices.

Moreover, debates about the cost of renewables often fail to consider the cost of doing nothing, which is enormous. Europe’s power demand is expected to nearly double by mid‑century, meaning the region will need to upgrade and expand its aging transmission and distribution grids regardless of which technology dominates. The longer European leaders wait, the more expensive this is likely to be.

Europe’s joint offshore wind plan offers a pathway to building more homegrown power and industrial capacity while reducing reliance on foreign fossil fuels. While that’s important, its ultimate success will depend on whether it lowers electricity costs for European consumers.

The opinions expressed here are those of the author, a columnist for Reuters.

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($1 = 0.8417 euros)

(Ron BoussoEditing by Marguerita Choy)