Trump’s war on wind to conquer Greenland

Illustration: hand grabbing wind turbine

When Donald Trump slapped a stop-work order on a $4bn (£2.9bn) windfarm project off the east coast of America, shareholders in the renewable-energy giant behind the plan knew the game was up.

Trump’s decision to cancel the project by Danish giant Ørsted means offshore wind energy in the US is “effectively dead”, says the investment chief at AkademikerPension, an £18bn Danish pension fund.

AkademikerPension, which has a £23m stake in Ørsted, said it was now up to Danish politicians to “sort things out” with the White House and revive the company’s fortunes in America.

But that is easier said than done.

Relations between Denmark and the US are at rock bottom because Trump covets Danish-owned Greenland, and Copenhagen refuses to discuss any potential sale or handover. Ørsted is caught in the crossfire, a piece of collateral damage in the president’s geopolitical war.

Many see the president’s move against Ørsted’s wind farm project as a classic Trump tactic, designed to squeeze Denmark on his Greenland ambitions.

But it also reflects his virulent opposition to wind energy. US officials in April slapped a similar stop-work order on Norwegian giant Equinor’s $5bn Empire offshore wind project. That was eventually lifted in mid-May, but the White House has since taken aim at several other wind farms.

Anders Schelde, AkademikerPension’s chief investment officer, said: “As investors, we are used to accounting for risk. But Trump’s apparent hostility towards offshore wind is different, because we cannot discern any underlying logic.

“It is political risk on steroids – and that kind of risk is extremely hard to grasp, which makes it very bad news for the [Ørsted] stock.”

Ørsted shares plunged 16pc on Monday to a record low after the stop-work order came through, before a 5.8pc rebound on Tuesday. The order cited concerns over state-owned foreign companies operating in US waters, but was made even though the project is 80pc complete.

The company must either fight to rescind the order or mothball the project, both at great cost. On Sept 5, Ørsted will ask its shareholders to vote on a 60bn-kroner (£7bn) capital raising that it says will cover the company for even a worst-case scenario for its two big US projects, Revolution and Sunrise.

On Tuesday, Ørsted held a breakfast briefing for investors and analysts on its planned rights issue, which would sell stocks to existing shareholders.

Participants at the briefing said the company did not divulge its plans for trying to overturn the stop-work order. But Ørsted executives said they had ensured both Revolution and Sunrise were fully compliant on permitting, especially after Equinor’s difficulties in April and May.

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The Revolution wind farm is one of Ørsted’s main US projects - Adam Glanzman/Bloomberg

According to Norwegian media reports, Equinor’s effort to overturn its stop-work order involved up to 500 meetings and phone calls, including interventions from Norway’s prime minister and finance minister as well as New York’s governor and mayor.

The Danish government, which owns just over half of Ørsted’s stock, has pledged to buy half the shares in the rights issue next month. But politicians may come under pressure to do more, financially or politically, to protect the 79.6bn-kroner company, one of the dozen largest in Denmark.

“The government is already backing the rights issue, so in that respect, the politicians are already backing Ørsted financially. Whether direct political involvement to solve the stop-work order will be needed, we don’t know,” said Jacob Pedersen, an analyst at Danish investment bank Sydbank.

The difficulty for the Danes is that government intervention could stir up the hornets’ nest of Greenland, which seems to have lately dropped off Trump’s radar.

“The attention of the Trump government has shifted to other parts of the world. But I do not think that Greenland is completely off Washington’s agenda right now,” said Marc Lanteigne, a politics professor at the Arctic University of Norway.

“There is concern in Greenland and in Denmark that it’s only a matter of time before the United States shifts back to the idea that ‘yes, we should acquire Greenland somehow’.”

The Danes are hoping to lay low.

“We have a Danish saying, ‘It is calm before the storm.’ We appreciate it is calm right now and hope there will be no storm,” says Christian Friis Bach, a Danish MP who chairs the parliament’s foreign affairs committee.

If senior Danish politicians began lobbying the White House over Ørsted, the president may realise he has a “bargaining chip”, says Pierre-Yves Gauthier, the chief executive of Paris-based analysts AlphaValue.

“Ørsted has the backing of the Danish government ... It creates a situation for the Trump administration, who can say, ‘OK, if we squeeze these guys, we may be able to have an interesting debate.’”

Lanteigne said this could spur Mr Trump into renewing his campaign, with Ørsted caught in the crossfire.

“As this situation with Ørsted would seem to suggest, we’re definitely seeing a US government that’s becoming less restrained in using forms of economic punishment for perceived diplomatic misdeeds.”

While Mr Trump’s attention has been diverted by tariffs and wars, the European Union has been quietly working to deepen its ties with the mineral-rich, strategically located territory of 57,000 inhabitants.

Emmanuel Macron, the French president, visited Greenland in June, a month after a Franco-Danish mining group won a licence to extract anorthosite, a rock that could replace bauxite in aluminium production.

Naaja Nathanielsen, Greenland’s mining minister, said at the time that she had not seen similar tangible proposals from the US.

“We have welcomed a number of investors, but we have not yet seen any concrete example of American funds being injected into Greenland’s business community,” she said. By contrast, “there is no doubt that the dialogue with both the EU and Denmark is going smoother”.

This is unlikely to stop Greenland from pursuing an independence referendum, but experts are divided over whether it will happen any time soon. Lanteigne said most Greenlanders supported independence but were wary of the potential political and economic costs.

“I wouldn’t say people are becoming pro-Denmark, but they’re saying, ‘OK, maybe we should be a little bit more careful regarding independence under the current geopolitical situation.’”

Tony Sage, an Australian mining executive who hopes to mine rare earths in Greenland, said Trump may be biding his time.

“Greenland is still extremely strategic to the Trump administration. But until the referendum happens, he can’t really push Denmark,” he said.

Dwayne Menezes, the managing director of the Polar Research and Policy Initiative, said Copenhagen’s biggest difficulty in negotiating with Trump was figuring out what he actually wanted.

He said Greenland and Denmark had never refused US requests. “If America wanted 20 bases in Greenland, all they’d need to do is ask,” he said. “I think Trump sees it from a real estate standpoint, and now I think he’s trapped by his own words, and very much needs to deliver this thing he’s made such a big hullabaloo about.”

If Denmark wants to avoid being lured back into this dangerous diplomatic dead-end, Ørsted might be left to sort out its commercial difficulties on its own.

Sydbank’s Pedersen said that eventually, one of the wind energy companies subject to a stop-work would have to eschew the political route and face down Trump in court.

“If the Trump administration gets into the habit of issuing this type of stop-work order, at some point some implicated parties will have to take this to court in order to get some precedents that this is unlawful,” he said.

“I’m quite sure that if this ends up in court at some point, Ørsted will be the winner. But this is Donald Trump, and the Trump administration. So you never really know what’s going to happen.”

And that’s exactly what Copenhagen is afraid of.

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