The United States faces two serious challenges: China and climate change. Ships can help solve both of them.
China is run by an authoritarian and increasingly militarily capable government determined to reshape the international order. Climate change, meanwhile, threatens future generations — and our own. Expanding military shipbuilding will mitigate these risks by deterring a quarantine, blockade, or invasion of Taiwan. Similarly, targeted industrial policy could render the economics of offshore wind more viable, improving the energy security of U.S. allies and partners. The United States should advance its comprehensive security interests by strategically and selectively increasing fiscal support for its shipbuilding industry.
U.S. navalists have cautioned about insufficient shipbuilding capacity, but these warnings have fallen flat across successive administrations. Now it’s time for a new approach. Different elements of the U.S. political system are drawn to shipbuilding for their own reasons. The U.S. Navy needs more ships to overcome its pacing challenge. U.S offshore wind development, meanwhile, is a critical decarbonization technology, but its development has been hampered by insufficient vessels, especially wind turbine installation vessels. Conditions for shipbuilding could be ripe for a breakthrough. A marriage of convenience between China hawks and climate hawks could enable the United States to finally begin to address its military and civilian shipbuilding shortfalls.
China Has an Alarming Shipbuilding Advantage
China’s military and civilian naval project is impressive — and alarming. From 2025 to 2030, the Chinese fleet is projected to increase by eight ships per year, on average, reaching 435 ships, while the U.S. Navy fleet size is expected to shrink to 290 ships. Moreover, the U.S. fleet has dispersed responsibilities and applies 60 percent of its assets to the Indo-Pacific. The Chinese navy is larger than the U.S. equivalent, is building ships at a faster rate, and can concentrate on fewer problems.
China’s dominant civilian shipbuilding program further bolsters its military potential, as retired U.S. Navy Capt. Thomas Shugart and others have warned. Almost every Chinese ship is constructed in prime yards servicing both military and civilian vessels, while the Chinese military’s war planning incorporates civilian-class ships, such as roll-on/roll-off ferries.
China’s output of these civilian-class ships is prodigious. China’s shipbuilders accounted for 49 percent of the global market share in the first eight months of 2023, while its new orders and holding orders represented 68.8 percent and 53.9 percent of the world’s total, respectively.
Beijing’s advantage in certain civilian ship classes is stark. While U.S. shipyards delivered only a single deep-draft civilian vessel in 2020, Chinese shipyards were constructing 514 civilian container ships — a single vessel type — in August 2022. China had 84 ships capable of installing wind turbines in October 2022, or about 45 percent of the existing fleet; it also accounts for 90 percent of all offshore wind turbine installation vessels under construction. The United States has no existing wind turbine installation vessel capacity and is currently onlyconstructing a single vessel.
China’s advantages in civilian shipbuilding are due to many factors, but subsidies play a leading role. One Center for Strategic and International Studies report estimated that Beijing supplied roughly $132 billion between 2010 and 2018 for its shipyards. China’s massive subsidies for shipbuilding not only benefit its commercial shipping industry but also constitute indirect, stealthy military spending, especially since its notionally civilian shipyards would help repair the Chinese fleet in wartime.
Taken together, China’s military and potentially dual-use civilian shipbuilding capabilities pose major direct and latent risks to U.S. and allied forces. The United States should overcome this challenge, in part, by increasing the size of its own fleet.
A New Approach to Shipbuilding
U.S. navalists are in near-universal agreement over the need to expand the fleet, while even casual observers grasp the arithmetic of China’s naval buildup. The U.S. Navy needs more ships, and better capabilities, as soon as possible. Despite the scale and urgency of the problem, the U.S. response to the shipbuilding crisis has been woefully inadequate across several U.S. administrations. Rather than serve as modern-day Cassandras, navalists should adopt a new strategy. Forging a bipartisan coalition around greater military and civilian shipbuilding — especially offshore wind — could dramatically improve the U.S. Navy’s deterrence posture vis-à-vis the Chinese military while enhancing the energy security of the United States and its allies and partners across the Indo-Pacific and Europe.
Securing greater military naval capabilities requires strengthening the civilian shipbuilding complex. The U.S. civilian shipbuilding complex’s shambolic state threatens the Navy’s ability to compete with China, as the civilian and military shipbuilding sectors are distinct but complementary (at least in the West; China, as mentioned, employs dual-purpose shipyards). Western civilian and military shipyards have different acquisition processes, design and construction parameters, workforces, and security needs. Additionally, an expanded civilian shipbuilding sector would compete with the military industrial base for personnel and resources such as steel.
Nevertheless, there are important complementarities between U.S. civilian and military shipbuilding. Just as the civil aviation industry creates synergies with the military, a stronger civilian shipbuilding sector would likely, over time, expand the labor pool for U.S. government ship construction and sustainment and preserve shipyards, creating something akin to a “defense industrial base reserve.”
A vibrant civilian shipbuilding sector could also create competition and lead to a more efficient military shipbuilding sector, as there are only four prime contractors operating America’s seven shipyards. Senator Jack Reed and Senator Jim Inhofe’s analysis of the business of Navy shipbuilding notes that its cost index outpaced general economic inflation by 1.2 percentage points per year. A stronger civilian shipbuilding sector could increase the number of shipbuilding “primes,” foster competition, restrain costs, and, all things being equal, drive down per-unit costs for the U.S. Navy.
Finally, and perhaps most importantly, expanding fiscal support for civilian and military shipbuilding could find bipartisan support, especially if offshore wind is prioritized. While the Democratic and Republican parties might have shifting positions on the role of the United States in the world, both sides are largely united in opposition to the Chinese government, even as they disagree on the appropriate responses. Public polling suggests Republicans prioritize higher military spending, while Democrats prefer to counter Beijing through leadership of a world alliance of democracies, including on issues such as climate change.
Democracies operate by finding consensus and compromise. While the upcoming election cycle will likely prove to be the most divisive in living memory, shipbuilding could be an area of bipartisan compromise. Republicans, such as former U.S. national security adviser Robert O’Brien, have called for a bipartisan agreement on expanding military shipbuilding. Democrats, meanwhile, are disproportionately represented along the coasts, prioritize decarbonization, and are highly supportive of offshore wind development, which is severely constrained by shortfalls in U.S. civilian shipbuilding. Since both U.S. political parties share an interest in expanding domestic shipbuilding, it may be possible to reach some sort of bipartisan consensus despite profound levels of polarization.
Maritime Synergies
Expanding U.S. shipbuilding via a bipartisan agreement is politically achievable, militarily necessary, and climatically critical. While the United States shouldn’t attempt to match China subsidy-for-subsidy, smart, targeted industrial policycould accelerate the U.S. and potentially the global offshore wind industry. Offshore wind, while critical for the energy security and climate objectives of the United States and its allies and partners across Europe and the Indo-Pacific, has faced tremendous difficulties in the United States, thanks in large part to the U.S. civilian shipbuilding sector’s shortfalls.
The civilian shipbuilding sector’s deficiencies harm U.S. maritime industries, especially offshore wind. The U.S. civilian shipbuilding sector is a laggard in producing vessels, but century-old legislation also prevents U.S. companies from procuring ships from elsewhere, as the Jones Act of 1920 requires that all U.S. vessels providing coastwise shipping services be U.S.-built, -owned, -flagged, and -staffed.
Leaving aside the debate over whether the Jones Act achieves its objectives, the U.S. offshore wind sector has undeniably been damaged by weaknesses in U.S. shipbuilding capacity. Domestically produced wind turbine installation vessels can cost 50 percent more than international vessels and deliver less capability.
Ship shortages were a major factor leading to high-profile offshore wind project cancellations in New Jersey, while the U.S. Department of Energy’s latest offshore wind market report warns that global vessel shortages and Jones Act constraints could lead to higher expected costs for U.S. offshore wind projects, along with schedule overruns.
Moreover, the looming offshore wind vessel shortage is not merely confined to the United States. Industry bodies predictthat Europe will see shortages before the end of the decade, while the consulting firm Wood Mackenzie sees installation vessels as a major supply chain constraint outside of China. Wood Mackenzie warns that just 25 percent of the wind turbine installation capacity needed by 2030 is in operation today.
U.S. shipbuilding shortages could also prove to be a major constraint if the U.S. and European offshore wind markets standardize wind turbines at large sizes. U.S. testing sites and ports are currently not configured for some of the larger, more efficient — and costly — turbines, while existing barges, tugboats, and other vessels could become obsolescent if turbine sizes continue to expand. While the costs and benefits of industrialization of turbines and components require further study, insufficient shipbuilding capacity could emerge as an even greater obstacle if the United States and its allies and partners seek to standardize at larger turbine sizes.
A U.S. and global shortage of wind turbine installation vessels and other offshore wind-relevant ships would slow the industry’s development, delaying innovation and hindering swift learning curve improvements. Moreover, America’s inability to produce civilian ships for its maritime industries is not only preventing the deployment of domestic clean electricity generation capacity and accelerating the threat of climate change. It’s also damaging U.S. national security interests in the primary theaters of the Indo-Pacific and Europe. If global offshore wind development is slowed, European energy security will suffer, and Taiwan will be more vulnerable to coercion.
Key Indo-Pacific democracies, especially Taiwan, are highly dependent on maritime energy imports and have few viable indigenous energy alternatives to offshore wind. America’s northeastern Asian allies, Japan and South Korea, are energy-poor nations that rely on imports for over 90 percent of their energy and natural resources consumption. Taiwan, meanwhile, imported nearly 97 percent of its energy in 2022. These economies have virtually no hydrocarbon resources, limited solar irradiance, slow-to-average onshore wind speeds, and significant land use constraints. While each of these Indo-Pacific economies should adopt nuclear energy to the maximal extent possible, offshore wind might be the more politically palatable and lower-cost technology.
Offshore wind is also critical to Europe’s energy security and decarbonization plans. The European Union’s energy import dependency rate stood at 55.5 percent in 2021, before Russia’s illegal invasion of Ukraine. Weaning Europe, especially German industry, off Russian natural gas will require investments in energy efficiency, heat pumps, and the deployment of renewables — especially offshore wind. European countries have set a goal of deploying 111 gigawatts of offshore wind energy by 2030, up from the European Union’s existing offshore wind installed capacity of 14.6 gigawatts in 2021. Indeed, offshore wind is already helping reduce Europe’s exposure to Russian natural gas imports, especially during peak winter demand periods.
The United States, as the world’s largest and most innovative economy, will play a major role in determining the future of the global offshore wind sector. The U.S. offshore wind sector will accelerate or slow global offshore wind because markets are linked. Each offshore wind market has its own distinct characteristics, such as permitting challenges, and international trade in wind turbines is constrained by unfavorable weight-to-value ratios.
Still, different offshore wind markets are tied to one another. Learning by doing, technological improvements, and economies of scale drove the levelized cost of electricity for offshore wind lower by 59 percent from 2010 to 2022. Without a global improvement in the industry’s economics, it’s doubtful that we would have seen the construction of projects as far-flung as the United Kingdom to Taiwan to New England.
The United States has largely been on the sidelines of offshore wind: While it is finally beginning to deploy utility-scale capacity, it has lagged the rest of the world. By 2022, the United States cumulatively deployed only 42 megawatts of offshore wind capacity, versus a total world offshore wind capacity of 64,320 megawatts. Had the United States more aggressively installed offshore wind, the global industry would be much more advanced, costs would likely be substantially lower, and U.S. allies across the Indo-Pacific and Europe likely would have installed more capacity.
The U.S. — and therefore the global — offshore wind industry’s future rate of growth will also have major implications for climate change, a nontraditional national security threat. Offshore wind, unlike other renewable technologies, provides semi-baseload power, meaning it produces more consistent generation patterns. Moreover, offshore wind’s generation tends to peak in winter months, matching peak electricity demand periods (while Taiwan enjoys outstanding offshore wind speeds in the winter, it’s worth noting that its wind speeds slow considerably in the summer, when the island’s electricity needs peak). Given the technology’s high-capacity factors and the widespread geographic availability of the resource, including in regions that lack viable renewable alternatives, offshore wind is a highly promising energy security and decarbonization technology.
The U.S. offshore wind complex faces more than just one bottleneck, and improving shipbuilding will not be a panacea. Permitting problems persist, interest rates are elevated, and steel costs in the United States are often disproportionately high. Still, setbacks to the U.S. offshore wind industry, especially from vessel shortages, will slow global offshore wind’s development across Europe and the Indo-Pacific, threatening U.S. comprehensive security interests.
Conclusion
Bipartisan shipbuilding legislation is politically achievable and necessary. Two previous industrial policy bills, the CHIPS Act and the Infrastructure Investment and Jobs Act, were able to pass with support from both aisles of Congress. To address challenges from China and climate, the United States should embrace a proposal first made by retired U.S. Navy Capt. Jerry Hendrix and pass a bipartisan SHIPS Act that provides funding for both military and civilian shipbuilding.
With China-related issues a rare point of bipartisan agreement, and offshore wind potentially galvanizing constituencies that have been lukewarm about the need for military shipbuilding, there is a real chance that Congress could pass legislation that provides significant national security, economic, and climate benefits. It’s time for the United States to start building military and civilian ships to address two critical national security challenges.
Joseph Webster is a senior fellow at the Atlantic Council and edits the independent China-Russia Report. This article represents his own personal opinions.
Image: U.S. Navy Photo by Mass Communication Specialist 1st Class Joshua J. Wahl
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