The hague: The Netherlands scaled back its plans for offshore wind energy development in the North Sea, citing slower-than-expected progress in the green transition and challenges facing the industrial sector, the caretaker government announced Wednesday.

According to Anadolu Agency, Climate Minister Rob Jetten Hermans stated in a letter to parliament that the previous goal of achieving 50 gigawatts (GW) of offshore wind capacity by 2040 is "no longer realistic," as reported by public broadcaster NOS. The government now targets a minimum of 30 GW by 2040, with the potential to reach 40 GW, contingent on future developments.

Currently, offshore wind farms in the North Sea generate 4.7 GW, which accounts for approximately one-sixth of the country's annual electricity needs. In May, the government postponed tenders for two new wind farm zones amid growing doubts about market feasibility.

Hermans acknowledged the challenges in making heavy industry more sustainable, noting that many factories will continue to rely on fossil fuels longer than anticipated. He emphasized that the energy transition must align with what is technically, economically, and socially feasible, highlighting that the demand for electricity from industry and households has not increased at the expected pace.

Part of the offshore wind power was intended for green hydrogen production to help reduce industrial emissions without requiring a complete switch to electricity. However, demand for green hydrogen is also lagging due to high energy prices, grid congestion, and competitive pressures from abroad.

The outlook for the offshore wind sector is further impacted by rising construction costs and high interest rates. Industry players have expressed concerns that new projects may stall without government support. Recently, a group of 21 companies urged the government to introduce financial guarantees or subsidies to mitigate investment risks.