By Ella Nilsen, CNN
(CNN) — The Trump administration announced it will pay nearly $1 billion to French energy giant TotalEnergies in exchange for the company abandoning plans to build offshore wind farms in the Atlantic Ocean and instead pursue fossil fuel projects in the US.
The current administration has thrown up roadblocks at every turn for offshore wind projects; a type of energy that President Donald Trump has personally reviled for years. After trying and failing to block construction on more mature projects, this announcement is the first sign of a new strategy: The federal government is paying to stop wind farms before they begin.
Last year, the Trump Interior Department took the step of stopping the approval of federal permits for renewable energy projects, a move that effectively killed offshore wind projects in early development. Monday’s deal builds on that, by trying to ensure companies can’t continue building under a future administration friendlier to offshore wind.
The government is paying back TotalEnergies for federal leases it purchased under the Biden administration to develop two offshore wind farms off the coasts of New York and North Carolina. The Justice Department will use nearly $1 billion in taxpayer funds to reimburse the company for money it spent to purchase leases under the Biden administration.
Together, those two projects could have generated more than 4 gigawatts of electricity for US households and businesses, according to developers.
Instead, TotalEnergies will now spend the money on the development of a new liquified natural gas plant in Texas that will help export US LNG overseas to Europe, CEO Patrick Pouyanné said in a statement. The money will also go towards the company’s development of oil drilling operations in the Gulf of Mexico and shale oil projects elsewhere in the US.
“Considering that the development of offshore wind projects is not in the country’s interest, we have decided to renounce offshore wind development in the United States, in exchange for the reimbursement of the lease fees,” TotalEnergies CEO Patrick Pouyanné said in a statement. “These investments will contribute to supplying Europe with much-needed LNG from the US and provide gas for US data center development.”
US Interior Sec. Doug Burgum in a statement repeated prior claims that offshore wind is “one of the most expensive” forms of energy and is too unreliable because energy is only produced when the wind is blowing. While offshore wind is more expensive than other forms of renewable energy because of its unique supply chain constraints, wind has no fuel costs and states negotiate set power price agreements with developers that don’t fluctuate — unlike natural gas and oil.
“We welcome TotalEnergies’ commitment to developing projects that produce dependable, affordable power to lower Americans’ monthly bills while providing secure US baseload power today—and in the future,” Burgum said in the statement.
But the move could worsen the growing electricity crunch in the US, as power-hungry data centers and home and vehicle electrification collide headlong into a lack of available power. That dynamic has sent prices spiking in mid-Atlantic states in particular.
The move “will actually cause a further energy deficit in our country and increase the cost of energy certainly along the East Coast,” said Elizabeth Klein, former director of the Department of the Interior’s Bureau of Ocean Energy Management under the Biden administration.
Klein said the scrapped New York project in particular would be a blow to the region, which is badly in need of new electricity sources.
“For the current administration to be cutting that off makes no sense at all,” Klein said.
The Oceantic Network, an offshore wind industry trade association, blasted the TotalEnergies repayment as one that raises US energy prices with little benefit to utility customers.
“Paying to remove affordable, homegrown energy out of the equation leaves American consumers struggling to pay their electricity bills,” said Sam Salustro, Oceantic’s senior vice president of policy and market affairs. “This is political theater meant to obscure the fact that offshore wind capacity is being pulled out of the pipeline when energy prices are skyrocketing.”
It’s unclear whether the TotalEnergies settlement is the first of many to come. The Interior Department did not respond to CNN’s request for comment on whether it was negotiating more agreements with other companies.
However, some energy companies have publicly said they would also want their lease money back if the Trump administration won’t let them develop offshore wind projects. The leases for several undeveloped offshore wind projects off the Atlantic, Pacific and Gulf coasts total more than $5 billion, and that doesn’t include additional pre-development costs incurred by developers.
German renewables company RWE, which paid more than $1.2 billion for three leases off the coasts of New York, California and the Gulf of Mexico, is one of the companies expecting to be reimbursed.
“If we never get the right to build the plants, I assume we’ll get the money we’ve already paid back. And if necessary, through legal action,” RWE CEO Markus Krebber said at a recent press conference.
An RWE spokesperson declined to comment on whether the company is actively negotiating with the federal government and how much money it is seeking.
In addition, while TotalEnergies was able to offer to reinvest offshore wind money into oil and gas operations that the Trump administration favors, many other offshore wind developers don’t have the same fossil fuel-rich portfolio.
TotalEnergies is “opting to take the billion dollars, which is a good deal for them but not a good deal for American taxpayers or the energy needs of our country,” Klein said.
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