The High Cost of Canceling Offshore Wind in the United States
- The U.S. will reimburse TotalEnergies nearly $1 billion to abandon offshore wind projects that could have generated over 4 GW of clean power.
- In exchange, the company will reinvest in U.S. oil, gas, and LNG infrastructure, marking a sharp policy pivot.
- The move comes as global energy markets tighten due to geopolitical conflict and rising demand from AI and data centers.
Donald Trump’s hatred for wind farms reached a new peak this week. The President announced that the United States will pay $1 billion in taxpayer dollars to a French company to not build planned wind farms in leased federal waters off the coast of New York and North Carolina. Together, those wind projects would have supplied more than 4 gigawatts of clean electricity for households and businesses in the United States.
Under the unusual deal, the French energy giant TotalEnergies would abandon its planned wind farms and annul the lease deal it made during the Biden administration. After the U.S. Treasury reimburses the company the $928 million it paid for those leases, the deal stipulates that TotalEnergies will reinvest that money in oil and gas projects in the United States. This would include a facility to export liquefied natural gas from Texas, ramping up oil production in the Gulf of Mexico, and building additional gas-powered plants.
“The deal is an extraordinary transfer of taxpayer dollars to a foreign company for the purposes of boosting the production of fossil fuels, a main driver of climate change, while throttling offshore wind power,” reads a New York Times article published earlier this week.
While the Trump administration’s decision to axe a planned domestic energy project seems fuelled by personal vendetta and long-standing hatred for wind energy rather than energy security strategy, for France’s TotalEnergies, the deal is reportedly a pragmatic one. “When the Trump administration came to power and began setting U.S. energy policy, we said that we’ll have to reconsider, clearly, these offshore wind project developments,” says Patrick Pouyanné, the CEO of TotalEnergies. He said that without the Biden-era clean energy subsidies that have been cut by the Trump administration, the margins for such a project become much tougher in the United States. A $1 billion payout is therefore a pretty good alternative.
“To be clear, we don’t renounce onshore wind,” Pouyanné went on to say. “We continue to invest in onshore solar, onshore wind, batteries [in other countries].”
This is just the latest in a long series of attacks on ongoing offshore wind projects in the United States on the part of the Trump administration. Last year, Trump tried to order an immediate halt to the construction of five wind projects along the East Coast of the U.S., but judges overturned this ruling across the board. This failure has led to the administration’s current tactic, paying off companies to cancel their wind power projects before they’ve even begun.
This most recent deal comes at a pivotal time in global energy markets. While it’s somewhat puzzling that the Trump administration would choose to derail plans that would boost the United States’ energy independence and resilience to oil market shocks, it stands to reason that the U.S. would be doing everything it can to boost liquefied natural gas output as oil and gas prices soar across the globe. Europe will also benefit from an increased flow of LNG out of the United States, which would not require navigating the chaos in the Strait of Hormuz.
The Strait of Hormuz, through which one-fifth of global oil trade passes on a normal day, has been closed to nearly all traffic for nearly a month now as the United States and Israel continue to wage war in Iran, and that closure is not likely to reverse any time soon. This energy crisis comes on top of another concurrent threat to global energy security – the rapid rise of AI and data centers, which have sent energy growth trends skyrocketing and global leaders scrambling to shore up energy security strategies.
By Haley Zaremba for Oilprice.com
Washington Plans $1 Billion Deal to Kill Wind Power as Energy Prices Rise
- The U.S. plans to reimburse TotalEnergies $928 million to cancel offshore wind leases and halt future development.
- The move reflects a broader policy shift away from renewables toward oil and gas amid geopolitical energy disruptions.
- Critics argue the decision will increase energy costs and deepen reliance on volatile fossil fuel markets.
United States President Donald Trump will not stop in his efforts to quash offshore wind energy development, as he offers France’s TotalEnergies almost $1 billion to permanently halt its wind projects. The move follows more than a year of Trump badmouthing wind energy, cutting federal financial support for wind projects, and refocusing energy policy on fossil fuels.
Wind contributes around 10 percent of U.S. energy at present, with wind capacity having grown rapidly following the introduction of the Inflation Reduction Act (IRA) and other favourable policies under the Biden administration. In fact, Wind energy has become the cheapest source of new electricity in the U.S. However, since coming into office last January, President Trump has repeatedly taken aim at the wind industry.
Last January, Trump issued an executive order pausing the approval for wind development. He stated that wind projects were “the most expensive form of energy that you can have, by far.” He has often referred to wind farms as an eyesore, calling turbines ugly, as well as falsely claiming that offshore wind projects kill whales and overstating the impact of turbines on the bird population. Trump also suggested that the lifespan of the average wind turbine is just eight years, when it is actual
Trump paused several offshore wind projects in the United States last year, as he put increasing pressure on the industry to halt development. However, in February, a federal judge threw out the Interior Department’s halt work order on a multibillion-dollar wind farm off the coast of New York State, making it the fifth time that U.S. courts have ruled against the Trump administration’s efforts to stop offshore wind development. Judge Royce Lamberth of the U.S. District Court for the District of Columbia issued a preliminary injunction with the intention of allowing the developer of the New York project, Sunrise Win,d to restart construction while the broader legal battle continues.
Now, in the face of rising energy prices linked to the ongoing Iran War (which the U.S. started), the Trump administration is looking to use any means possible to halt offshore wind development. The federal government has announced plans to pay French energy major TotalEnergies almost $1 billion to scrap plans to build wind farms off the U.S. East Coast.
U.S. Interior Secretary Doug Burgum announced the deal on Monday at the annual CERAWeek conference in Houston, where he appeared alongside TotalEnergies CEO Patrick Pouyanne. The agreement states that TotalEnergies must give up two offshore leases it had purchased off New York and North Carolina, and, in response, the Interior Department is expected to reimburse the company the $928 million it paid for the leases under Joe Biden.
“We’re partnering with TotalEnergies to unleash nearly $1 billion that was tied up in a lease deposit that was directed towards the prior administration’s subsidies that were pushing expensive weather-dependent offshore wind,” said Burgum.
As part of the agreement, TotalEnergies has pledged not to develop any new offshore wind projects in the United States and will invest almost $1 billion in the development of four trains at the Rio Grande LNG plant in Texas, and the development of upstream conventional oil in the U.S. Gulf and shale gas production this year, according to a U.S. Interior Department statement.
Sam Salustro, a senior vice-president of pro-offshore wind group Oceantic Network, said in a statement, “This is political theatre meant to obscure the fact that offshore wind capacity is being pulled out of the pipeline when energy prices are skyrocketing, even as other offshore wind projects continue delivering reliable and affordable power to the grid.” Salustro added, “Paying to remove affordable, homegrown energy out of the equation leaves American consumers struggling to pay their electricity bills.
The move to kill offshore wind comes during the biggest oil supply disruption in history, which is driving up energy prices higher and higher every week that the conflict continues. Lena Moffitt, the executive director of the climate advocacy group Evergreen Action, believes that “Trump is deliberately deepening our dependence on the same volatile fossil fuel markets his reckless war is destabilising – while destroying the homegrown clean energy that could protect Americans from that volatility.”
Despite the Trump administration’s best efforts to restrict offshore wind development, several projects have gone ahead in recent months, with support from federal courts. The Vineyard Wind project, off the coast of Massachusetts, was completed in March, while Revolution Wind off Rhode Island’s coast launched operations just a few days before.
At a time when U.S. consumers fear rising energy bills (after a year of repeated cost increases), the Trump administration is continuing to attack offshore wind energy, as it favours the development of the country’s fossil fuel resources. The Trump administration will now pay almost $1 billion to halt TotalEnergies offshore wind plans, despite a federal court previously ruling in favour of the French firm’s wind projects.
By Felicity Bradstock for Oilprice.com
No comments:
Post a Comment