Trump’s $1B payoff to stop offshore wind is stranger than it sounds

On Monday, President Trump’s Interior Department announced it would repay nearly $1 billion to a French multinational oil company.

The company TotalEnergies had spent this sum under the Biden administration to obtain two leases allowing it to build offshore wind farms in the Atlantic Ocean. The Trump administration, which has taken every possible step to block offshore wind development, is so opposed to the possibility that it is paying Total to give up those leases – which the company wasn’t even using – in exchange for a promise that Total would invest the money in oil and gas projects off the US Gulf Coast – something it already was doing.

“This is a backdoor deal made without any transparency, without a public process, and without consideration of the impacts on taxpayers in states that had planned to use offshore wind power to meet their energy needs,” said Elizabeth Klein, who led the Interior Department’s Office of Ocean Energy Management under former President Joe Biden.

The administration may have tried to buy Total to avoid litigation, according to Hannes Pfeifenberger, director of the economic consulting firm Brattle Group. The French company purchased its offshore wind lease in the coastal area known as the New York-New Jersey Bight for a historically high amount, paying about four times the usual per-acre rate for such rentals. If the administration had tried to block the development, Total could have taken legal action to avoid losing its entire investment.

“[Trump’s Interior Department] could have been liable for damages if offshore wind developers sued the government for selling them leases and then making permitting impossible,” Pfeifenberger said, adding that other developers who purchased leases at the same auction may now consider following the same path.

But Klein and other industry experts also noted that the deal does not deal a permanent blow to offshore wind development, beyond steps already taken by the Trump administration: Trump has already frozen all offshore wind lease auctions and has pledged to oppose any new construction of wind farms. In the worst-case scenario, the regulation will only set back the timetable for new offshore wind development by a few years. Although Total’s ocean rights will revert to the government for now, a future president could lease them to another energy company.

“Obviously, no one expects this administration to conduct offshore wind lease sales, but future administrations will,” Klein said.

There are other reasons why the settlement might be less important than it seems. Industry experts say most companies that hold ocean leases are looking to divest them or leave them idle until Trump leaves office. Even before this award, most experts believed wind companies would not return to the Atlantic without legislative reform to protect approved permits from executive interference.

The oil side of the regulation is even more confusing. The Interior Department’s announcement said TotalEnergies “will invest approximately $1 billion — the value of its relinquished offshore wind leases — in oil and natural gas,” including offshore oil platforms in the Gulf of Mexico and a liquefied natural gas, or LNG, facility in Texas. But the company is already investing billions of dollars in new offshore platforms and last year made a “final investment decision” on expanding its LNG facility in Texas. The lease repayment would only be used to compensate for these existing investments, and not to generate new infrastructure that the company had not already planned.

A statement from TotalEnergies CEO Patrick Pouyanné announcing the deal contained multiple grammatical errors, and it ended on a mundane note, with the executive saying “we believe this is a more efficient use of capital.”

As for the debate in the U.S. Senate over so-called permitting reform legislation aimed at ensuring the cancellation of energy projects, the Total deal has done nothing to disrupt negotiations. That’s in stark contrast to what happened after the administration’s previous stop-work order on five wind farms under construction in December, which caused bipartisan negotiations in Congress to break down. Speaking to reporters last Friday, Senate Democrat Sheldon Whitehouse said negotiations over permitting reform were moving at a brisk pace despite the new deal.

“So far, so good, as far as dealing with the substantive issues,” said Whitehouse, who represents Rhode Island and is known for his leadership on climate and energy issues. He noted that the Trump administration has refused to appeal court injunctions against its actions targeting the five active wind farms.

“Right now, I think they’re getting a strong signal from Republicans and Democrats in the Senate: stop this, stop the nonsense,” he said.