As the Iran war pushes up energy prices, the Trump administration is paying offshore wind developers to walk away from projects and invest instead in fossil fuel infrastructure.
The US Department of the Interior (DoI) announced on Monday two "historic" agreements under which the firms behind the Bluepoint Wind and Golden State Wind projects will voluntarily terminate their offshore wind leases.
In return, the DoI will reimburse the companies with taxpayers' cash, to the tune of $765 million in the case of Bluepoint Wind, and $120 million for Golden State Wind.
There is a catch, of course: the leaseholders must first invest a comparable amount in qualifying US conventional energy projects (i.e., oil, gas, or liquefied natural gas infrastructure) before they can recover the money tied to their offshore wind leases.
This isn't the first such development: last month, the DoI reached a similar deal with French energy biz TotalEnergies to reimburse the company approximately $1 billion to give up its wind farm leases in Carolina Long Bay and the New York Bight area, suggesting that this may be an ongoing strategy.
It appears that paying developers to surrender offshore wind leases has become a fallback strategy after President Trump's executive order halting new federal approvals for wind projects ran into legal challenges from a coalition of state attorneys general and was later struck down in federal court.
In a remarkable coincidence, both sets of developers have decided not to pursue any new offshore wind developments in the US.
Washington's justification for these actions is that it is all part of President Trump's "Energy Dominance Agenda" to "leverage the nation's natural resources" to benefit American citizens and help lower everyday energy costs.
"President Trump is focused on providing affordable and reliable energy to American citizens," claimed Secretary of the Interior Doug Burgum in a prepared remark.
"The companies that bid for these offshore wind leases were basically sold a product in 2022 that was only viable when propped up by massive taxpayer subsidies. Now that hardworking Americans are no longer footing the bill for expensive, unreliable, intermittent energy projects, companies are once again investing in affordable, reliable, secure energy infrastructure," he added.
The President's well-known aversion to renewable energy is said to date back at least to his failed legal attempt to stop a wind farm project from being built within sight of his golf course in Scotland over a decade ago.
Looking at the figures, fossil fuel producers are estimated to receive about $34.8 billion a year in federal support through tax breaks, royalty policies, and other subsidies, even though oil and gas have enjoyed public backing for decades and hardly qualify as an emerging industry.
Globally, fossil fuel subsidies are typically much higher than those handed out to renewable energy projects. According to the International Monetary Fund (IMF), fossil fuel subsidies exceeded $7 trillion in 2022, or 7.1 percent of global GDP. Meanwhile, G20 governments provided about $168 billion in public financial support for renewable power in 2023, according to the International Institute for Sustainable Development (IISD).
At the same time, the most recent annual report on electricity generation costs published by investment bank Lazard found that unsubsidized wind and solar had been the lowest cost energy generation sources in the US for at least the last decade.
This is apparent to big energy users like datacenter operators, which are keen to keep renewables in the mix due to the low cost of solar in particular.
But it appears the Trump administration is convinced that only oil and gas, with a side dish of atomic power, can provide the energy America needs to meet the challenges of the future. ®
Source: The register