The Trump administration will pay the French energy giant TotalEnergies nearly $1 billion to abandon its plans to build wind farms off the East Coast, the Interior Department said on Monday at an energy conference in Houston.
Under the unusual deal, TotalEnergies would forfeit its leases in federal waters for two wind farms, which would have been built off New York and North Carolina. The Justice Department would then reimburse TotalEnergies $928 million, the amount it paid for the leases during the Biden administration.
In exchange, TotalEnergies would invest that money in oil and gas projects in the United States, including a facility in Texas that would export liquefied natural gas to global markets. The company would also commit to producing more oil in the Gulf of Mexico and said it was developing some additional gas-burning power plants to meet rising electricity demand from data centers.
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. It comes as the war in the Middle East has shocked global oil markets, prompting concerns about energy supplies.
The New York Times first reported last week that the administration was considering the agreement. Interior Secretary Doug Burgum unveiled the deal on Monday at CERAWeek by S&P Global, an annual energy conference in Houston, where he claimed that wind power was ineffective.
“The era of taxpayers subsidizing unreliable, unaffordable and unsecure energy is officially over, and the era of affordable, reliable and secure energy is here to stay,” Mr. Burgum said.
Patrick Pouyanné, the chief executive of TotalEnergies, called the agreement a “pragmatic” business decision.
“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,” Mr. Pouyanné said. He said that since winning the leases, the company had concluded that offshore wind was “not the most affordable way to produce electricity” and would require federal subsidies that are now being phased out by the Trump administration.
“To be clear, we don’t renounce onshore wind,” Mr. Pouyanné added. “We continue to invest in onshore solar, onshore wind, batteries.” But in the United States, he said, “offshore wind is too expensive from our point of view.”
Late last year, the Trump administration tried to quash five wind farms in various stages of construction along the East Coast. It took the drastic step of ordering a halt to construction of the projects, which had each received federal permits after years of review. The projects’ developers and several states sued. Federal judges ruled against the Trump administration in every case.
The larger of the two wind farms planned by TotalEnergies, known as Attentive Energy, would have been built 54 miles south of Jones Beach, N.Y. It would have produced enough electricity to power more than one million homes and businesses in New York and New Jersey.
The smaller wind project, Carolina Long Bay, would have operated 22 miles south of Bald Head Island, N.C., and could have powered around 300,000 homes and businesses starting in the early 2030s.
The agreement between TotalEnergies and the administration comes as the war in the Middle East has rattled global oil markets. Some experts have argued that investments in renewable energy, including wind and solar power, can help countries protect against the volatility of oil prices, particularly during wartime.
“The lesson that folks in Europe learned when the full-scale Ukraine invasion happened was that they really needed to look at their own native energy resources,” said Seth Kaplan, a vice president at Grid Strategies, a consulting firm focused on the power sector.
Asked about the reported deal last week, Gov. Kathy Hochul of New York said it would harm her constituents. “It doesn’t help the people of New York,” said Ms. Hochul, a Democrat. “It doesn’t help the people of Long Island get renewable energy. These projects must continue, and I’m fighting like hell to keep them going.”
Representatives for Gov. Mikie Sherrill of New Jersey and Gov. Josh Stein of North Carolina, both Democrats, did not immediately respond to requests for comment.
Representatives for the Interior Department also did not respond to questions about the source of the nearly $1 billion. Energy lawyers said it would probably come from the Justice Department’s Judgment Fund, which is used to pay court judgments and settlements with the government.
Mr. Trump has disparaged offshore wind power since 2012, when he tried unsuccessfully to stop a project visible from one of his golf courses in Scotland. He has often called the projects ugly and has claimed without evidence that they are “driving whales crazy.”
When it ordered construction to halt on the five other wind farms being built along the East Coast in December, the administration cited a classified report that it said found that the projects threatened national security. Federal judges said they were unpersuaded by the government’s national security claims after reviewing the report, which has not been made public.
Benjamin Oreskes contributed reporting from New York.
Maxine Joselow covers climate change and the environment for The Times from Washington.
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