German energy company RWE has reached a $1.22bn deal with the US government to give up its offshore wind leases and instead invest in fossil fuel projects.
This is the fifth agreement the Trump administration has made with energy companies, offering payouts to abandon renewable projects. The total taxpayer money spent on killing offshore wind projects now approaches $4bn.
Details of the agreement
Announcing the deal with the US interior department on Thursday, RWE said it had agreed to relinquish its offshore wind leases off the coasts of New York, California, and Louisiana.
“After careful consideration, it was determined there is no path forward to permit these projects in the US for the foreseeable future,” the company said, referring to leases it had secured with a “long-term commitment to develop offshore wind capacity.”
RWE paid $1.1bn for its New York lease in a 2022 auction under the Biden administration, while its Louisiana and California leases cost a combined $163m, according to Reuters.
“The settlement resolves RWE US Offshore’s legal claims and provides $1.22 billion in settlement funds,” RWE continued, adding that the deal would allow it to “direct resources toward energy projects that can be advanced with certainty.”
Investment in fossil fuels
As part of the agreement, RWE will spend $900m to acquire a 16% stake in an unnamed Louisiana liquefied natural gas (LNG) project. The company said settlement proceeds would fund construction of the terminal.
RWE has also signed a $300m turbine reservation agreement to develop a pipeline of 15 natural gas peaker plants across the country.
Interior Secretary Doug Burgum welcomed the deal, saying: “We welcome RWE’s agreement and voluntary investment in projects that strengthen our nation’s energy security, provide dependable baseload power, and help keep electricity affordable for hardworking Americans today while supporting our country’s long-term energy future.”
Context and criticism
The RWE agreement is the largest such deal to kill clean energy projects. Earlier agreements with companies like TotalEnergies and Duke Energy totaled $2.7bn in taxpayer money.
After a $928m deal with TotalEnergies to cancel its New York offshore wind lease, seven states, including New York, sued the administration. New York Attorney General Letitia James called it a “sham deal” and “illegal agreement.”
The administration has also spent up to $1.1bn to boost coal, a move critics argue is “fattening the wallets of his cronies” while raising energy bills for working Americans, especially as the US’s war on Iran drives up fuel prices.
Meanwhile, the federal government is seeking to cut public input periods for fossil fuel drilling on federal lands and shift more financial risks of cleanup to taxpayers.
A report released last fall by the Environmental Integrity Project found that every fully operational LNG facility in the US had violated federal pollution limits in recent years, including discharging illegal amounts of bacteria, zinc, oil, and other pollutants into waterways, and failures to submit monitoring reports.
