U.S. to repay TotalEnergies nearly $1 billion to drop offshore wind leases, redirecting investment to LNG and drilling

When the federal government auctioned vast stretches of the Atlantic seabed for offshore wind in 2022, officials hailed it as the start of a new era in American clean energy. Four years later, Washington is poised to pay nearly $1 billion to unwind two of those leases—and steer the equivalent investment into liquefied natural gas exports and new oil and gas drilling instead.

On March 23, the U.S. Department of the Interior announced what it called a “landmark agreement” with French energy company TotalEnergies to terminate the company’s offshore wind leases in the New York Bight and Carolina Long Bay. Under the settlement, TotalEnergies will relinquish the leases and, after making a comparable amount of new investments in U.S. fossil-fuel projects, receive a refund of almost all the lease payments it made just two years ago.

The deal marks one of the sharpest reversals yet of the federal offshore wind push and offers a blueprint for how President Donald Trump’s second administration is reshaping energy policy: not only by slowing new renewable projects, but by paying companies to abandon those already in the pipeline.

Interior Secretary Doug Burgum said the settlement was “driven by President Donald J. Trump’s Energy Dominance Agenda” and would “lower costs for hardworking American families.”

“For years, Americans have been forced to underwrite one of the most expensive, unreliable, environmentally disruptive, and subsidy-dependent schemes ever foisted on them: offshore wind,” Burgum said in the department’s statement. Ending the projects, he added, “protects our grid, our national security and our pocketbooks.”

TotalEnergies, one of the world’s largest integrated oil and gas companies and a major player in liquefied natural gas, cast the move as a rational reallocation of capital in a tougher market for U.S. offshore wind.

“Given the evolution of the U.S. regulatory and economic environment, these offshore wind projects are no longer in the country’s interest in terms of power affordability,” Chairman and CEO Patrick Pouyanné said. Redirecting the money to oil and gas, he said, would be “a more efficient use of capital in the United States,” supporting domestic gas production, LNG exports to Europe and power supply for rapidly growing U.S. data centers.

How the buyout works

TotalEnergies and its partners paid about $928 million in winning bids for the two leases under the Biden administration.

• In February 2022, a consortium including the French company secured lease OCS-A 0538 in the New York Bight—an area of the Atlantic between New York and New Jersey—with a bid of about $795 million. The lease, held through its Attentive Energy venture, was expected to support more than a gigawatt of offshore wind capacity.
• Three months later, TotalEnergies Renewables USA won lease OCS-A 0545 in the Carolina Long Bay area off North Carolina and South Carolina with a bid of around $160 million, though Interior later referenced an adjusted paid amount of $133.3 million after credits. That site was widely described as capable of supporting roughly 1 gigawatt of generation.

Under the March settlement, TotalEnergies commits to invest roughly the same amount—$928 million—in 2026 in U.S. oil, gas and LNG projects. After those investments are verified, the federal government will reimburse the company dollar-for-dollar up to the amount paid for the wind leases.

The Interior Department said those investments will include further development of the Rio Grande LNG export terminal in Brownsville, Texas—where TotalEnergies already holds an equity stake and long-term purchase agreements—as well as conventional oil projects in the Gulf of Mexico and expanded U.S. shale gas production. The department did not list specific fields or basins.

Once the investments are made and the reimbursements processed, Interior’s Bureau of Ocean Energy Management will formally terminate the offshore wind leases, clearing the way for the areas to be re-offered or left undeveloped.

In addition, Interior said, TotalEnergies has pledged that, “in light of national security concerns,” it will not pursue new offshore wind projects in U.S. waters. The department did not detail what specific security concerns it was referring to. The commitment effectively removes one of the largest global energy companies from the U.S. offshore wind market for the foreseeable future.

From flagship leases to political flashpoint

The New York Bight and Carolina Long Bay auctions were centerpieces of President Joe Biden’s goal to deploy 30 gigawatts of offshore wind by 2030. The record bids from TotalEnergies and other developers were cited at the time as a sign that global capital was betting on U.S. climate policy remaining stable.

Since then, the industry has faced rising costs, higher interest rates, supply chain bottlenecks and lengthy permitting processes. Several major East Coast projects have been delayed, canceled or forced to renegotiate power contracts.

Trump, who regained the White House in the 2024 election, has long criticized offshore wind on aesthetic, economic and environmental grounds. During his first term, he repeatedly attacked projects off the New England coast, alleging without evidence that turbines were killing whales and damaging tourism.

In his second term, the administration moved quickly to slow new offshore wind approvals. Several early attempts to revoke permits or freeze construction were set aside by federal judges, who found that agencies had not followed required procedures. Faced with those legal setbacks, officials turned to negotiated settlements with developers instead.

The agreement with TotalEnergies is the first such high-profile deal to be made public. Industry analysts and advocacy groups say it could serve as a template for similar arrangements with other companies holding leases in the Atlantic.

Attorney General Pamela Bondi, whose Justice Department helped negotiate the settlement, said in Interior’s release that the agreement “prioritizes affordability for hardworking American consumers” and bolsters “national security and grid reliability.”

Critics characterized it in starkly different terms. Environmental groups and some energy-policy experts have described the arrangement as an unprecedented use of taxpayer funds to dismantle renewable-energy projects and support fossil-fuel expansion, rather than the other way around.

Several said the move risks undermining investor confidence in U.S. energy policy by signaling that large infrastructure projects approved under one administration can be unwound—with compensation—by the next for ideological reasons.

Winners, losers and the energy mix

The immediate effect of the deal is to halt two projects that together could have supplied electricity for more than a million homes, based on typical offshore wind capacity estimates.

For port cities and coastal communities in New York, New Jersey and the Carolinas, the termination of the leases removes a potential source of long-term investment in manufacturing, shipbuilding and workforce training tied to offshore wind construction and maintenance. The Carolina Long Bay auction, for example, had built-in commitments for tens of millions of dollars in local workforce and supply chain development as part of bidding credits.

By contrast, Gulf Coast and South Texas communities stand to benefit from additional construction and operations activity at LNG terminals and in offshore oil and gas fields. Rio Grande LNG alone is designed to ship tens of millions of metric tons of liquefied natural gas per year when fully built out, much of it to European and Asian buyers seeking alternatives to Russian pipeline gas.

Supporters of the deal argue that boosting U.S. LNG exports can help allies and provide a reliable, dispatchable fuel for power plants as data center demand grows. Opponents counter that new LNG capacity and upstream drilling lock in decades of additional greenhouse gas emissions at a time when scientific bodies have warned that most new long-lived fossil projects are incompatible with limiting global warming to 1.5 degrees Celsius.

TotalEnergies, which rebranded in 2021 to emphasize a shift toward a “multi-energy” portfolio, continues to invest in solar, onshore wind and batteries in the United States and abroad. But the company remains heavily dependent on hydrocarbon production and is one of the largest LNG sellers in the world.

By recouping nearly all of what it paid for the U.S. offshore wind leases and putting that capital into projects at the core of its existing business, the company reduces its exposure to a politically contested and financially stressed sector while reinforcing its LNG growth strategy.

The Interior Department framed the settlement as an innovative way to correct what it described as costly, subsidy-driven offshore wind policies of the previous administration without extended litigation or abrupt cancellations. The agreement does not include any admission of fault by either party.

Whether the arrangement will be seen as a one-off or the first in a series of offshore wind buyouts may determine how investors view the United States as a destination for long-term clean-energy capital.

In the span of four years, the same tracts of ocean that once symbolized an ambitious push to harness Atlantic winds have been converted back into cash on TotalEnergies’ balance sheet and new gas trains on the Texas coast. How other developers and governments respond to that reversal could shape the direction of America’s energy transition long after the last check is written.