Trump administration pays $2.7bn to cancel offshore wind leases, spends $1.1bn on coal

DOE coal spending includes $500 million from Defense Production Act

The Department of the Interior has reached four deals with energy companies since March, paying them to cancel a total of eight offshore wind projects and pledge investment in fossil fuel power, the Guardian reported. The first such agreement, announced in March, was with the French company TotalEnergies and sparked a lawsuit from seven Democratic-controlled states that alleged it was an illegal use of taxpayer money. The latest deal with Duke Energy was announced late last month.

“They are trying to snuff out an entire form of energy,” said Jenny Rowland-Shea, senior director for conservation policy at the liberal thinktank the Center for American Progress. “And it’s at a time when the United States needs more energy … as people’s rates are going up for electricity, as we see datacenters gobbling up more energy.”

As it cancels offshore wind leases, the administration has simultaneously moved to boost coal. In September, the Department of Energy announced it would spend $625 million to “expand and extend the life of” coal-fired power plants, allocating $350 million to modernize coal plants, $175 million to fund coal projects powering rural communities, and $50 million to upgrade wastewater management systems. Last month, the agency set aside up to $500 million from the Defense Production Act to “expand and reinvigorate” the capacity of 13 coal plants and to help build a coal export terminal in Oakland, California. A week later, the department announced an additional $3.6 million to refurbish or retrofit nine existing coal plants.

In an email, energy department spokesperson Ben Dietderich said the administration is “proud” of its efforts to boost coal, stating that before Trump ended “the Green New Scam,” taxpayers paid for trillions of dollars of so-called green energy subsidies that resulted in premature shutdown of fossil fuel plants, higher energy costs, and increased blackout risk.

White House spokesperson Taylor Rogers said officials were “not spending taxpayer dollars on these deals.” She said the administration is “returning the money that companies bid on offshore wind projects that are unable to be built due to national security concerns,” and those companies are voluntarily redirecting those returned bid amounts to energy projects that will provide “affordable, reliable, and secure energy for American families and businesses.” She described the former Biden administration as having lured companies into projects with millions in taxpayer subsidies.

Rowland-Shea said money from energy leases on public lands and waters goes into public accounts. “They can use the word return, but they are paying the companies not to produce this energy or to give taxpayers what was promised,” she said.

Coal is the most carbon-dense fossil fuel, making it a major contributor to the climate crisis. A 2023 study estimated that as many as 460,000 deaths in the U.S. from 1999 to 2020 were attributable to tiny particles of air pollution from coal plants alone. A 2023 report from the research organization Energy Innovation found that 99% of domestic coal-fired power plants cost more to run than it would cost to replace them with renewable power sources. Energy Innovation found last year that generating power with coal in 2024 cost 28% more than the same amount would have cost in 2021.

“Coal has largely died because of economics, and so forcing it to stay afloat is not a good energy decision, and not a good economic decision for taxpayers,” Rowland-Shea said.

Gabrielle Levy, spokesperson for the green advocacy group Climate Action Campaign, said the government is propping up plants that would otherwise close. “So we’re paying as taxpayers to keep economically unviable plants open, and meanwhile those are doing immeasurable harm to the local environment, to people’s health, and to the climate, which costs us more, too,” she said.

The spending is part of a broader effort to tilt U.S. energy policy toward fossil fuels. In October, the energy department allocated an additional $1.5 billion in public money as a loan to restart a coal gasification plant. In February, the president signed an executive order directing the Pentagon to purchase electricity from coal plants. Officials have also signed legislation phasing out many of the clean-energy tax credits created under the Inflation Reduction Act, frozen or slowed permitting for new wind projects, and streamlined permitting for fossil-fuel projects.

Through a provision in the One Big Beautiful Bill Act, the administration lowered royalty rates on federal coal from 12.5% to 7%, slashing the amount coal companies pay to the federal government and states to extract on public lands. Wyoming alone estimates the change could cost it $50 million per year. In October, when the administration held the largest U.S. coal leasing sale in over a decade, the only bid amounted to one-tenth of a penny per ton.

“Even though the bid was ultimately rejected, the failure of this coal sale demonstrates the Trump administration’s willingness to use significant resources to subsidize a dying industry,” Rowland-Shea said.

Jay Inslee, the former governor of Washington state, described the administration’s actions as a “mugging.” “We pay more, Republicans rubber-stamp it, and Trump’s donors walk off with the bag,” he said.