What the TotalEnergies Deal Means for Energy Investment, Political Risk, and Affordability

Critical Questions by Leslie Abrahams

Published March 27, 2026

On March 23, The Trump administration announced a deal with French energy firm TotalEnergies, agreeing to pay the company $1 billion to stop developing two offshore wind projects and instead invest in oil and gas projects. In the announcement, the Department of the Interior referenced national security concerns and other arguments the administration has repeatedly used to justify its opposition to offshore wind. The TotalEnergies press release characterized offshore wind projects as "not in the country's interest." Notably, key details about the deal have yet to be disclosed and it could yet prove to be unlawful.

The most important aspect of this deal is not that it pays TotalEnergies to stop its offshore wind projects, but that, if upheld, it could establish a new mechanism for executive policy that bypasses Congress and the courts. Should this become a broader precedent, it would have consequences for offshore wind, broader infrastructure investment, and domestic energy affordability that extend far beyond this single transaction.

Q1: What was the TotalEnergies deal and what impact will it have on the offshore wind industry?

A1: In 2022, TotalEnergies bought the leases for two offshore wind projects, Attentive Energy and Carolina Long Bay. Combined, these projects represented more than 4 GW of electrical capacity off the coast of New York and North Carolina. The Trump administration is paying back $928 million of the $955 million TotalEnergies originally paid for the leases in exchange for TotalEnergies reinvesting the money in a Texas liquefied natural gas (LNG) project and oil and gas production in the Gulf of Mexico. All other costs incurred by TotalEnergies for other predevelopment activities (likely in the tens of millions) will be borne by the company. TotalEnergies described the agreement as a settlement proposed to avoid litigation over President Trump's January 2025 pause on offshore wind permitting (which was later struck down by a federal judge).

Because neither of these offshore wind projects had begun development, the immediate impact on the U.S. offshore wind industry is substantially more limited than the Trump administration's previous efforts to stop five offshore wind projects under construction (a move which was eventually overturned by the courts). Importantly, however, the administration has now paused new permits and leases for offshore wind projects. Therefore, when these two TotalEnergies leases revert to the Bureau of Ocean Energy Management, they will be frozen instead of being reauctioned.

The United States has sold 40 leases for offshore wind development to commercial developers since 2010, but only eight wind farms have gotten to the construction phase or are operating. It is likely that additional offshore wind developers are in talks with the administration to make similar deals, which would further revert active leases to the frozen pool. However, many of these developers are specialized renewable companies and lack the capacity to reinvest in oil and gas, limiting how widely this model could be applied. Even if additional deals are reached, the near term impact on U.S. offshore wind deployment will be limited given the administration's continued efforts to restrict the industry. However, fewer active leases would delay development timelines in the long term, if political and economic conditions around offshore wind deployment shift in the future.

Q2: Why is this deal unusual and how does it change political risk calculations?

A2: While the concept of political risk is not new, what is fundamentally different about this deal is that it reallocates public funding and directs private investment without a clear statutory framework. By bypassing congressional authorization and judicial oversight, it redefines market participation as a political question instead of a legal one. The agreement combines two elements: the use of public funds to compensate a company for not developing a project, and a requirement that those funds be reinvested in a politically favorable sector. It is not clear what funds would be used for the reimbursement nor under what authority the reallocation could be executed.

Any energy company that has held federal approval is aware of political risk; there is always the possibility that a future administration could try to revoke approval, slow-walk progress, or make development conditions unfavorable to motivate a company to walk away from a project. However, historically, there were clear legal frameworks in place to adjudicate these boundaries. The Keystone XL pipeline is an instructive example. When the Biden administration revoked its permit, TC Energy pursued legal recourse and ultimately lost in the courts. While unfavorable to the company, it provided legal clarity and a defined boundary of government authority that every market participant could see and price. In contrast, TotalEnergies has characterized this deal as a settlement implying a legal dispute existed and was resolved. In practice, it is an arrangement with no court record, no defined precedent, and no clear guidance on government authority for other companies.

Q3: Are there broader impacts beyond offshore wind?

A3: While on the surface this deal targets the offshore wind industry, the mechanism is precedent-setting across all industries that rely on long-duration federal approvals. In executing this deal, the administration may have unintentionally increased risk across sectors it is actively working to scale, such as mining and critical minerals. Like offshore wind leases, mining leases on federal lands are awarded through competitive auctions. For these industries, federal leases are the foundation of long-term infrastructure projects requiring large amounts of private capital. Historically, obtaining a lease has been the preliminary step toward raising debt, attracting equity investment, and making supply chain commitments.

Companies have long understood that future administrations may change rules moving forward, but this deal demonstrates a risk that unilateral executive action can be used to unwind existing contracts without any consistent framework for eligibility, price, or process. Will a mining company or an LNG developer now require a higher risk premium to commit capital, knowing a future administration could unilaterally unwind previous approvals at odds with its environmental or economic priorities? At the macro level, this introduces political discretion into what has historically been a rules-based investment environment, a shift that has consequences for every industry where private capital is predicated on federal leases or permits.

Q4: How might this deal impact investment in the United States?

A4: Investors, especially foreign entities, have long viewed the United States as a secure, attractive market, largely due to contract durability and reliable judicial processes. In many instances, investors have been willing to pay a premium for this security. This new example of executive dealmaking that bypasses Congress and the courts erodes this advantage. The cost of capital will also increase-for debt investors, lenders price risk based on the probability of project completion and revenue realization; for equity investors, federal contracts have traditionally been assumed to de-risk investments. Should this change, equity investors would require higher returns to offset this increased risk. These changes are difficult to observe in real time because they will impact projects that have not yet been realized rather than causing already announced projects to fail.

While this won't change overnight, it is well understood that higher perceived risk translates into worse deployment outcomes; in the long term, the new risk calculus may result in the United States developing fewer infrastructure projects more slowly and at higher cost. Beyond higher cost of capital, project costs themselves could also increase; should this type of public lease buyout be perceived as a plausible exit strategy, an unexpected consequence of this deal could be that auction prices increase as this pseudo insurance policy gets priced in. This is particularly consequential given that the sectors the administration is most urgently trying to scale-including critical minerals, LNG exports, and domestic manufacturing-are precisely those most dependent on long-duration federal commitments undermined by this deal.

Q5: Does redirecting this investment reduce energy costs?

A5: In the deal announcement, Secretary of the Interior Doug Burgum claimed redirecting capital from the offshore wind projects to U.S. gas production and export will "produce dependable, affordable power to lower Americans' monthly bills while providing secure U.S. baseload power today." This assertion obscures the dynamics of the U.S. energy system.

First and foremost, the U.S. grid is regionally fragmented. The offshore wind projects would have provided electrical capacity to critically constrained electricity grids, directly contributing supply where consumer rates have already been increasing. Increased gas production in the Gulf of Mexico, and especially development of a new LNG export facility, does not alleviate these affordability constraints or provide baseload power to the grid operators that would have benefited from the two TotalEnergies projects, PJM and the New York Independent System Operator. This is especially true for New York, where limited natural gas pipeline capacity already constrains the availability and affordability of natural gas.

PJM is experiencing a capacity and affordability crisis. Some PJM customers saw rate increases of up to 20 percent from 2024 to 2025, and consumers are projected to pay an extra $100 billion through 2033. For the first time, PJM failed to buy enough capacity to reliably meet its forecasted demand by the summer of 2027. A new natural gas plant in PJM territory would likely take 7-10 years from permitting through interconnection, and can therefore not directly substitute for the canceled projects in a relevant timeframe. Completing already leased offshore wind projects would have been the fastest way to add critical capacity to the grid.

Another important consideration for domestic energy affordability is that increasing LNG exports removes natural gas from the U.S. market. This deal therefore redirects investment from projects with direct benefits to the domestic grid to a project that ships U.S. gas to foreign buyers. Because LNG export terminals sell U.S.-produced gas to international buyers at global market prices, expanding export capacity increases competition for domestic gas supply. Increasing LNG exports may put upward pressure on domestic natural gas prices, further exacerbating the cost of domestic natural gas-powered electricity.

Leslie Abrahams is deputy director and senior fellow with the Energy Security and Climate Change program at the Center for Strategic and International Studies (CSIS) in Washington, D.C.

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