RWE - The Gilded Capitulation

Despite all the concern about the climate, and despite the prices driven higher by Trump's war against Iran in violation of international law, his administration continued its campaign against offshore wind this week. Once again, it got a company to put its money into fossil energy instead with what critics call a taxpayer-funded favor. What looks like an orderly retreat is, in reality, a trade: give up the wind farms in exchange for a fat check.

German energy company RWE announced an agreement with the U.S. Department of the Interior on Thursday. Under the deal, the company will give up its leases for wind farms off the coasts of New York, California, and Louisiana and receive $1.22 billion in return. RWE said that, after careful consideration, there was no realistic prospect of getting these projects permitted in the United States for the foreseeable future. The company said the solution best served the interests of its shareholders and would allow it to direct its resources toward projects that offered planning certainty.

RWE left no doubt about where that money is going. $900 million will go into an indirect 16 percent stake in a liquefied natural gas project in Louisiana, with another $300 million going toward turbines for 15 planned gas-fired power plants in selected U.S. markets. The administration has already struck four such agreements this year, and this one is the largest. Trump has been fighting offshore wind since before his presidency, and what his administration is doing today is widely described as a war on renewable energy. With every one of these agreements, planned generating capacity disappears before the first turbine tower ever goes into the water.

Senate Democratic Minority Leader Chuck Schumer of New York summed it up in four words: "CORRUPTION AT YOUR EXPENSE." The administration, he wrote, is once again spending billions in taxpayer money to cut America's domestic energy supply while exporting more energy to countries like China. The only result for ordinary Americans, he said, will be higher utility bills.

Interior Secretary Doug Burgum pushed back with an inversion that speaks for itself. Not a single taxpayer dollar would be spent, he said. It was simply a dollar-for-dollar repurposing of RWE's own money. He left out the fact that the $1.22 billion is going to the company, not coming out of its coffers. The previous energy transition, meanwhile, was supposedly really an energy subtraction. Renaming something replaces the math here. If you call building capacity a reduction, you no longer have to fear the numbers. RWE itself laid out the figures: it had invested more than $1 billion in the leases and development, and the agreement resolves the legal claims and provides $1.22 billion in settlement funds.

An American economist who once dissected the conspicuous consumption of the leisure class also defined sabotage: the deliberate restriction of output for the benefit of business. That is exactly what is happening here on a massive scale, except that the public is paying for the restriction. The rollback is not the result of a market failure. It is written into the agreement and backed with public money. Jared Huffman of California, the top Democrat on the House Natural Resources Committee, called the deal what it is. Trump, he said, paid RWE more than $1 billion in taxpayer money to abandon its wind projects, including one off Humboldt in his district, and switch to fossil fuels. This fake, illegal settlement destroys good-paying jobs and drives up electricity costs while rewarding the oil industry with public money. Everyone involved, he said, will eventually have to answer for it.

A deal like this had been feared for months. In May, more than 50 U.S. organizations, alarmed by the prospect, sent a letter to CEO Mark Krebber urging him to stand up to the administration's pressure and its vendetta against offshore wind. Friends of the Earth US was among the signatories. Its senior energy campaigner Raena Garcia called it a disastrous mistake to commit to putting more than $1 billion back into fossil energy. No administration lasts forever, she said, and any company that enters into deals like this should expect to be held accountable eventually.

The BlueGreen Alliance, a coalition of environmental groups and labor unions, is keeping track of the cost of these buyout deals. So far, it puts the total at $3.9 billion in taxpayer money and 21.15 gigawatts of generating capacity that will never be built, along with more than 57,000 projected jobs. Its executive director, Jason Walsh, described it as a relentless war on offshore wind. Billions in taxpayer dollars have been wasted, along with tens of thousands of potential jobs. At a time of rising demand and rising costs, he said, this latest buyout is particularly disappointing because workers on three coasts will lose out on the clean, reliable energy those projects would have provided.

The retreat is not completely sealed yet. New York Attorney General Letitia James announced in June that she would lead a coalition with her counterparts in Connecticut, Maine, Massachusetts, New Jersey, Rhode Island, and Vermont seeking to overturn one of the agreements in court. California Attorney General Rob Bonta has also announced plans to sue over another one of these deals.

And while Washington is canceling the wind, the United States is generating more electricity from solar and wind than ever before. In May, solar power overtook every other source of electricity generation in Utah for the first time. That shift is happening in defiance of Washington's course, and Washington still has not stopped it. Weber State University physics professor Dan Schroeder called it good news for the air and the climate, as well as for jobs and the economy. The buyout does not change that. It only makes the road there more expensive. But the bill for this purchased standstill will be paid by the people who got nothing out of it.