In “Energy Emergency”, Tax Money to Shut Down Wind Projects

The White House – Declaring a National Energy Emergency – January 20, 2025:

This active threat to the American people from high energy prices is exacerbated by our Nation’s diminished capacity to insulate itself from hostile foreign actors. Energy security is an increasingly crucial theater of global competition. In an effort to harm the American people, hostile state and non-state foreign actors have targeted our domestic energy infrastructure, weaponized our reliance on foreign energy, and abused their ability to cause dramatic swings within international commodity markets. An affordable and reliable domestic supply of energy is a fundamental requirement for the national and economic security of any nation.

New York Times:

The Trump administration will pay the French energy giant TotalEnergies nearly $1 billion to abandon its plans to build wind farms off the East Coast, the Interior Department said on Monday at an energy conference in Houston.

Under the unusual deal, TotalEnergies would forfeit its leases in federal waters for two wind farms, which would have been built off New York and North Carolina. The Justice Department would then reimburse TotalEnergies $928 million, the amount it paid for the leases during the Biden administration.

In exchange, TotalEnergies would invest that money in oil and gas projects in the United States, including a facility in Texas that would export liquefied natural gas to global markets. The company would also commit to producing more oil in the Gulf of Mexico and said it was developing some additional gas-burning power plants to meet rising electricity demand from data centers.

The deal is an extraordinary transfer of taxpayer dollars to a foreign company for the purposes of boosting the production of fossil fuels, a main driver of climate change, while throttling offshore wind power. It comes as the war in the Middle East has shocked global oil markets, prompting concerns about energy supplies.

Heatmap:

A supply squeeze that could have resolved quickly once the Strait of Hormuz reopened and Qatar’s Ras Laffan facility got up and running again turned into a years-long interruption when Iran knocked out 17% of Qatar’s liquified natural gas export capacity, taking out almost 13 million tons per year of gas production, according to Morgan Stanley. As recently as a month ago, Qatar supplied about a fifth of global LNG capacity. The damage will likely take several years to fix, the chief executive of QatarEnergy told Reuters.

“What started as a transitory (but significant) capacity outage has escalated to a multi-year loss of supply,” Morgan Stanley analysts wrote in a note to clients Thursday. “Even with near-term resolution, the global gas market will need to contend with refilling inventories amid a large supply loss, creating upside price risks.”

European and East Asian LNG importers will likely choose to pay the higher prices. Poorer countries in South and Southeast Asia, however, may have to go without.

“There is now no longer going to be an LNG glut in 2026. There’s going to be a tight gas market,” Brew told me. “That’s going to keep regional prices high. That’s going to keep European prices high. That’s going to keep Asian prices high. That’s going to mean emerging markets in South Asia and Southeast Asia that would otherwise be able to buy LNG cargoes are going to have a tougher time.”