US redirects $120m from California wind to fossil fuels
The Trump administration has diverted $120 million in public funds from California offshore wind projects to out-of-state fossil fuel developments, deepening regulatory uncertainty for energy investors.
The U.S. Department of the Interior has reached an agreement with Golden State Wind LLC to abandon offshore wind plans in federal waters. The deal redirects $120 million in taxpayer money toward out-of-state fossil fuel projects.
This capital reallocation directly undermines California’s target to deploy 25 GW of offshore wind by 2025. The California Energy Commission warned the “unlawful agreement... puts at risk California’s clean energy gains, thousands of high-quality jobs, and more than $100 million in public investments in the offshore wind industry, including voter-approved climate funds.”
The offshore wind clash is part of a wider federal intervention in California's energy markets. Following the closure of the Strait of Hormuz and the resulting spike in global oil prices, the administration invoked emergency powers to reactivate a California oil pipeline. The line has been shuttered for over a decade, despite state concerns over previous leaks.
Federal pressure extends to state regulatory bodies. In May, Commerce Secretary Howard Lutnick accused the California Coastal Commission of “environmental terrorism” for obstructing spaceport development, triggering a federal performance review. This followed the commission’s refusal to increase rocket launches for SpaceX, a dispute previously settled in court.
California is responding with legal action to protect its energy agenda. Attorney General Rob Bonta sent a notice of intent to sue in June. “Let’s be clear: this illegal attempt from the Trump administration lets Sable profit at the expense of our environment and public health,” Bonta stated in May.
For market participants, the core tension lies in competing mandates. California added 30.8 GW of clean energy and battery storage between 2019 and 2026. Governor Gavin Newsom noted the state ran on 67% clean energy for nine out of ten days in 2025, adding, “Outside of China, there’s only one other jurisdiction in the world – California – that has as much battery storage implemented.”
However, natural gas remains California’s top energy source. Federal overrides on both wind development and oil infrastructure mean capital deployed in the state faces elevated political risk. “California strongly condemns yet another reckless Trump Administration misuse of taxpayer dollars that undermines clean energy growth and U.S. energy security,” said California Energy Commission Chair David Hochschild.
