On Monday, the Interior Department said it had struck a deal with France’s TotalEnergies, which agreed to forfeit its leases for offshore wind areas near North Carolina and New York. In exchange, the Trump administration will ​“reimburse” the company dollar for dollar for the lease fees – and that money will be plowed into new fossil fuel projects.

In announcing the payout, TotalEnergies struck a very different note on offshore wind than it had originally. The oil major had previously said its planned one-gigawatt Carolina Long Bay wind farm would ​“generate abundant energy and significant economic growth for the communities of the Southeast.” Its massive three-gigawatt project in New York was expected to deliver ​“attractive returns” while supplying ​“green electricity to New York City.”

But today, TotalEnergies CEO Patrick Pouyanné reversed course. ​“Considering that the development of offshore wind projects is not in the country’s interest, we have decided to renounce offshore wind development in the United States,” he said, adding that investing in U.S. oil and gas ​“is a more efficient use of capital.”

The company still has about seven gigawatts of offshore wind projects in development or production in Europe and Asia.

Under the new agreement, TotalEnergies will invest some of the $928 million in reimbursed funds to develop a liquefied natural gas export terminal along the Texas Gulf Coast. That project, called Rio Grande LNG, has faced yearslong opposition from local community groups, tribal leaders and environmentalists who worry the massive development will destroy ecosystems and exacerbate the climate crisis.

Pouyanné said the Texas terminal and other new oil and gas projects ​“will contribute to supplying Europe with much-needed LNG from the U.S.” and also provide gas for the United States’ growing crop of data centres.

The deal to defund new U.S. offshore wind farms is occurring against the backdrop of a swelling energy crisis, the direct result of the U.S. and Israeli strikes on Iran. Energy experts have argued that the ongoing conflict and disruption to shipping in the Strait of Hormuz underscore the need to shift toward renewable-energy sources, which are less vulnerable to geopolitical shocks.

CBAM is a first-in-the-world policy by the European Union that charges fees on imports based on how much planet-warming pollution was produced in their manufacturing. On January 1, 2026, the carbon tariff will officially take effect, raising costs for European businesses that source products from dirty facilities abroad.

The policy is part of the EU’s broader effort to drive the decarbonization of heavy industries in the 27-member bloc as well as globally. It’s already having a ripple effect, with other countries considering adopting their own carbon-pricing schemes and international firms investing in cleaner technologies to make their exports more enticing to Europe.

Here’s what to know as the landmark policy goes into effect.

How it started

In 2005, the EU launched the Emissions Trading System, the first scheme in the world to limit greenhouse gas emissions from power plants and industrial facilities. The ETS caps the total amount of carbon pollution that each operator is allowed to spew. The companies can then buy allowances that give them the right to generate one metric ton of carbon dioxide equivalent. The idea is that making it costlier to pollute will incentivize businesses to clean up their operations.

Until now, however, the ETS has given what experts call a ​“free pass” to producers of certain trade-exposed commodities. Manufacturers argued that raising the costs of producing goods in Europe would make their industries less competitive on the global market. It could also push key customers, including European automakers, to import cheaper materials from countries without stringent climate policies – a phenomenon known as ​“carbon leakage.”

As the EU phases out these free passes, CBAM is designed to plug such a leak.

“It doesn’t make sense that you basically ask your own producers to produce in a certain way, to be as clean as possible, or else ask them to pay a price, and then let others – competitors from outside Europe – bring in their products and then compete unfairly,” Mohammed Chahim, the European Parliament’s lead negotiator on the carbon border fee, said on the Energy Policy Now podcast earlier this year.

How it works

The EU officially finalized CBAM’s rules in May 2023. Later that year, a ​“transitional phase” began for importers of goods from six carbon-intensive sectors: aluminum, cement, electricity, fertilizers, hydrogen, and iron and steel. Companies had to begin filing quarterly reports listing the direct and indirect carbon emissions of those products.

On December 31, that phase will end, kicking off the ​“definitive period.”

Starting next month, in addition to tracking emissions, importers will pay a fee on covered products like steel rods, metal wiring and ammonia. Initially, the fee will be a small percentage of the average quarterly price of carbon allowances under the ETS – though participants could pay less, or nothing at all, if the exporting country has a similar carbon-pricing scheme in place. Over eight years, the CBAM tariff will gradually increase to represent 100% of the weekly average allowance price.

At the same time, the EU will wind down the special treatment it’s given to trade-exposed industries under the regional cap-and-trade scheme, requiring European manufacturers to gradually pay more for their facilities’ emissions.

The milestone, announced on Tuesday, will allow Houston-based XGS to begin financing and building its first next-generation geothermal energy project, according to the company. XGS is partnering with Meta and the utility PNM to develop 150 megawatts of around-the-clock clean electricity in New Mexico that will supply the tech giant’s data centres.

“We’re really off to the races now,” said Josh Prueher, the CEO of XGS. The start-up is slated to deploy the project’s first five megawatts by around 2027 and bring the remaining megawatts online by 2029, he added.

XGS is part of a fast-growing industry that’s working to harness the world’s abundant geothermal resources to meet soaring electricity demand. Dozens of U.S. companies are developing cutting-edge technologies that promise to access Earth’s heat in drier, deeper and hotter conditions than is technically or economically feasible for conventional geothermal plants. Another of these firms, Sage Geosystems, is also partnering with Meta to build its own 150-megawatt geothermal facility somewhere east of the Rocky Mountains.

Today, geothermal energy represents about 0.4% of total U.S. electricity generation, and most facilities are concentrated around geysers and hot springs in Northern California and Nevada.

This unlocks a huge commercial pipeline that has been accumulating in parallel.

– Josh Prueher, CEO, XGS Energy

The next-generation geothermal projects that are currently in development fall into one of three buckets. Enhanced geothermal systems, like the ones that Sage and Fervo Energy are building, involve fracturing rocks and pumping them full of water to create artificial reservoirs far below the earth’s surface. Superhot geothermal, which scientists are studying in Iceland, aims to tap into extreme resources like magma chambers to extract gargantuan amounts of heat.

XGS’s approach falls into the third bucket: closed-loop systems, which entail placing pipes deep underground and sealing them off so that they operate like radiators. As water circulates within the system, it collects heat from the hot rocks below and brings it to the surface, where the heat produces steam that drives electric turbines.

A leap forward for closed-loop geothermal?

What sets XGS apart from its closed-loop competitors, such as Canadian start-up Eavor, is the ​“thermally conductive” cement alternative that the company places between the hot rock and pipe system. XGS claims that its proprietary material, which includes a naturally occurring mineral, can increase the total amount of heat it pulls from the subsurface by 30% to 50%, allowing the company to use simpler and cheaper well designs to access hotter rocks with existing drilling technologies.

XGS completed its first pilot project in late 2024 with a 100-metre-deep well in central Texas. Earlier this year, the start-up began operating a full-scale prototype using an idled well at the Coso geothermal field in the Western Mojave Desert region of California. The well runs more than 1,000 metres deep – a standard depth for commercial geothermal wells – and reaches subsurface temperatures of around 200°C (392°F).

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For 3,000 hours, or 125 days, XGS continuously ran its closed-loop system while adjusting key variables, such as the rate at which liquid flows and the amount of heat extracted at the surface. The idea was to simulate how the technology performs in different operating conditions, in order to prove it can withstand various types of stress while also demonstrating that the company can accurately predict the system’s performance.

The start-up claims the prototype’s actual performance fell within 2% of its predictions, results that XGS later verified with independent engineers, Prueher said. Being able to accurately predict how a project will perform – and for how long – is an essential step for the company to be able to raise the many millions of dollars in debt financing it needs to build its first geothermal power plants, he added.

“This unlocks a huge commercial pipeline that has been accumulating in parallel,” Prueher said of the test results. Along with the 150 megawatts it’s developing with Meta, the start-up has lined up more than three gigawatts of projects ​“mostly in the Western United States, where water sensitivity is a huge issue, and where there’s a strong demand signal from data centres and other types of clean energy consumers to build this as quickly as we can.”

XGS has raised US$55 million so far from private investors to develop its heat-harvesting technology. One of its biggest backers is VoLo Earth Ventures, which focuses on early-stage climate-tech companies.

Joe Goodman, a managing partner for VoLo, said his firm identified XGS ​“as one of the leading geothermal solutions” about a year and a half ago after reviewing its experimental lab data, and Goodman later joined XGS’s board of directors. By boosting the system’s overall energy output, XGS’s thermally conductive materials could be the key to making closed-loop geothermal more economically viable, he said, adding that the technology also sidesteps the concerns around water-supply constraints facing enhanced geothermal systems.

“We’re quite optimistic about what we’ve seen,” Goodman said.

Maria Gallucci is a senior reporter at Canary Media. She covers emerging clean energy technologies and efforts to electrify transportation and decarbonize heavy industry.

The 1.6-megawatt installation, called Project Nexus, was fully completed late last month. The $20-million state-funded pilot has turned stretches of the Turlock Irrigation District’s canals into hubs of clean electricity generation in a remote area where cotton, tomatoes, almonds and hundreds of other crops are grown.

Early research suggests that, along with producing power in land-constrained areas, putting solar arrays above water can help keep panels cool, in turn improving their efficiency and electricity output. Shade from the panels can also prevent water loss through evaporation in drought-prone regions and can limit algae growth in waterways.

Plus, solar canals could offer a faster path to clean energy development than utility-scale solar farms, especially in rural parts of the United States where big renewables projects increasingly face community opposition. Placing solar panels atop existing infrastructure doesn’t require altering the landscape, and the relatively small installations can be plugged into nearby distribution lines, avoiding the cumbersome process of connecting to the higher-voltage wires required for bigger undertakings.

On Thursday, CFS said that, with its Series B2 funding round, the start-up has raised about $3 billion in capital since it was spun out of the Massachusetts Institute of Technology in 2018. That’s just under one-third of the $9.8 billion in total funding for fusion companies globally.

Seemingly every type of investor showed up for CFS’s latest funding round as the world’s interest in the long-promised, highly speculative technology continues to soar. More than three dozen names appear in the start-up’s new announcement, including those of venture capitalists, sovereign wealth funds, private equity firms, individual investors, industrial firms, hedge funds, pension funds and private banks.

CFS has ambitious plans to begin supplying one of its big-name investors – Google – with power in the next few years from a plant in Virginia.

“This funding recognizes CFS’ leadership role in developing a new technology that promises to be a reliable source of clean, almost limitless energy,” Bob Mumgaard, CEO and cofounder of CFS, said in an August 28 press release. He said the company ​“will enable investors to have the opportunity to capitalize on the birth of a new global industry.”

To oversimplify, nuclear fusion – the source of the sun’s energy – involves converting hydrogen into plasma, which is then compressed and confined in a process that releases massive amounts of energy. Proponents say that fusion power plants could offer the best of nuclear energy – carbon-free electricity supplied around the clock – without the drawbacks of today’s nuclear fission plants, including the risk of catastrophic meltdowns and ever-growing stockpiles of radioactive waste.

Funding for fusion energy rising sharply