The German energy company RWE has reached a $1.22bn deal with the US government to relinquish its offshore wind leases and instead redirect funds towards fossil fuel investments.

The agreement marks the fifth deal the Donald Trump administration has struck with energy companies, offering payouts in exchange for abandoning renewable energy projects and redirecting investment towards fossil fuels.

This latest deal takes it to almost $4bn of taxpayer money spent on killing offshore wind projects.

Announcing the deal with the US interior department on Thursday, RWE said it had agreed to give up its offshore wind leases off the coasts of New York, California and Louisiana.

“After careful consideration, it was determined there is no path forward to permit these projects in the US for the foreseeable future,” the company said, referring to the leases it initially secured with a “long-term commitment to develop offshore wind capacity”.

RWE paid $1.1bn for its New York lease in a 2022 auction held by the Joe Biden administration, while its leases in Louisiana and California cost a combined $163m, Reuters reports.

“The settlement resolves RWE US Offshore’s legal claims and provides $1.22 billion in settlement funds,” RWE continued, adding that the deal will allow it to “direct resources toward energy projects that can be advanced with certainty.”

As part of the agreement, RWE will spend $900m to acquire a 16% stake in an unnamed Louisiana liquified natural gas (LNG) project. The company said the settlement proceeds will be used to fund construction of the terminal.

RWE has also signed a $300m turbine reservation agreement under which it will develop a pipeline of 15 natural gas peaker plants across the country.

The interior secretary, Doug Burgum hailed the deal, saying on Thursday: “We welcome RWE’s agreement and voluntary investment in projects that strengthen our nation’s energy security, provide dependable baseload power, and help keep electricity affordable for hardworking Americans today while supporting our country’s long-term energy future.”

The RWE agreement appears to be the largest deal the Trump administration has struck with an energy company to kill clean energy projects. Earlier agreements with other companies, including TotalEnergies and Duke Energy, amounted to $2.7bn in taxpayer money.

Following the Trump administration’s $928m deal with French energy company TotalEnergies to cancel its offshore wind lease off the coast of New York, seven states, including New York, sued the administration over what the New York attorney general, Letitia James, described as a “sham deal” and “illegal agreement”.

The administration has also spent up to $1.1bn to boost coal, a move critics argue is “fattening the wallets of his cronies” while raising working Americans’ energy bills, particularly as the US’s war on Iran drives up fuel prices.

At the same time, the federal government is seeking to slash public input periods for fossil fuel drilling on federal lands while shifting more of the financial risks of cleanup to taxpayers.

Meanwhile, a report released last fall by the Environmental Integrity Project found that every fully operational LNG facility in the US had violated federal pollution limits in recent years.

According to the nonprofit research organization, violations included the discharge of illegal amounts of bacteria, zinc, oil and other pollutants into waterways, as well as failures of terminal managers to submit monitoring reports for waterway discharge.