Will Texas Blow Up Its Energy Miracle to Bolster Fossil Fuels?

Because the Texas energy system is so large and central to the American economy, we all have a shared stake in its energy success.

When the Texas grid goes down, Atlanta might not get jet fuel. When Texas gas production freezes up in winter storms, a surprisingly frequent phenomenon, fuel prices spike in Minnesota. And because Texas is by far the nation’s largest emitter of greenhouse gases among the states, the country cannot decarbonize its economy without Texas.

The Lone Star State has seen rapid growth not only in oil and gas production but also in wind and solar generation, a boom has been justly called the Texas Miracle.

But now reactionary forces in the Texas Legislature want to turn the clock back to the days before the state became a national leader in producing electricity from solar and wind power.

The Texas Legislature is moving to erect barriers to clean energy development while providing incentives for fossil fuel production. This would make the task of reducing emissions much harder. And it comes even though oil and gas production has continued to grow, though not at the pace of the market’s embrace of wind and solar.

This is a “radical departure,” as Locke Lord, a national law firm active in the energy business, put it, for a state that “has long prided itself on a regulatory climate that is business-friendly and encourages, rather than stifles, economic development.”

The Texas energy miracle over the last 15-plus years has transformed the industry. The shale revolution turned fears of oil and gas imports into the security and financial benefits of oil and gas exports. At the same time, the rapid development of large-scale wind and solar power generation has helped push a rapid decarbonization of the Texas economy (and the national one) while lowering consumers’ energy bills. It has also reinvigorated rural economies by raising prevailing wages, reloaded the coffers of county governments and school districts with tax revenues from renewable power plants and provided landowners with handsome royalties as developers construct new wind and solar farms.

All told, Texas is globally relevant and world leading in energy production. It is the No. 3 producer of natural gas in the world (behind the United States as a whole and Russia), and one of the largest economies globally for refining, wind and solar power generation, hydrogen production and consumption and carbon sequestration.

The state is also one of the world’s largest greenhouse gas emitters, on par with rich, populous countries such as Germany and South Korea. The difference is that while those countries pledged to reduce emissions quickly, their per capita emissions have not dropped as quickly as they have in Texas. The state is lowering its emissions because it has made it easy to build clean energy projects there, in the process pushing dirtier and more expensive options like coal out of the fuel mix.

While plodding lawmakers elsewhere deliberate whether to reform what are frequently labyrinthine and expensive approval processes for new energy projects, Texas already makes it easy to build what is needed.

Now Texas stands to benefit more than any other state from the recent federal Inflation Reduction Act and Infrastructure Investment and Jobs Act. Tens of billions of dollars of new clean energy projects have been announced in Texas, which will further boost the state economy while accelerating cuts in emissions.

That is, unless the Texas political leadership gets its way.

The Texas Legislature is pushing a slate of backward-looking measures that would stop the Texas energy miracle in its tracks. Rather than taking credit for these huge successes and letting market forces continue, legislators, the governor (who recently received the 2023 “Champion of the Oilfield” award from an industry group) and the lieutenant governor, who presides over the Senate, are tossing aside long-held beliefs in the power of markets and hands-off governance. They are turning instead to heavy-handed regulation and central control to pick winners and losers.

And renewable energy would be the loser.

Lawmakers are debating a range of bills that would mandate and subsidize more natural gas power plants, provide tax incentives for fossil fuels, punish renewables and make it easier to stop clean energy projects.

One measure, for instance, would reinstate a tax abatement program for oil and gas projects but exclude renewable energy developments from those tax benefits. Another would impose setback requirements for new wind farms, requiring those projects to be set back at least 3,000 feet from any property line unless the nearby owners grant waivers. There are no statewide setback requirements for oil and gas operations. Yet another measure, bordering on the preposterous, would impose retroactive permitting requirements for already operating renewable power plants, which could end up invalidating their licenses. Still more proposals would further sock it to renewable energy.

It should not go without mentioning that this fast-growing renewable energy industry provides more than 37,000 jobs in the state, including some 25,000 in wind generation — four times as many jobs as there are for mining coal and using it at power plants and 12 times as many as there are in the nuclear power sector in Texas.

What’s going on here? Republican leaders say they are focusing on dispatchable energy sources — fossil fuel and nuclear generation, which can be easily turned on and off — following the disastrous 2021 winter storm that left more than 10 million people without power for hours or days and resulted in more than 200 deaths. (Numerous reports have blamed the blackout on the failure of natural gas infrastructure.)

But a wide array of energy companies and consumers have testified that these bills would make energy more expensive, dirtier and less reliable, and would stall the rapid pace of investment in the state. The legislation is moving forward anyway.

Other states might look on with bemusement as Texas decides to inflict economic self-harm and then eye some of the investment that would surely leave the state. But it’s in the national interest for Texas not to do this.

Texas can be an environmental ally to the rest of the country. For states that are serious about decarbonizing their economies, it might be easier to build clean projects in Texas and import the resulting energy or products. That is, if the Texas energy miracle continues.

Texas has already demonstrated that if we make it easy to build energy plants and the accompanying infrastructure, then markets will choose the cleaner options. Let’s hope Texas legislators will come to their senses and let the markets prevail rather than turning socialist to protect their favorite — dirtier — fuels. It would be the patriotic thing to do, the environmental thing to do, and would continue to make Texas rich in the process.

Michael E. Webber is a professor of energy resources at the University of Texas and the chief technology officer at the venture fund Energy Impact Partners, a global investment firm focused on technologies that help decarbonize the global economy.

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