A Model for Clean Energy Policy? Look to Texas

By John W. Nikolaou (CMC ’19)

Yes, you read that correctly: Texas, well known for being the top crude oil producer in the country, has also emerged as a leader in clean energy. As the only state with its own electric grid, Texas’ electrical transmissions and new energy developments are free from federal regulation. The result? Texas ranks first in nation in total electricity generation, installed wind capacity, and solar energy potential. Notably, the state has achieved these rankings while preserving exceptionally low electricity costs for consumers, offering one of the top ten lowest rates in the country, according to the Energy Information Administration.

Here are the facts. Since 2000, renewable energy development in Texas has grown rapidly. The state has a nation-leading 17,713 MW of installed wind capacity, and 534 MW of installed solar capacity as of April 2016. The Electric Reliability Council of Texas (ERCOT), which manages about 90 percent of the state’s electric load, reports that in 2015, 11.7 percent of its electricity came from wind, 11.3 percent from nuclear, and 0.6 percent from solar and hydro­­. While these percentages may seem small, 11.7 percent of ERCOT’s wind production alone is equivalent to close to 41,000,000 MW of electricity, or enough to meet the energy demand of close to one million Texan households in 2015.

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Texas’ unparalleled $32.7 billion in private capital investment in wind has been beneficial in many ways. Economically, wind projects have produced annual lease payments for landowners totaling $50 million and have increased the tax base of communities in general. In 2015, the wind industry in Texas supported close to 25,000 jobs, according to the American Wind Energy Association.

The state’s rise to the top is greatly attributed to its free market policies. The deregulation of the electric market in 2002 left the state’s generating capacity largely up to the private companies that can provide it at the cheapest rate. While Texas does have Renewable Portfolio Standards (RPS) that often distort prices in the electricity market, the state RPS goals are some of the least aggressive in the nation as well as the cheapest for producers to comply with (National Renewable Energy Laboratory). Texas maintains these comparatively low RPS standards while remaining the nation’s top producer of renewable energy, demonstrating the potential benefits that repealing RPS completely can do for markets and consumers.

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Environmentally, contrary to the narrative from pro-regulation environmentalists, the Texan free-market approach to energy production has not resulted in the industry doing more harm to the environment. In fact, while energy production has expanded, with renewables making up a good share of that growth, Texas’s air quality has improved. According to the Texas Commission on Environmental Quality, of the 20 states with the highest sulfur dioxide (SO2) emissions, Texas ranks 6th lowest in emissions per capita, and 4th lowest in NOX emissions. SO2 emissions have been cut by more than half since 1997, and CO has decreased by about 74 percent over the last 15 years. Wind energy also helped the state avoid 25.1 million metric tons of carbon dioxide (CO2) emissions in 2014.

It is clear that Texas is a national leader in reducing emissions and known pollutants, and advancing renewable energy sources all while remaining a leader in the nation’s energy production. The state has successfully balanced the need for improving the environment while also fostering economic growth, investment, and job creation. Texas’ advancement of renewable energy through market incentives and stable regulation should serve as a model for other states.

 

 

 

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