As all eyes turn toward Texas this week in advance of the Democratic primary, we will see a state that is beginning its transition to a new energy economy. Texas is grappling with a shift the entire nation faces — and as usual, it’s doing it on a big scale.
When it comes to energy and to carbon emissions, Texas is a place of superlatives and contrasts. It has more solar, wind and biomass resources that any other state; but it’s also No. 1 in total carbon emissions.
It is the ancestral home of Big Oil, but it also hosts the world’s largest wind farms. It has a very successful renewable energy portfolio standard (RPS), but it also has two nuclear power plants in the pipeline to provide power to its rapidly growing population.
A year ago in a watershed deal, a private equity firm working with environmentalists arranged a $45 billion buyout of the state’s largest power producer, TXU. As part of the deal, eight of 11 planned new coal-fired power plants were cancelled. However, as many as nine new coal plants remain in the pipeline.
In Texas, we see a contest between conventional and renewable energy resources, and between the past and the future.
The first oil well was discovered in Texas in 1866. Through the early part of the last century, the state was the “dominant producer in the world oil market, producing more oil than the entire output of the Middle East.”
In 1972, the state’s oil production peaked and began to decline. Today, Texas is a net oil importer and has begun taking steps to make renewable energy a significant part of its energy mix and its economy. As the Texas State Energy Conservation Office as (SECO) puts it:
Texas is at a crossroads wherein development of vast in-state renewable energy resources, coupled with energy efficiency measures, offer Texans the chance to redirect their focus in order to regain and maintain their energy independence.
In 1999, the State Legislature passed Senate Bill 7, which required electricity providers to generate 2,000 megawatts of new renewable energy by 2009. SB 7 led to $1 billion in investments by the wind industry and electric utilities, generating million of dollars for the state’s school fund and rural tax base, and for farmers and ranchers who lease their land for turbines. “The Texas RPS has been so successful that its 10-year goal was met in just over six years,” says SECO. “Wind power development in Texas has more than quadrupled since the RPS was established.”
Encouraged by the success of SB7, the Legislature passed Senate Bill 20 in 2005, increasing the state’s RPS to 5,880 megawatts by 2015, including at least 500 megawatts from non-wind renewables. SB 20 also established a plan to build transmission lines to “Competitive Renewable Energy Zones” — locations with major renewable resources but no infrastructure to move the energy to market.
Meantime, the federal Clean Air Act became a driver for improving the state’s energy efficiency. To try to reduce air emissions in 41 nonattainment counties, the Legislature passed Senate Bill 5, requiring that municipalities in those counties to adopt all cost-effective energy efficiency measures and achieve savings of at least 5% annually for five years. To help municipalities meet the goal, SECO partnered with energy efficiency programs at the U.S. Environmental Protection Agency and the U.S. Department of Energy, and SB 5 became a model of state-federal collaboration.
Texas now brags that it is America’s undisputed leader in renewable energy. Last year, it became the first state in the U.S. to achieve one gigawatt of wind installations in a single year. Its wind farms at Horse Hollow and Sweetwater rank No. 1 and No. 2 in the country in terms of size. Texas also is exploring off-shore wind development along its massive coastline.
Today, there are signs that the old wildcatting spirit is emerging again, but this time above ground. Farmers and ranchers are finding that by leasing land to wind developers, they can earn $6,000 annually per turbine and still graze or farm the land around the turbines’ small footprint. It’s hard to find a crop that’s more profitable and still legal.
As the New York Times reported last Saturday (Feb. 23) in an article titled, “Move Over, Oil, There’s Money in Texas Wind“:
Texans are even turning tapped-out oil fields into wind farms, and no less an oilman than Boone Pickens is getting into alternative energy. “I have the same feelings about wind,” Mr. Pickens said in an interview, “as I had about the best oil field I ever found.” He is planning to build the biggest wind farm in the world, a $10 billion behemoth that could power a small city by itself…”I like wind because it’s renewable and it’s clean and you know you are not going to be dealing with a production decline curve,” Mr. Pickens said. “Decline curves finally wore me out in the oil business.”
Solar energy development also is moving in Texas. The U.S. Department of Energy wants to build concentrating solar power stations in the Southwest, including Texas, to achieve 1,000 megawatts of power by 2010.
Texas defies the stereotype that renewable energy is the darling of the left. Both of the state’s U.S. Senators are Republican; its Congressional delegation is overwhelming Republican; both houses of its Legislature are controlled by Republicans; and the legislative achievements cited above came under two Republican governors, George W. Bush and Rick Perry.
To be sure, Texas has a very long way to go in making the transition to a clean energy economy. The state ranks only 34th on Forbes’ list of green states — an assessment that includes not only carbon emissions, but green buildings and other sustainability criteria. Renewable resources still provide only about 4% of the state’s electric power, while 40% comes from coal and 13% comes from two nuclear power plants. According to the New York Times, cancellation of the TXU coal plants puts the state in some danger of falling below the generation reserves experts recommend to handle peak consumption periods, for example periods of high heat. And renewables can expect stiff competition from natural gas as the state tries to meet the needs of its growing population while reducing its carbon footprint.
But just as they once led the nation in oil production, energy entrepreneurs in Texas have begun to lead America in the exploration of a new set of resources — clean, inexhaustible, profitable, and absolutely essential if we are to head off the worst impacts of global climate change.
– Bill B.