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This summary is part of Beyond the Beltway: A Report on State Energy and Climate Policies produced by the Center for Law, Energy & the Environment at Berkeley Law

 

Market trends are pushing Republican-stronghold Texas toward a cleaner electrical grid. The Electric Reliability Council of Texas (ERCOT), which operates most of the state’s grid,[1] recently projected that in the next fifteen years, Texas will add almost 20 gigawatts (GW) of solar, equivalent to 15-20 new nuclear reactors. In fact, under virtually every scenario ERCOT considered, the only new capacity is solar, with no new fossil fuel plants expected. ERCOT also expects to retire about a third of that amount in coal generation together with some older, inefficient natural gas plants. Regulatory changes could nudge these numbers upward or downward. Both the use of renewables and the fossil fuel retirements would increase with stronger environmental mandates in place. On the other hand, coal retirements would slow in the absence of the federal haze limits that are now in litigation.

The reason wind power does not play a greater role in these projections is probably that Texas is already #1 in the nation in terms of wind; in fact, if it were a country, it would be #6 in the world. So there is more potential for growth in the state’s comparatively small solar sector.

Another modeling effort provides a reality check on ERCOT’s projections, reaching comparable conclusions. The Brattle Group, an independent economic consultancy, has done its own projections, with somewhat different assumptions.[2] It assumes that the cost of solar continues to decline as predicted and that natural gas remains under $4 per million British thermal units (Btus) (the current price is about $3.25). On these assumptions, Brattle found that over the next 20 years, even without new regulations, the economics will favor cleaner power: natural gas, wind and solar could constitute 85% of ERCOT generation by 2035 (with new additions of 9 GW of wind by 2019 and 13 GW of solar by 2021) and CO2 emissions reductions could drop 28% below 2005 levels. And as a result of these trends, Brattle projects, Texas would hit its target under President Obama’s Clean Power Plan even if the regulation itself is eliminated.

It is crucial to note that all of these projections are inherently uncertain. Energy forecasts are notoriously imprecise, with all manner of unexpected developments intervening. One critical assumption is that natural gas prices continue to be low, making coal less appealing. That may be too optimistic, although President Trump’s apparent enthusiasm about fracking should if anything push gas prices lower.

Even if these market projections prove out, they by no means disprove the importance of regulations. A rollback from current air pollution regulations would slow the trends favoring natural gas and renewables, while more aggressive regulation would accelerate them. So, too, could technological advances in renewables or energy efficiency. That said, even if Trump is able to boost coal production temporarily, it would take a very bold company to invest in a plant with a 30- to 50-year lifespan based on a short-term easing of regulations.[3] So it seems unlikely that Texas coal use will increase much in any event; the real question is how much it will take for it to come down.

Texas is the state with the highest carbon emissions today, with about twice California’s emissions. Given the gloomy scenario for federal climate policy in the next few years, it’s some consolation that market forces are working to lower emissions there. Better yet, the same market forces are also operating elsewhere in the nation.[4]

Moreover, although the state government has zero interest in addressing climate change, that’s not true at the city level. For instance, Dallas – which used to be a conservative Republican stronghold – has worked hard to cut its own carbon footprint and is trying to promote green building and use of public transportation.[5] And state-level politics may also shift. Hispanics are predicted to become the largest demographic group sometime in the next seven years, which will impact the political balance of power. So, even in Texas, change is coming – regardless of what happens in D.C.

 

  1. Electric Reliability Council of Texas, Inc., “2016 Long-Term System Assessment for the ERCOT Region,” http://www.ercot.com/content/wcm/lists/89476/2016_Long_Term_System_Assessment_for_the_ERCOT_Region.pdf.
  2. The Brattle Group, “Market Forces Primary Driver of Transition in the ERCOT Grid, According to Report by Brattle Economics,” http://www.brattle.com/news-and-knowledge/news/market-forces-primary- driver-of-transition-in-the-ercot-grid-according-to-report-by-brattle-economists.
  3.  See Clifford Krauss, “Coal’s Decline Seems Impervious to Trump’s Promises,” New York Times (January 24, 2018), https://www.nytimes.com/2018/01/24/business/energy-environment/coal-miners.html.
  4. David Ignatius, “Trump Can’t Easily Undo Progress on Climate Change: David Ignatius,” The Oregonian (January 17, 2017), www.oregonlive.com/opinion/index.ssf/2017/01/trump_cant_easily_undo_progres.html.
  5. Green Dallas, “What is the City Doing?” http://greendallas.net/climate-change/city-climate-change/.