Texas-Sized Targets: A Simulated Policy Memo Makes a Real Case for Higher Renewables Standards

YPCCC-Texas

This year, the Center's working with over 80 professionals earning online certificates in Financing and Deploying Clean Energy. Learners study the history, physics, innovation pathways and technological possibility sparking the carbon-free economy. One learning strategy involves crafting policy memos and op/ed pieces on issues where changes in policy or public support can help unleash capital. Here, Joan Beckner lays out the case for lifting Texas' renewable portfolio standard to encompass half the state's energy in ten years and all of it in thirty years. She premises her argument on Texas' success in reaching the targets it set in prior markets- when the cost of solar and wind ran higher. This memo aims at the science, with footnotes that Beckner provided as part of her assignment. 

***

Recommendations. Two decades after setting its first Renewable Portfolio Standard (RPS)1, Texas generates over 20% of its net electricity from renewable energy. This is phenomenal progress. At the same time, 66% of our net electricity generation uses nonrenewable carbon-emitting sources2. We can do better. 

This memo recommends two statutory refinements for the 2021 Texas Legislative Session to ensure Texas continues its path to a clean energy future:

  • Update RPS Targets to 50% renewable generation by 2030 and 100% renewable generation by 2050, and
  • Update Labeling and Scorecard requirements for the marketing of natural gas generation. 

Background. Texas achieved its ultimate RPS target3, 10,000 megawatts of installed renewable capacity by 2025, fifteen years early, in 20104.  In the ten years since, Texas has continued to install new renewable capacity5. Its power industry now ranks first in wind and fourth in solar6, to the benefit of enterprising companies and energy consumers alike. Yet the Texas power industry also leads the nation in harmful greenhouse gas emissions7. Untapped wind and solar potential defies imagination8, and with a nod to past success we can – and, given customer preferences, should9 – continue to set new goals to lead Texas toward an increasingly renewable portfolio.  

We therefore can and should expand the Texas Renewable Portfolio Standard with goals of 50% renewable generation by 2030 and 100% renewable generation by 2050.

Texas has demonstrated that renewable energy targets can accelerate the market and infrastructure for utility-scale wind and solar10. Benefits of its renewable energy growth include economic development and green jobs, including in the rural areas of West Texas11, increased diversity of the energy mix12, and reduced carbon dioxide emissions in power generation13. Renewables now account for 20% to 25% of net electricity use14, with more capacity on the way15.  

In view of this progress, why is an updated RPS necessary, and why now? Activating new targets for 2030 and 2050 will ensure that renewable source capacity and uptake grow at rates sufficient to align electric utility sector carbon emission reductions with established decarbonization goals. Texans have experienced the now-evident effects of climate instability, such as increases in the frequency and impact of storms, devastating floods, extreme heat, drought and wildfires. New “percent renewable generation” goals will provide a firm measure for demonstrating our future progress using a widely adopted standard for ensuring reduced risk of more severe climate instability.

The RPS update also can: (1) further stimulate the Texas renewables economy16; (2) create new green jobs, including for fossil fuel workers in transition17; (3) accelerate innovation and deployment of technologies necessary to meet new target levels and ensure reliable supply; and (4) reduce harmful greenhouse gas emissions and air pollution-related illnesses (including conditions increasing susceptibility to the worst forms of Covid-19). Reaching the new RPS targets can be accomplished within the state’s established Renewable Energy Credit system18.

Build on Texas' front-runner status. Texas can continue to demonstrate national energy leadership by establishing these new goals. So far, fourteen (about half) of the states with renewable portfolio standards require 50% or greater; eleven states require at least 30% renewable generation by 2030 and/or target 100% carbon-free generation by 205019. There is previous legislative interest in Texas.  A bill introduced during the 2019 Legislative Session proposed a feasibility study for RPS expansion but was not acted upon20. The 2021 Legislative Session provides a critical near-term opportunity to update Texas RPS targets and ensure continued growth toward a clean, secure, and stable energy future. At the same time, legislators can innovate farther in how the state reports its emissions and progress. 

Update labeling and scorecard to reflect that emitted methane is a greenhouse gas. The Texas Natural Gas Goal of 1999 (requiring 50% of new generating capacity that is not renewable to use natural gas)21– followed by advancements in the technologies used to extract shale gas, production expansion, and substitution of natural gas for coal power plants – lowered carbon dioxide emission rates22. Natural gas burns cleaner than coal and has been an effective transition fuel during ramp-up of renewable energy and storage technologies. But natural gas is composed primarily of methane, a greenhouse gas much more potent to global warming than carbon dioxide when released into the atmosphere, which occurs through leaks along the supply chain and at the plant as a by-product of combustion23. Methane is no longer considered the “green” source of energy it once was, leaving public communications statutes out-of-step. The following actions will help to update the “green” calibration standard from coal to carbon: 

  • Remove natural gas from “green” labeling provisions in PUCT Subst. R. 25.476(d), marketing standards for “green” and “renewable” electricity products24.
  • Require power generation methane emissions data reporting (start-up, stack, shut-down25) in addition to the carbon dioxide emissions data reporting required under PUCT Subst. R. 25.476(e)(2)(B), compilation of scorecard data. With stronger reporting, we can herald Texas' success story: more than 20 years after the state set its Natural Gas Goal, we have leapt past the need for carbon-burning gas as a bridge fuel26.
  • These updates honor original legislative intent to lower emissions by reducing fossil fuel use in electric power generation and to provide competitive scorecard data to customers for informed decision-making regarding energy providers consistent with their environmental preferences27.

Conclusion. The RPS and other provisions of the Utility Code were forward-thinking when put in place. Texas leads the nation in certain aspects of renewable energy adoption (#1 in wind), but lags in others (#1 in harmful carbon emissions).  Without action, the RPS incremental goal going forward is zero.  All previous goals were met, and there is currently no statutory incentive to do more. 

 Implementing these recommendations to (1) extend and expand the RPS, and (2) remove obsolete statutory provisions in Texas law to ensure that green energy alternatives are truly green, will clarify Texas’s commitment and provide means to track progress on its path toward growth in price-competitive renewable energy and reduction of greenhouse gas emissions. 

 

*********

References

1. Public Utility Regulatory Act (PURA), Tex. Util. Code § 39.904(a) (Goal for Renewable Energy) (1999 am. 2005), statutes.capitol.texas.gov/Docs/UT/htm/UT.39.htm; Public Utility Commission of Texas Substantive Rules (PUCT Subst. R.), 16 Tex. Admin. Code § 25.173(a), www.puc.texas.gov/agency/rulesnlaws/subrules/electric/ 25.173/25.173.pdf.  A renewable portfolio standard is a policy tool that requires or encourages electricity suppliers to provide their customers with a stated minimum share of electricity from eligible renewable resources.  See, e.g., U.S. Energy Information Administration (EIA), Renewable Energy Explained: Portfolio Standards, www.eia.gov/energyexplained/renewable-sources/portfolio-standards.php.

2.  EIA, Texas State Profile and Energy Estimates, Electric Power Monthly - Texas Net Electricity Information by Source, www.eia.gov/state/?sid=TX#tabs-4 (in May-June 2020 Texas generated 22.9% to 24.1% of its net electricity from Nonhydroelectric Renewable sources and 31.5% to 33.2% of its net electricity from combined zero-carbon sources (Nonhydroelectric Renewable, Hydroelectric, and Nuclear)).

3. Id. (in May-June 2020, Texas produced 66.8% to 68.5% of its net electricity generation from Petroleum-Fired, Natural Gas-Fired, and Coal-Fired power plants).

4. PURA § 39.904(a); PUCT Subst. R. 25.173(a).

5. Electric Reliability Council of Texas (ERCOT) 2009 Annual Report, www.texasrenewables.com/reports.asp (2009_Report.doc), at 2 (“The renewable generation capacity exceeds the 2025 target of 10,000 MW of installed renewable generation capacity in the state that is set forth in [PURA] Section 39.904[.]”); cf. EIA, Texas State Profile and Energy Estimates, Analysis, Renewable Energy (Mar. 19, 2020), www.eia.gov/state/analysis.php?sid=TX#122 (“In 2011, Texas was the first state to reach 10,000 megawatts of installed wind generating capacity.”).

6. EIA, Texas, Analysis, Renewable Energy, supra note 5 (by the end of 2019 Texas had ~28,800 MW installed wind generation capacity and >6,200 MW additional capacity under construction); Am. Wind Energy Ass’n (AWEA), Wind Energy in Texas, www.awea.org/Awea/media/Resources/StateFactSheets/Texas.pdf (as of Q2 2020 Texas had installed wind capacity of 30,217 MW, i.e., triple the 2025 target based on wind alone).

7. EIA, Texas State Profile and Energy Estimates, Quick Facts (Mar. 19, 2020), www.eia.gov/state/?sid=TX (Texas leads the nation in wind-powered generation); Solar Energy Indus. Ass’n (SEIA), Texas Solar, www.seia.org/state-solar-policy/texas-solar (as of Q2 2020 Texas ranks 4th in installed solar). 

8. EIA, Texas, Quick Facts, supra note 7 (Texas leads US in carbon emissions); EIA, Env’t, Energy-Related CO2 Emission Data Tables, Table 4, 2017 State energy-related CO2 emissions by sector (May 20, 2020), www.eia.gov/ environment/emissions/state (Texas leads in electric power sector CO2 emissions); see also PUCT Proposal for Subst. R. 25.173 (Oct. 8, 1999), www.puc.texas.gov/agency/rulesnlaws/subrules/electric/25.173/20944pub.pdf (observing that “[r]elying on energy produced by burning fossil fuels has contributed to the degradation of air quality in much of Texas and over reliance on fossil-fueled energy sources in the future will continue this trend”).

9. AWEA Wind Energy in Texas, supra note 6 (estimating technical wind potential of ~1,348,000 MW land-based at 80 m hub height and ~216,000 MW offshore net at 100 m hub height); ERCOT State of the Grid Report (2019), http://www.ercot.com/content/wcm/lists/197391/2019_ERCOT_State_of_the_Grid_Report.pdf, at 9 (noting growth trends in wind, utility-scale solar, and battery storage; indicating >67,000 MW of utility-scale solar and >30,000 MW of wind were under study by the end of 2019); SEIA, Texas Solar, supra note 6 (Texas ranks 2nd in projected growth of solar at nearly 15,000 MW over the next 5 years).

10. PUCT Proposal, supra note 8 (citing Texas consumer preferences for renewable power; concluding that “cleaner sources of energy should be deployed to develop the state's economic resources and improve [air] quality”).

11. AWEA Wind Energy in Texas, supra note 6 (noting that the combination of policy and infrastructure in Texas “allows wind to compete in the market while unlocking economic opportunities for landowners and rural communities”); Nat’l Conf. of State Legislators, State RPS’s and Goals (Apr. 17, 2020), https://www.ncsl.org/ research/energy/renewable-portfolio-standards.aspx (“Roughly half of the growth in U.S. renewable energy generation since the beginning of the 2000's can be attributed to state renewable energy requirements.”).

12. AWEA Wind Energy in Texas, supra note 6 (as of 2019 the Texas wind industry generated over 25,000 direct wind-related jobs, capital investment over $53 billion, annual state and local tax payments by wind projects $285 million, annual land lease payments $192 million, and 46 active in-state manufacturing facilities); Elizabeth Weise & Rick Jervis, “As climate threat looms, Texas Republicans have a solution: giant wind farm everywhere,” USA Today (updated Oct. 21, 2019),https://www.usatoday.com/story/news/2019/10/18/texas-wind-energy-so-strong-its-beating-out-coal-power/3865995002/ (describing economic and other benefits the wind industry has provided); SEIA, Texas Solar, supra note 6 (indicating that as of Q2 2020 Texas solar has generated over 10,000 jobs).

13. See ERCOT State of the Grid Report, supra note 9, at 8.

14. AWEA Wind Energy in Texas, supra note 6 (environmental benefits of wind energy include reduced emissions by avoiding generation from fossil fuel plants, and in 2019 Texas wind power avoided in-state carbon dioxide emissions of 49 million metric tons, equivalent to 10.5 million cars’ worth).

15. ERCOT Grid Information, Generation, Fuel Mix Report: 2020, http://www.ercot.com/gridinfo/generation (IntGenByFuel2020.xlsx) (wind was 23% and solar 2% of the Texas energy mix during the first 8 months of 2020); ERCOT State of the Grid Report, supra note 9, at 8 (wind was 20% and solar <2% of the Texas energy mix in 2019).

16. AWEA Wind Energy in Texas, supra note 6 (noting wind capacities installed, under construction, and in advanced development as of Q2 2020); EIA, Today in Energy, “New electric generating capacity in 2020 will come primarily from wind and solar” (Jan. 14, 2020),  www.eia.gov/todayinenergy/detail.php?id=42495 (noting that in 2020 “Texas accounts for 32% of the planned wind capacity and 22% of the planned utility-scale electric power sector solar photovoltaic capacity additions nationwide”).

17. See generally Nat’l Conf. of State Legislators, State RPS’s and Goals, supra note 11 (states have been very active in the past year revising their Renewable Portfolio Standards to further diversify energy resources, promote domestic energy production, and encourage economic development).

18. See, e.g., Paul Takahashi, “U.S. oil and gas industry sheds 118,000 jobs during pandemic,” Houston Chronicle (Aug. 21, 2020), https://www.houstonchronicle.com/business/energy/article/U-S-oil-and-gas-industry-sheds-118-000-jobs-15505020.php (Texas had the largest number of oil and gas layoffs, 39,900 jobs lost in March-July 2020 alone).

19.  PURA § 39.904(b); PUCT Subst. R. 25.173 (in entirety).

20. Nat’l Conf. of State Legislators, State RPS’s and Goals, supra note 11 (listing eleven states that require at least 30% renewable generation by 2030 and/or require or target 100% carbon-free generation by 2050); see also EIA, Today in Energy, “Four states updated their renewable portfolio standards in the first half of 2019” (June 24, 2019), www.eia.gov/todayinenergy/detail.php?id=39953 (highlighting recent RPS updates including New Mexico (50% renewable by 2030 and 100% carbon-free target by 2045) and Nevada (50% renewable by 2030 and 100% carbon-free by 2050)). 

21. Texas Legislature Online, House Bill 2148, Legislative Session 75(R), capitol.texas.gov/billlookup/text.aspx? LegSess=75R&Bill=HB2148 (providing links to HB 2148 proposed text and legislative history indicating the bill was pending with the House State Affairs Committee at the time of 2019 legislative adjournment).

22. PURA § 39.9044(a) (Goal for Natural Gas) (1999), statutes.capitol.texas.gov/Docs/UT/htm/UT.39.htm; PUCT Subst. R.  25.172, www.puc.texas.gov/agency/rulesnlaws/subrules/electric/25.172/25.172.pdf.

23. See, e.g., EIA, “CO2 emissions from coal fell by record amount in 2015, led by Texas and Midwest” (Nov. 13, 2017), www.eia.gov/todayinenergy/detail.php?id=33712 (explaining that reduced coal-fired electricity generation was largely offset by higher natural gas-fired electricity generation).

24. Intergovernmental Panel on Climate Change (IPCC), Contribution of Working Group I to the IPCC Fifth Assessment Report (2013) Table 8.7 at p.714, www.ipcc.ch/site/assets/uploads/2018/02/WG1AR5_Chapter08_FINAL.pdf (noting that methane (CH4) has a lifetime of 12.4 years in the atmosphere (until it decays to CO2) and a Global Warming Potential (GWP20) of 84 to 86 – meaning that methane is 84 to 86 times more potent than CO2 as a greenhouse gas over the critical first 20 years after its release); R.A. Alvarez et al., Greater focus needed on methane leakage from natural gas infrastructure, Proceedings of the National Academy of Sciences 109:6435-6440 (2012), https://www.pnas.org/content/109/17/6435 (finding that methane losses must be kept below 3.2%  for natural gas power plants to have lower life cycle emissions than new coal plants over short time frames of 20 years or less).  

25. PUCT Subst. R. 25.476(d), www.puc.texas.gov/agency/rulesnlaws/subrules/electric/25.476/25.476.pdf.

26. See, e.g., Kristian D. Hajny et al., Observations of Methane Emissions from Natural Gas-Fired Power Plants, Am. Chem. Society, Environ. Sci. Technol. 53, 15, 8976–8984 (2019), https://doi.org/10.1021/acs.est.9b01875 (observing that these elements are likely to indicate the majority of a natural gas plant’s methane emissions).

27.  PUCT Subst. R. 25.476(e)(2)(B), www.puc.texas.gov/agency/rulesnlaws/subrules/electric/25.476/25.476.pdf.

28.  See PUCT Proposal, supra note 8 (policy goals underlying Substantive Rule 25.173 (Goal for Renewable Energy), include to reduce air pollution associated with the generation of electricity using fossil fuels and to respond to customer preferences that place a high value on environmental quality).

Find additional related content on these topics: 
CBEY logo bug