Markets can help fight climate change
Two decades ago, Texas joined other states to impose renewable energy targets. The goals were modest and by 2009, Texas had already exceeded its 2025 goal of 10,000 megawatts of new renewable power, reflecting generous federal wind and solar tax credits and population growth that encouraged more overall generation.
New transmission lines would later carry that new wind power to population centers, relieving congestion along the state’s power lines.
The steps Texas took 20 years ago laid the foundation for the nation’s oil and gas capital to become the nation’s biggest producer of wind power, which is on track to deliver 24 percent of the state’s electricity generation next year, according to the Department of Energy.
New solar farms are also dotting the landscape, reflecting the growth of an industry that is slow to start in Texas — the sun produces less than 1 percent of the state’s energy needs — but is expanding faster than it is in other states. Only California and Florida are adding more solar generation facilities, according to the research group Wood Mackenzie and the Solar Energy Industries Association.
The secret is coming up with government-led incentives to encourage companies to do the right thing rather than imposing mandates difficult to pass during election years, according to one former oil and gas executive in Houston who spoke at an energy panel sponsored by the University of Houston.
Worked before
The same sort of polices that led Texas on the path to renewable energy leadership can be used to lead the effort to lower emissions of carbon dioxide, a greenhouse gas that traps heat in the atmosphere and contributes to climate change. In other words, offer tax incentives and other initiatives to boost energy efficiency and encourage clean energy.
“Corporate leadership is not dumb,” said John Hofmeister, who retired a decade ago as president of Shell Oil Co., the U.S. arm of the European oil major Royal Dutch Shell. “They go where the money is and they create the markets.”
Hofmeister, who founded and leads the Houston public policy firm Citizens for Affordable Energy, said mandates face an uphill battle. He recalled his unsuccessful effects while at Shell Oil in Houston a decade ago to push Democrats in Congress and the White House to enact a cap and trade program that would have set limits on carbon emissions and then allowed companies to buy and sell permits. The legislation would have likely reduced overall emissions by providing incentives to use power more wisely and control waste.
Still waiting
But a decade later, there is still no penalty for adding carbon dioxide to the atmosphere, even as warnings about climate change become more dire. A carbon tax would put a price on those emissions, creating incentives — and plenty of business opportunities — to reduce emissions. But no federal legislation is pending on either carbon taxes or cap-and-trade.
“Nothing is happening,” said Hofmeister, “because the atmosphere of government enabling was so polluted by the experience of cap-and-trade that nobody wants to touch it.”