Texas Won’t Pick Energy Winners, Just Defend Losers

Section: Politics & Policy

By Liam Denning / Mar 15, 2021

Even in Texas, freedom has its limits. City limits to be precise. The same day Attorney General Ken Paxton sued the city of Austin over a facemask mandate, the Texas legislature sought to constrain local liberties on another touchy subject: energy.

New bills in the wake of February’s blackouts target expected reforms such as forcing power generators to weatherize equipment. Tucked in there, however, is House Bill 17. This would prohibit local authorities in Texas from discriminating against any kind of utility service or infrastructure based on the type of energy used. It doesn’t mention any form of energy in particular, but one detects a whiff of natural gas.

The gas industry has watched with alarm as a spate of cities — kicking off with Berkeley, California — banned gas hook-ups for new construction on climate-change grounds. A year ago, Arizona passed a law supported by the state’s largest gas utility, Southwest Gas Corp., barring its own cities from following Berkeley’s lead. This drew protests from City Hall in Phoenix and Tucson about preempting local sovereignty, especially as no Arizona municipality had passed such a gas ban in the first place. Several other states, including big gas producers such as Oklahoma and Louisiana, have passed similar bans on bans.

The new bill in Texas is also oddly timed, though more for other reasons. While the final report on the blackouts is months off, it’s clear one of the bigger culprits was systemic failure in natural gas. Competition for gas has increased. While almost two-thirds of Texan homes are heated with electricity, more of that electricity is generated by gas these days, and industrial and commercial demand for gas in winter has also risen by a lot (see this). Meanwhile, blackouts may have persuaded some Texans of the allure of gas-fired heating; but even in the capital of U.S. hydrocarbons, support for more renewable energy appears strong.

In short, the challenges facing the Texas energy system are complex. A systemic, state-wide approach to meeting them might be preferable, but it’s hard to be confident about that. Exhibit A: The governor’s initial reaction to the blackouts — blaming wind turbines — which owed more to ideology (and possibly mild panic) than even a cursory read of relevant data.

HB 17 is of a piece with this, its brevity and sweeping language redolent of something a lobbyist might dash off on their lunch break (you can read it here; it won’t take long). In seeking to prohibit anything that might have the “effect of directly or indirectly” discriminating against any type of energy, HB 17 could conceivably enjoin a Texan town from even just educating citizens about the costs and benefits of this or that fuel or piece of equipment. This is absurd overreach; doubly so in the wake of a crisis laying bare the pros, cons and interactions of energy choices — and the failure of the state legislature to act on prior warnings.

If the gas industry is nervous about city bans, then it might consider more rapid moves to curb the methane emissions that threaten to turn this vaunted “bridge” fuel for the energy transition into more of a pier. This is particularly relevant to Texas, where the industry’s regulator has dragged its heels on venting and is yet to face serious pressure from state leaders about the recent debacle. The relevant bill, HB 14, treads far more lightly when it comes to gas compared to power generators. 

Such tussles over local energy choice are part of a broader battle at the national level. To be clear, city bans are not the optimal way to address climate change; Berkeley, for example, must grapple with the burden of high and rising electricity costs in California. But such local action fills a climate-policy vacuum at higher levels, not least in Washington, and has been radicalized by the long delay in addressing climate change, which owes much to concerted fossil-fuel lobbying.

Recent reports of the American Petroleum Institute belatedly considering backing a carbon price should be seen in this context. As the threat of outright prescription or proscription rises, especially in the shadow of a newly green White House, market-based solutions suddenly seem palatable. Yet with urgency increasing, the era of pricing choices may be giving way to just picking winners — or, in Texas’ case, defending losers.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

To contact the author of this story: Liam Denning at ldenning1@bloomberg.net