Texas has hundreds of thousands of workers in the energy industry. There are 161,000 oil and gas workers in Texas (Federal Reserve of Dallas, January 2021) and 230,000 advanced energy workers in Texas. The energy industry is constantly changing as customer preferences, technology, and policy change. Texas workers need to be prepared.
Specifically cited in various sessions were the need for fleet managers who maintain diesel and/or gas fleets to learn how to maintain electric and/or hydrogen fleets; construction trades including HVAC contractors, builders, electricians, and plumbers to learn how to electrify homes (wiring for fast EV charging and solar) and make homes and businesses more efficient; industrial workers to learn about carbon capture; etc.
The state needs a comprehensive approach to this as it impacts hundreds of thousands of workers, and preparedness will likely yield significant economic benefit while unpreparedness will probably mean hardship for Texas workers. The legislature could consider something similar to a bill passed 100-0 in the West Virginia House to create an Office of Just Transition to support those who lost jobs in the coal industry. Another approach would be to create a temporary “New Energy and Worker Transition Committee” of key state agencies, industry leaders, and labor to assess gaps in worker training opportunities to work over the interim and make recommendations to the legislature in 2022 for further investments in worker transition.
Building codes increase safety and resiliency, reduce costs, and reduce energy waste. Texas is currently on the 2015 International Energy Conservation Code (IECC) and should update to the 2021 version through the administrative process. Local governments can adopt higher energy codes to push for even greater resiliency based on local needs (resiliency against high winds and flooding along the coast; water catchment systems in drought-prone areas; etc.).
In addition to the energy code, there is a need for the Legislature to update base building codes, which are still decades behind in state statute. Raising the minimum residential building and commercial codes to 2015, 2018, or 2021 base codes would help make our homes and buildings more resilient. Policymakers could also give counties more specific authority to raise codes since all Texans should be protected by living in modern homes.
Local codes can also specify homes and businesses be “ready for electrification,” with wiring in place to allow for easy installation of solar, electric vehicle rapid charging, and electric appliances. The South-central Partnership for Energy Efficiency as a Resource (SPEER) has a Code Adoption toolkit for local governments.
Often environmental, energy, and climate policies are enacted as if they’re neutral, but policies historically have had significant negative consequences for marginalized communities and people. Policies adopted going forward need to explicitly address equity and justice. (See Facilitating Power 2019).
Recently, scholars and practitioners have started to develop equity frameworks to understand the specific impacts of the energy sector. There is a range of definitions of energy equity, but at its most basic, it requires addressing all disparities caused by the generation, transmission, and distribution of energy. Like equity more broadly, energy equity must be achieved by including impacted communities in the decision-making process, by ensuring that the benefits and burdens of the energy sector are evenly distributed, and by accounting for the energy sector’s harmful historical legacies.
One way to do this is to have an environmental justice mapping tool like several states have created. The State of Washington uses the data to direct energy efficiency and weatherization funding as building upgrades reduce harmful exposure to pollutants. It stands to reason that the places with the worst pollution should get the most assistance. (Model bill from WA here.) EPA also uses an environmental justice screening tool that is publicly available.
In 2013, the Legislature enacted a law that allows cities and counties to adopt Property Assessed Clean Energy (PACE) districts. Local governments representing over 40% of Texans have adopted them but over 80% of counties and over 90% of cities have not. (See here for more information.)
PACE, once adopted by a local government, is entirely voluntary for commercial building owners to use. It can enable billions of economic activity (PACE projects already exceed $115m) for energy efficiency and renewable energy while increasing the tax base and creating new jobs.
Rural cities and counties should band together to adopt and promote regional programs to scale the program and reduce costs.
A study that analyzed potential savings for states from energy efficiency showed that Texas had among the highest potential for cost-effective savings of 87.3 million MWh, equal to more than 18% of total energy usage through 2035. This is currently wasted energy.
Lowest income households average 21% cost effective savings offering significant potential for improved quality of life for the neediest Texans. For example, a recent study shows residential energy efficiency investments could economically address the energy affordability gap for low-income residents of Harris County.
Texas has not increased its goals in the last decade. SB 1125 in 2011 and HB 3693 in 2007 were the most recent increases. The Public Utility Commission used its established authority to increase energy efficiency goals on its own volition in 2010.
All public entities should deal with deferred maintenance in long term planning and not out of maintenance and operations (M&O) budgets, which cause the backlogs for much-needed building improvements to fester. Financing like energy saving performance contracts and SECO’s award winning LoanSTAR program should be used. If it became commonplace, this kind of practice would have multiple benefits: lower energy costs for taxpayers, improved public buildings for students and employees, more funds available for core missions like education in schools, improved indoor air quality and health, etc.
SB 241 passed in the 2019 session extending the requirement for seven years that all local government entities in nonattainment areas of the state file plans to reduce energy use by 5% each year. Less than 20% of public entities submit these plans. More assistance could be provided, if funded, to ensure taxpayer dollars are not wasted on inefficient use of energy.
Further, the budget passed in 2019 (HB1) prohibits capital expenditures by state agencies on energy and water efficiency projects which could be funded by utility savings in an energy service performance contract (see here page IX-68-69, page 881-882 of the pdf). Many savings could be gained through the use of performance contracts and other financing tools like SECO’s LoanSTAR program.
Many participants pointed out that public buildings operating during the pandemic have had to incur high costs for advanced air filters and other measures to improve airflow and indoor air quality to protect health. State officials and the general public should understand that public sector facilities expenditures and energy use will be higher in 2020-21 due to these vital protective steps.
To be expanded upon soon
The chief means of attracting jobs and investment to Texas are economic development programs commonly referred to as “Chapter 312” and “Chapter 313” programs (named after the section of statute). In the 2019 legislative session, Chapter 312 programs were extended. The Legislature decided to keep renewable energy projects in the program as they are one of the largest sources of economic development in the state, especially in rural areas.
The Legislature will need to renew Chapter 313 (the larger of the two economic development programs) in 2021, or it will expire. The tax abatements are a major inducement to renewable energy projects to locate in Texas. The tax base, jobs, and local payments to landowners are significant (see Rhodes 2020), as are the air quality benefits from renewable energy as calculated by the Texas A&M Energy Systems Laboratory (see Haberl 2020). Participants of the Summit suggested this is a primary way to continue the massive growth of renewable energy in Texas. To assure transparency, proper notice and the ability of the public to make comments in a public meeting at which a tax abatement is considered must be maintained or expanded.
Texas’ fast growing cities and suburbs need cheap pollution free electricity. This requires transmission. In 2020, the Electric Reliability Council of Texas (ERCOT) began to institute Generic Transmission Constraints (GTCs) on renewable energy providers, effectively curtailing production because the delivery of power was not possible. Policymakers should prioritize the building of additional transmission to continue to reap the many rewards of renewable energy investments, including lower power costs, reduced pollution, and increased investment in rural Texas.
Several project developers, particularly of distributed renewable projects (projects sited closer to urban areas), cited a slow, cumbersome, and overly bureaucratic process as a major impediment to development. One speaker focused on the costs that were only known to the developer well after construction had started. Renewables cited near load centers have substantial benefits and should be promoted. Policymakers could set a cap on the amount of time it can take utilities to interconnect renewables and make costs transparent before development begins.
Municipalities, homeowners’ associations, and utilities should be prohibited from imposing onerous requirements or discriminatory fees on Texans who want to put solar panels on their rooftops. In 2019, two bills were filed, which can be used as a good starting point for protecting consumers’ rights: SB 2066 / HB 2860. In the current session, Senator Menendez filed SB 398.
Markets thrive when there is adequate information for customers to make purchasing decisions and for market participants to make investment decisions. Utilities should be required to provide information on distribution system capacity to facilitate the development of EV charging and investment in DERs. Further, DERs and non-wires solutions (NWS) should be able to fully participate in the wholesale market, and a utility should be able to contract with competitively-supplied DERs for reliability services to the distribution system (“non-wires solutions”), which will save customers money by extending the life of existing utility infrastructure. (E.g., SB 1941, a bill introduced in 2019, and SB 415 introduced by Senator Hancock in the current session).
In 1999 the Legislature created, and in 2005 the Legislature expanded, the Renewable Portfolio Standard. The most ambitious goal in statute is 10,000 MW of renewable energy. The state currently has about 30,000 MW. The economic and environmental benefits have been considerable (see Rhodes 2020 and Haberl 2020). The Legislature should now consider a higher goal. The goal could be focused on renewable energy or could instead set a goal for zero emission electricity, thus encouraging nuclear and carbon capture fossil plants in addition to renewables. Other variations could be goals for community solar (solar located closer to cities), energy efficiency, and/or storage.
Depending on the location of a well, either the Railroad Commission or the Commission on Environmental Quality has oversight of Class VI CO₂ injection wells, potentially creating confusion and red-tape. The State of Texas should create jurisdictional clarity by providing the Railroad Commission with the authority (and resources) to regulate these wells. Then the Railroad Commission should apply to the US Environmental Protection Agency (EPA) for primacy so that it can be the regulator within the state. This would allow permitting to proceed and allow a full value chain to develop.
The federal government has established the 45Q tax credit of $50/ton for CO₂ sequestered underground and $35/ton for CO2 that is put to beneficial use. Recent legislation extended the tax break to projects that have commenced construction by the end of 2025. While the credit is incredibly important, there are ways the state of Texas could improve and supplement it. Still the type of extent of a potential Texas credit needs further consideration.
The State of Georgia in 2004 established a voluntary registry to provide guidance and procedures for forest landowners, municipalities, and other public and private entities to develop carbon sequestration projects.
It is challenging to coordinate the many actors involved in bringing hydrogen, direct air capture, and carbon capture to scale. Many academic institutions, including Texas A&M, UT-Austin, Rice University, University of Houston, are involved. The issues cut across power, transportation, and industrial sectors, as well as local, state, and federal governments. Governments throughout the world are taking leadership roles to establish themselves as centers for low carbon technology demonstrations. Texas, with its deep expertise and existing hydrogen infrastructure as well as geologic features, has a massive competitive advantage that needs to be seized by strong state leadership. Coordination by the Governor’s office will bring a unified voice and vision for how Texas can continue its energy leadership.
The UK Office of Science and Technology and BP discussed the international interest in locating industrial projects in the UK following a project to capture carbon and store it in a saline aquifer in the North Sea. Companies and investors worldwide are setting aggressive carbon reduction goals and will need to capture and store carbon to meet those goals. Texas has the expertise and geology to dominate this space but many regions around the world, including the UK, have a major head start. This is not necessarily a zero sum game, however, as the need to storage carbon is currently high and will likely continue to grow. In fact, the UK Government would like to partner with Texas to share lessons learned and best practices for reducing industrial pollution. According to Julio Friedman of Columbia’s Center for Global Energy Policy, Texas and the UK are the two best places in the world to deploy carbon capture projects.
Our expert panel focused on transportation equity, noting that in many areas of Houston, for example, 20-30% of households don’t own a vehicle. Transportation is both one of the largest sources of air pollution and one of the largest barriers (or enablers) of economic opportunity for the people who need it the most. Buses are one of the largest emitters of particulate matter, a type of pollution directly tied to respiratory illness and early death. We need more buses, but we need them to be clean burning, zero emission vehicles. Fortunately, the life cycle cost of electric buses is now less than diesel buses. Transit agencies need to add additional buses and routes to enable mobility while also reducing harmful pollution. Both of these goals can be achieved simultaneously.
One of the simplest and most impactful ways to ensure the increase in electric vehicles and resulting improvements in air quality is to set goals, much as the state set goals for renewable energy in 1999 and 2005, which have been far exceeded by private companies. Various speakers suggested different ways to do this, including requirements for manufacturers to sell a certain percentage of ZEVs by a date certain. For more information see the National Association of State Energy Officials PEV Policy Evaluation Rubric.
Fifteen states and the District of Columbia have signed a memorandum of understanding to commit to 30% of new truck and bus sales to be zero emission by 2030 and 100% by 2050.
One of the quickest ways to move the market toward ZEVS and reap air quality benefits would be for local governments to set aggressive goals for ZEV adoption. The City of Houston did this in their climate plan, specifying that all their vehicles should be electric or zero emission by 2030. Capital Metro, the transit authority in the Austin area, has made a similar pledge. Other local governments, including school districts, could take this action. Local governments, including ISDs, transit agencies, and colleges, should take the first step of requiring fleet departments to create a plan for electrification, including a cost-benefit analysis. Templates and other tools for doing these kinds of analyses are readily available (see Electrification Coalition’s EV Tools and Calculators).
The current process to receive a rebate for an EV and natural gas vehicle requires multiple pages of forms to be filled out and submitted after the sale. It takes six weeks to get a rebate check. The process should be changed to reduce the bottom line cost, so the rebate is directly applied at the point of sale. One of the biggest barriers to adoption of electric vehicles is the lack of knowledge and motivation by car salespeople; a modest bonus to the salesperson directly would change that.
Hydrogen and electric vehicles hold enormous promise for improving air quality in Texas. Many speakers at the Summit pointed out that national companies weigh ROI heavily and will often cite ZEVs and associated infrastructure in states with higher incentives. Texas has TERP and its associated $2 billion balance and thus could incentivize ZEVs more heavily.
Texas should also consider new incentives for hydrogen vehicles, especially in the heavy duty vehicles classes, and used EVs as a more robust secondary market will grow as more models become available. Already many used Nissan Leafs and Chevy Volts and Bolts are available, but they are currently ineligible for TERP incentives, greatly disadvantaging middle and low income Texans.
Summit participants recommended specifically revising the New Technology Implementation Grant (NTIG) portion of TERP to allow for ZEV pilots.
To transition to zero emission vehicles, Texas will need more infrastructure: both electric vehicle chargers and hydrogen fueling stations. For EV chargers, regulators will need to work with electric utilities to ensure that they can recoup costs and earn a return on “make-ready” infrastructure. Facilities that charge trucks and buses will sometimes see increases in electric load of 10-50 times previous use. If customers are required to pay entirely for upgraded infrastructure, the ROI of converting will be reduced.
The legislature could also explore a state tax credit on charging infrastructure.
Finally, legislators and regulators should ensure to incentivize charging in historically marginalized communities that often do not get the same level of infrastructure investment as more well-off communities. Chargers will need to be placed in areas where people do not have access to private charging (e.g., multifamily complexes, low income housing, etc.)
Companies deploying EV chargers cite onerous local regulations that increase EV chargers’ costs by $1000 or more. Local governments should look to streamline regulations and reduce costs, especially when qualified electricians are performing the installations. For reference, Texas local governments can look to their counterparts in California who are required to reduce regulations under AB1236.
Several companies’ representatives at the Summit emphasized how important time-of-use (TOU) charging is to reduce both emissions and costs for electric vehicles. While Texas’ competitive electric market allows companies to offer TOU retail prices without PUC approval, the 3-4c/kWh charge from the transmission and distribution (T&D) utility is flat at all times of the day. Thus, while wind blowing at night when energy demand is low could end up costing customers a penny or less, retail electric providers add 3-4c to that penny meaning effectively the lowest price they can offer customers is 4-5c.
The PUCT could require or allow for TOU rates even on the T&D portion of the bill. This makes logical sense as the T&D system’s costs are incurred mostly to meet peak demand, not to pay for use in the middle of the night when demand is low. In areas of the state not subject to retail competition, the PUCT also could require vertically-integrated utilities to establish TOU rates.
Several companies indicated that demand charges in Texas are a barrier to additional electrification. The PUC should review the roots of high demand charges and take steps to alleviate these charges where appropriate.
For an example, see this study on Austin Energy’s EV360 “off peak” charging pilot.
The Legislature should clarify that sales from electric vehicle charging stations are not a retail sale of electricity and thus do not to be regulated as such. The PUCT recommended to the Legislature that they update the statute to make this clear (see PUCT Biennial Agency Report to the 87th Legislature, p. 61-62).
Further, the Legislature or the PUCT should clarify that T&D utilities cannot own and operate electric charging infrastructure in areas where there is electric competition; the equipment and services should be provided by competitive entities. However, T&D utilities should be allowed and encouraged to build infrastructure to “make ready” the grid for rapid charging. They should be allowed to provide charging stations if the competitive market is not meeting the need.
Potential EV buyers often cite concerns about the ability to charge when far from home or work as a major barrier to purchasing. While the competitive market for charging is providing a robust system in urban areas, there are many stretches of highways and farm-to-market, and ranch-to-market roads where one can drive for hundreds of miles without access to charging. The state needs to include rural areas. One way to accomplish this is to charge a nominal fee on EV owners as part of their registration, which would be dedicated to placing charging stations in remote areas.
Several representatives of corporate fleets brought this up. Batteries add to the weight of trucks. They will need to be granted variances to allow them to operate. See the Department of Energy’s Alternative Fuels Data Center for an example.
One of the biggest benefits of moving to ZEVs is improved air quality and health. To maximize the benefits, state and local governments could target incentives for scrapping the dirtiest, oldest trucks. In doing so, governments should differentiate incentives along with several aspects:
Large and small fleets as decision making, operations, and motivation to scrap are very different
Short haul vs. long haul: short haul stay in the airshed, and so have a bigger bang for the buck
Fleets with the heaviest use should be targeted as, again, they would have air quality benefit if scrapped (e.g., >100k miles per year)
Many leading fleet owners and managers want to transition to ZEVs but have fleets with vehicles only a few years old. Current rules require scrappage to access ZEV grants. For vehicles six years or less, this requirement should be removed as it will serve as a major barrier to uptake of electric vehicles, reducing ROI to the point where fleet conversions no longer make economic sense.
As electric vehicles scale, there is a significant opportunity to use their batteries for grid balancing and reliability. Most light duty vehicles are in operation only 5% of the time. The rest of the time, if grid connected, they could be feeding energy into the grid, or at least charging to optimize cost and availability of power, keeping prices low and the grid stable. For example, electric school buses are mobile batteries that could be used as a grid resource at times when that power is most needed.
The Public Utility Commission and ERCOT should work with the National Renewable Energy Laboratory and other leading research entities to analyze the opportunity for VGI. For more, see here: NREL’s Electric Vehicle Grid Integration R&D.
Texas flares and vents large volumes of “associated gas” from the Permian and Eagle Ford basins. Flaring is when gas is burned off, and venting is when gas (methane, or CH₄) is released directly into the atmosphere. This is a waste of Texas’ nonrenewable resources and harms human health as SO₂ is released in large amounts (Howard County, in the Permian, was designated by the EPA as nonattainment in 2020).
Recently, the French government canceled a $7b contract for Texas Liquefied Natural Gas (LNG). From a news article (Politico):
That focus on imports could become a problem for U.S. LNG sellers that get their natural gas from West Texas, where methane emissions are high and many oil-focused companies vent or burn off the natural gas that is a byproduct of those wells. About 1.4 million metric tons of methane escapes a year from fields in the Permian Basin, an oil and gas hotspot covering West Texas and eastern New Mexico, according to data collected by the Environmental Defense Fund and published in April.
Increased regulation to end routine flaring could, paradoxically, be extremely beneficial to Texas oil and gas producers in an increasingly competitive global energy market.
This action could be taken by the Railroad Commission, the Legislature, or a combination. As an example, this session bills have been introduced to either limit or set goals to eliminate routine flaring (HB 1452, HB 896) and SB 388.
The Railroad Commission currently runs a program to plug abandoned wells. In 2020, the Commission exceeded its goal and plugged 1,498 wells. This can reduce pollution (many of these wells are leaking methane and other pollutants) and put unemployed oil and gas workers back to work. There is likely to be a push at the federal level to fund this work through stimulus funding. Given the state already has a program and workers in the industry badly need opportunities to work, this could be a win-win.
The Railroad Commission should seek additional funding to plug additional wells, and Texas’ congressional representatives should seek funding for this purpose.
See Railroad Commission news release on the State Managed Plugging Program and this report from Resources for the Future: Green Stimulus for Oil and Gas Workers for more info.
Marginalized communities experience the worst impacts of pollution in the form of early death and disease. The state maintains a $2b balance in the TERP account (Account 5071), which could be spent to get the state into attainment with national air quality standards. In spending the balance or simply spending what is collected year to year, spending should be focused on the communities that need relief from pollution the most: namely, communities of color.
The planet is currently 1.2°C hotter than a century ago. This heat is not evenly distributed, though. Urban areas can get as much as 17°F hotter than surrounding rural areas (see this study done in Houston in 2020). Groundbreaking reporting highlighted hundreds of heat-related deaths in Texas after electric service was cut off due to nonpayment. There are protections in place to prevent this, namely a prohibition on cutting electric service during heat advisories; however, hundreds have still lost their lives in recent years.
With state support, local governments should ensure citizens have access to facilities where they can stay cool and safe during dangerously hot spells in Texas summers. These hot spells that will grow increasingly deadly with each passing year.
The federal government requires a cost-benefit analysis before rebuilding. This, and many other governmental disaster recovery systems and processes, ensure funds flow to wealthy, predominantly white neighborhoods. (For more information, see How Federal Disaster Money Favors the Rich.) As disasters become more prevalent (half of counties now experience a disaster in a given year compared to 20% only 50 years ago), equitable distribution of disaster recovery needs to be prioritized.
It will likely be necessary to provide resources for capacity to income communities to ensure residents can navigate disaster recovery bureaucracies effectively. See Why Are These Tiny Towns Getting So Much Hurricane Harvey Aid?)
In the famous words of Peter Drucker: “What gets measured gets managed.” Texas suffers from a dearth of data on air quality. More monitors are needed, particularly at fencelines where pollution and adverse health outcomes are most acutely experienced. (See Air Alliance Houston’s page on air monitoring for more information.)
A collaborative and effective community needs assessments and engagement strategies are needed to create programs that fit the needs of specific communities and target vulnerable households. (See ACEEE Low-Income Households, Communities of Color Face High “Energy Burden” Entering Recession).
Further, Texas leaders should encourage utilities and state and local agencies to coordinate the delivery of housing, energy assistance programs, and the installation of clean DERs to optimize the provision of these services to these constituencies to reduce utility bills, improve employment opportunities and ensure energy equity (See EDF’s Encouraging the Development of Distributed Energy Resources in Texas.)