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Texas could lead the energy transition. State leaders are determined to fight it

Texas could lead the energy transition. State leaders are determined to fight it
Amazon Wind Farm Texas (JORDAN STEAD / Amazon)

The state of Texas is in an energy transition. Some prefer to call it an expansion, but make no mistake, it’s happening and we’re in it. 

We can try to hold it back, but it would be like trying to hold back the tide. We’ll lose. 

Or we can lead it. Shape it. Create high-paying jobs from it.  Profit from it. And hell, maybe even help maintain a habitable Earth.

Right now, Texas’ political leadership seems hell-bent on choosing a quixotic battle against economic gravity—and Texans will suffer for it.

Last month, the Texas Comptroller functionally blacklisted financial firms that have net-zero goals (goals to reach zero emissions at a future date). In the minds of Texas leaders, that equals a boycott of oil and gas firms. 

But by that definition, Texas-based Oxy, a $40 billion oil and gas producer, boycotts oil and gas. They have an aggressive net-zero goal — they actually trademarked the term “Zero In.” Another boycotter: Schlumberger, the largest oil field services firm in the world. And Pioneer. And for goodness sake, Exxon!

But let’s come back to Oxy, the recent object of desire of one Warren Buffett. Their CEO, Vicki Hollub, says the way to win the energy transition is to be the most sustainable oil and gas producer. I know, I know: oil and gas is not sustainable for the long term. But for the short to medium term, we’re going to use it. Hollub acknowledges that oil and gas are not sustainable long-term, but she says Oxy will have emissions so low that they’ll “be the company to produce the last barrel of oil.”

“I’m thinking about the long term for our shareholders,” Hollub told the Financial Times. It’s a fascinating strategy and it’s working; Oxy stock is up 100% on the year.

Subscribe today to the all-new Factor This! podcast from Renewable Energy World. This podcast is designed specifically for the solar industry and is available wherever you get your podcasts.

If only Texas leaders would think similarly. But they want to go the other way. They deny and delay, punishing anyone investing in lower emissions, refusing to acknowledge the reality of human-caused climate change or the energy transition. 

Ultimately, this punishes Texans the most. It signals to the world that Texas isn’t interested in leading the energy transition—especially when California is making generational investments in advanced energy. In the age of Model T’s, we’re doubling down on horses and buggies. 

The rest of the world stands to gain from our abdication of energy leadership. It will cost Texans in both the short and long term. 

In the long term, our failure to lead could destroy the very oil and gas wealth Texas leaders are trying to protect. Other countries will develop technologies to capture and store carbon, capture methane, produce low-emission hydrogen, integrate renewable power sources into the grid, store energy, use power more efficiently, and achieve zero-emission goals in ways we haven’t thought of yet. If oil and gas use trends downward, the lower emission producers will have a market advantage. We will not.

And in the short term, by targeting top-tier financial firms, borrowing costs are going to rise. They already have. Interest costs for bonds went up by $300-$500 million just this year because of the attack on ESG investing. Blacklisting net-zero investors will add even more to those costs.

Retired teachers and public employees will lose out on top-performing funds from firms like BlackRock. The Teacher Retirement System fund investment in BlackRock equals .001% of the firm’s $10 trillion (yes with a “t”) in assets. They’ll be OK. It’s Texas teachers who will lose out. (But not Lt. Governor Dan Patrick who reportedly still holds ESG funds from BlackRock.)

The Azure Sky project developed by Enel Green Power features a 350 MW wind farm paired with a 137 MW/204.6 MWh battery storage facility in Throckmorton County, Texas. (Courtesy: Enel Green Power)

The cost in prestige and reputation is much higher. Texas’ war on business sends the wrong signal, and the world is watching. Texas used to be a place businesses wanted to be but these punishing policies only drive up costs for job creators and hurt our economy. Texas rightly takes pride in being the nation’s energy leader, but it can’t hold that status if it punishes companies pursuing the technologies and goals that drive energy in the 21st century. 

The energy transition will be worth trillions, and it’s just getting started. 

With its deep, vast experience and expertise, Texas could be the strongest player in the energy transition. Instead, leaders want to walk off the field and forfeit the next generation of energy leadership—and to broadcast it to the world. 

Luckily, markets and technology — as well as local and federal leadership — also play major roles. 

No matter what Texas politicians do, investors will continue to put money in lower-emission oil and gas, as well as zero-emission wind and solar, batteries, energy efficiency, geothermal, and other technologies. 

The unprecedented Inflation Reduction Act investments will have a big impact here, too. 

GO DEEPER: Jose Zayas, EVP of Policy and Programs, American Council on Renewable Energy joined the Factor This! podcast to break down the key components of the historic Inflation Reduction Act, which includes $369 billion dedicated to clean energy and climate change.

Local policies implemented by city councils and commissioners courts across Texas will help our cities build wealth and position themselves in the energy transition. 

And Texas universities and colleges, as well as entrepreneurs, will continue developing new technologies and developing the workforce to succeed in the advanced energy industries. 

Even Texas’ oil and gas companies will continue their market-driven push for net-zero operations and technologies — even if state leaders try to ban them, too.

The energy transition is here and it’s only picking up speed. So Texas leaders should stop pursuing these empty gestures that hurt Texans more than the target of their frustrations and instead support companies that are looking to lead the energy transition and turn it into an energy expansion. 

For the good of Texas, it’s time to lead the energy transition. We can’t afford to be left behind.