Deregulated energy markets made Texas a clean energy giant

Deregulated energy markets made Texas a clean energy giant
© Greg Nash

Lots of things come to mind when we think of Texas. To many, it might be the Cowboys, Tex-Mex food, big trucks or border towns. To most, however, we associate Texas with oil production and the rise in economic prosperity that it gave to the Lone Star State.

Although still a large oil producer, Texas has recently become a clean energy giant, giving rise to economic growth from East to West and an expanding market for wind, solar and natural gas. Furthermore, their renewable and clean energy market growth has come organically and with minimal effects on price, unlike the growth also seen in California.

These changes aren't by chance or due to mandates, either — in fact, the cause is quite the opposite, and due to something that environmentalists such as Al GoreAlbert (Al) Arnold Gore2020 Democrats release joint statement ahead of Trump's New Hampshire rally Deregulated energy markets made Texas a clean energy giant Gun safety is actually a consensus issue MORE have failed to acknowledge as an effective solution for decades: deregulated energy markets. 

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In 2002, the Texas legislature voted to deregulate the energy sector and foster a competitive energy market. This move came after decades of effort, spanning from the 1970s to the late 1990s. Although there was uncertainty at the time, the move has paid off. The deregulatory move gave more power to consumers and independent energy companies and redefined the role of utility companies to fit their intended purpose, which is energy transmission and objectivity toward energy sources. Because of this, 85 percent of Texans have energy choice, allowing them to choose what type of energy they use and where it comes from.

Texas’s consumer energy choice and market competition between energy companies has resulted in the blossoming of energy production of all kinds. Texas has always been an energy giant, producing the most energy of any state in the country. However, today they are diversifying their portfolio. Texas produces 25 percent of the nation’s natural gas. There are major benefits to natural gas, particularly cost and reducing co2 emissions. Natural gas is a great bridge energy between traditional fuels and clean energy, and it also gives us leverage from an international trade perspective.

The most prominent product of Texas energy freedom is seen in wind production. Texas is now the largest wind producer in the country. Wind energy accounted for 17 percent of the state’s energy portfolio in 2017, and that number is set to increase to 23.4 percent of the total state energy portfolio for 2019. Furthermore, many of these wind investments are being made in West Texas, an area of the state that has struggled economically in the past. Wind production is allowing farmers and rural communities in Texas a new opportunity for growth, stability and wealth that more restrictive energy markets don’t offer.

The criticism from the left of open markets leading to increased use of traditional fuels has been false, and the theory that opening energy markets will cause price spirals has also been false. Texas has lower energy costs than the majority of the country, with residential energy costing about 10 percent less than the national average and industrial energy costs being almost 22 percent lower than the national average.

The increase in cleaner energies at reasonable costs is also allowing a natural reduction in Texas’s coal use. Coal as a percent of the total state energy portfolio dropped 9 percent from 2017 to 2018; and from 2018 to 2019, coal is set to drop even more, from 24 percent to 15.9 percent of the total state energy portfolio.

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California, on the other hand, took a mandate based approach to renewable energy production, and the effects have been mostly negative. From the residential solar mandate to the funneling of tax dollars into solar subsidies, the state still produces less solar than Texas does wind. Because investments in renewable energy have been inorganic and artificially bolstered, costs for energy in California are also incredibly high, with residential energy costs being 56 percent over the national average and industrial energy costs being a whopping 76 percent above the national average.

These prices hurt lower-income families the most and make it extremely hard for small and medium businesses to remain competitive. As with most mandates, California’s energy mandates hurt the most vulnerable people and make upward mobility more difficult.

Texas, not California, should be the model that other states look to when reimagining their energy framework. Consumers deserve to choose their energy, energy developers deserve to be able to compete, and utility companies need to focus on their true purpose: transmission. Energy freedom fosters energy innovation, energy efficiency, portfolio diversity, lower costs and an America that leads the world in energy production and innovation.

Nick is the national policy director at the American Conservation Coalition, a conservative environmental organization that promotes free-market solutions to environmental issues and advocates for conservation and a sustainable “all of the above” energy approach. Follow the organization on Twitter @ACC_National.