3 ways Biden could transform Texas energy

By Edward Klump | 02/12/2021 07:20 AM EST

The impact of President Biden’s policies on the Texas energy mix could have national repercussions, considering the state is the nation’s largest greenhouse gas emitter, is home to the oil and gas industry and ranks first in the country for installed wind energy capacity.

Supporters of then-presidential candidate Joe Biden at a campaign event in Dallas on March 2, 2020. President Biden's policies will affect how Texas' signature energy industry evolves.

Supporters of then-presidential candidate Joe Biden at a campaign event in Dallas on March 2, 2020. President Biden's policies will affect how Texas' signature energy industry evolves. Elizabeth Frantz/Reuters/Newscom

When asked about having President Biden in office rather than Donald Trump, the mayor of the nation’s oil and gas capital emphasized one word: "refreshing."

"It will be good to have a partner in the White House," Houston Mayor Sylvester Turner, a longtime Democrat, told E&E News in an interview.

But Texas Gov. Greg Abbott (R) doesn’t see it that way. He has railed against Biden’s executive actions on energy and climate and directed state agencies in a January executive order to fight federal overreach. That was followed this week by Texas Land Commissioner George P. Bush announcing a Texas Defense Task Force within the state General Land Office that would work "to identify federal overreach and fend off threats to the Texas oil and gas economy."


But what would Biden’s policies actually do to Texas energy? The answer could have national repercussions, considering Texas by far produces more greenhouse gas emissions than other states, is home to the nation’s oil industry and ranks first in the country for installed wind energy capacity.

Outside of the crossfire among politicians, the experience under Biden could be nuanced for the Texas energy industry, which is diversifying and trying to cut emissions, according to experts. Along with leading the nation on wind, the Lone Star State is seeing a rise in solar power. At the same time, Texas and many of its municipalities still rely on oil and gas jobs to help drive employment and the economy, even after the pandemic slashed jobs in the state.

"Much of what we have heard so far from state elected officials in Texas is just political," said Cal Jillson, a professor of political science at Southern Methodist University. "It’s just positioning themselves to be opponents, or at least watchdogs, of the Biden administration. They’ll then look at the exact policies and decide where they can benefit by a relationship."

Like other states, Texas is divided over urban and rural issues and how best to promote business while protecting the environment. The new administration’s focus on climate change could ultimately help Texas, which is affected by hurricanes and sea-level rise.

For a mayor like Turner, whose city is in a county that voted for Biden last year, there’s potential upside in federal funding around pandemic aid, efforts to withstand hurricanes, combating climate change and a pivot toward cleaner energy. The challenge for Turner comes in balancing any benefits with concerns about losing high-paying jobs in oil and gas.

In that context, some of Biden’s early signals on energy and the environment have landed with a thud among industry supporters in Texas.

Revoking a permit for the Keystone XL pipeline and moving to reenter the Paris climate accord have generated opposition and cries of symbolism. Perhaps the most concrete concerns stem from Biden’s pause on oil and gas leasing on federal lands and offshore — and the potential to extend or expand that.

Meanwhile, old rumors and fears about federal intervention in the energy sector keep resurfacing.

Houston-based Halliburton Co., a major oil field services firm, told investors in a recent filing that the new administration "may seek to adopt federal regulations or urge federal laws that would impose additional regulatory requirements on or even prohibit hydraulic fracturing in some areas."

That practice, commonly known as fracking, uses sand, water and chemicals to unlock petroleum from shale and other formations.

Biden has not signaled plans to end fracking in the United States, and the president doesn’t have the power to do so unilaterally (Energywire, Sept. 24, 2020). But the use of executive orders early in his presidency has added to the expected pushback in a state closely tied to oil and gas even as companies march ahead with wind and solar investments.

Here are three issues to watch as Biden’s energy plan is fleshed out:

Oil and gas jobs

Energy jobs, from office towers in big cities to oil and gas fields in West Texas, could be affected by Biden’s plan to move away from fossil fuels. But it’s too early to say that predictions of an industry collapse are imminent under Biden’s watch, especially as oil prices have climbed this year.

Yesterday, the International Energy Agency reported that the effect of Biden’s moratorium on new oil and gas leasing on federal lands would be limited in the near term, according to Axios.

Before the election, large oil producers on federal land began stockpiling drilling permits, creating a buffer against Biden’s plans (Energywire, Jan. 12).

Still, other analysts say Biden’s impact on the oil industry could be significant.

In his recent executive order against federal overreach, Abbott put much of the focus on workers. He said that "hundreds of thousands of Texans are employed in the energy industry," which he called "vital to economic growth" in Texas.

Besides Keystone XL, the Paris accord and a suspension of new federal oil and gas leasing, another of Biden’s moves that the governor criticized was creating a path to rescind a 2020 federal methane rule. Abbott called that "an apparent prelude to burdensome new regulation of the energy industry’s emissions in Texas" and elsewhere.

If EPA pursues new rules on methane, Texas likely would have to follow those or propose its own and be at least as stringent. There’s also the potential for new litigation over energy issues, which is a reminder that Texas Republicans sued the Obama administration over energy and other issues many times, with a mixed record.

When asked about Texas’ concerns by E&E News this week, the White House pointed to one of its recent statements:

"The Biden-Harris administration has proposed transformative investments in infrastructure that will create millions of good union jobs here in America, boost the U.S. economy, and advance our climate and clean energy goals."

In announcing the Defense Task Force, Bush’s office cited a presentation prepared for the American Petroleum Institute in saying almost 120,000 Texas jobs would be at stake in 2022 if a ban on leasing and developing on federal lands and offshore were made permanent.

Michael Webber, a professor at the University of Texas, Austin, who has written extensively about energy, ripped the announcement from the Texas General Land Office about the new task force. On Twitter, Webber labeled it "a waste of taxpayer $$$."

"Gov’t should help the state prepare for the future rather than picking fights as part of a contrived culture war," he tweeted. "Retrenching to insulate industry from global markets didn’t help Appalachia w/coal and it won’t help Texas."

Texas isn’t a major producer of oil from federal lands. But Bobby Tudor, chairman of Tudor, Pickering, Holt & Co., an energy investment bank, said suspending new federal leasing hurts Texas’ oil and gas industry. That’s in part because companies in the state work on federal lands in places such as New Mexico, potentially affecting jobs in Houston. Tudor said halting new leases could push companies to drill elsewhere, perhaps even outside the country. And Tudor said that wouldn’t address consumption or help the goal of lowering global emissions.

"It takes off the table a lot of the very best acreage for domestic oil and gas production in the country," he said.

Tudor stressed that oil and gas companies are accustomed to dealing with regime changes, whether they’re the United States, in states or in other countries.

"I think it’s in the industry’s interest to be viewed as a partner in transitioning the world to a lower-carbon future," he said.

Jillson at SMU said the Texas energy industry operates in many places and that it’s only looking at a pause on federal lands. It’s possible environmental regulations later in the Biden administration could be something more to talk about in Texas, in Jillson’s view. For now, unless the suspension became permanent, he suggested its effects would only be on the margins in the state.

In a twist, some drilling rigs have been redirected from New Mexico to private land in Texas, according to a New Mexico official (E&E News PM, Feb. 10). An industry group also is looking to end routine gas flaring in Texas after pressure from state lawmakers and the Biden administration (Energywire, Feb. 11).

Turner said it’s important to provide constructive input on the Biden administration’s plans. He’s the current chair of Climate Mayors, a bipartisan group of leaders seeking to promote climate action in cities across the country. Turner has called for using technology to help achieve cleaner and greener outcomes.

"It doesn’t necessarily mean, for example, that you just permanently stop the leases … on public property," he said, adding that Houston can play a role in a conversation with the Biden administration on climate goals.

"Let’s sit down at the table and let’s discuss how we can achieve the same objectives and provide additional ideas on how to get there," Turner said.

Still, Republicans are ready to push back on energy and other issues. While some observers say that realizing a fully completed Keystone XL pipeline isn’t a critical project for Texas, Attorney General Ken Paxton was among state attorneys general who recently signed a letter threatening to sue the Biden administration over its revoked permit (Energywire, Feb. 10).

Clean energy pivot

Biden has called for decarbonizing the U.S. power sector by 2035, although it’s not fully clear what role the federal government will play in reaching that target. But Turner said he has spoken this year with Gina McCarthy, the former EPA administrator who is now a White House climate adviser. He also has talked with Vice President Kamala Harris.

Turner suggested there could be more resources for renewables; clean hydrogen; carbon capture, utilization and storage; and electric vehicles and charging stations under Biden.

Yet Texas occupies an unusual spot in the power world, as its main grid is managed by the Electric Reliability Council of Texas — with primary oversight from state regulators and lawmakers. In 2020, 46% of the energy on the ERCOT power grid came from natural gas-fueled units. Wind accounted for 23%, followed by coal at 18%, nuclear at 11% and solar at 2%. So the grid is not close to being decarbonized at this point.

While new federal rules on generation might apply, Biden’s reach into Texas could have limits, given that ERCOT has only a few connections to other grids. But Webber, in a private Twitter exchange with E&E News, said Biden could push for research and development and tax credits to boost clean electricity. He called the federal government "a relevant stakeholder," even if it can’t dictate what Texas does with the grid.

It’s possible that some parties could push for more involvement by the Federal Energy Regulatory Commission in Texas on issues such as transmission lines, but that would be met with heavy pushback in the state.

In many ways, the grid’s shift in the main Texas power region has been market-driven, though Texas did have a roughly $7 billion program to help build out transmission over multiple years. Power producers have been turning away from coal and toward renewables, while natural gas remains the top source for producing power in the ERCOT region.

Webber also told E&E News that oil and gas in Texas "will do fine under Biden and renewables (wind, solar and geothermal) will get a boost." Webber predicted that carbon capture and sequestration, for which he said Texas has world-leading expertise, also will benefit. And he suggested that lifting immigration bans and improved relations with Mexico would be good for Texas companies.

"All in all Biden is good to Texas energy in my opinion," wrote Webber, who spoke in his role as a University of Texas professor, not as someone who also works at Engie SA, an energy company.

Biden’s executive action also included a push to double energy output from offshore wind by 2030 — a target that could be relevant eventually in the Gulf of Mexico.

Another technology to watch is EVs, which Biden promoted in his executive order last month on climate. He directed federal agencies to procure vehicles that are free of emissions, with a goal of creating union jobs and bolstering clean energy businesses.

In his recent State of the State address, Abbott carved out time for a mention of Tesla Inc., the EV company that’s working on a factory in Texas.

Some EV movement is happening in Texas cities like Houston, where the city recently touted a plan by BP PLC and Uber Technologies Inc. to expand EV charging options. And Blink Charging Co. recently said that it will be involved in the planned rollout of EV charging equipment in San Antonio.

Jillson said Texas leaders would be well advised "to position themselves for the changes that are inevitably — have been and will continue to be — taking place in the energy markets around the world and in Texas."

Turner said Houston is focused on climate technology and clean technology. That push includes work on a local branch of Greentown Labs, which aims to help climate tech startups. Houston also is touting a public-private plan to turn the closed Sunnyside landfill site into a solar development.

Tudor pointed to the growth of U.S. oil production under former President Obama and the fall of U.S. coal output under Trump to emphasize that factors in energy go beyond government actions.

"Markets and technology really matter and, in fact, matter very often at least as much as policy. And probably most of the time, they matter more than policy," Tudor said.

Climate and environmental justice

Houston Mayor Sylvester Turner. Photo credit: New America/Flickr
Houston Mayor Sylvester Turner speaking at a New America event in Washington in 2019. | New America/Flickr

The Biden campaign’s message last year to "Build Back Better" in the wake of the COVID-19 pandemic echoed what Houston has been trying to do for several years for a different reason.

Houston saw widespread flooding in the wake of Hurricane Harvey in 2017, as tens of thousands of structures were damaged and dozens of people in the Gulf Coast region died. A federal estimate of disasters put the storm’s adjusted cost at more than $131 billion.

Much work to improve drainage during storms remains, although Turner touted efforts in Houston to build higher because the area is susceptible to flooding. There’s also the matter of proposed protections against sea-level rise and flooding along the Gulf that haven’t been built or even fully approved. And the Army Corps of Engineers has warned that much more needs to be done (Climatewire, Dec. 21, 2020).

Turner applauded Biden’s recognition of the science of climate change and a planet that’s dealing with stronger storms. And he said major energy companies such as BP, Royal Dutch Shell PLC and CenterPoint Energy Inc. have worked with Houston as it embarks on a climate action plan. Houston is aiming to be carbon neutral by 2050 or sooner.

With Biden now in office, Turner expressed hope that Texas will see more federal funding and attention to help it get ready for future storms. He said more resources could go to projects like a coastal spine or floodgate to help protect people and assets along the Gulf Coast. That’s important for energy markets, given the cluster of refineries and petrochemical plants near the coast.

"Storms don’t care whether you are a Democratic mayor or a Republican mayor," Turner said.

There’s also the matter of environmental justice, which has taken on new urgency following nationwide protests for equality last year. Turner said climate change and stronger storms have significant effects on communities of color as well as low-income areas.

But it remains to be seen how the new administration will juggle priorities that cut across large swaths of society. Biden’s actions have included a call to help revitalize energy communities and give new life to idled properties.

"You can’t discuss climate change, resilience, energy transition without also talking about equity and inclusion," Turner said.

The mayor said he doesn’t plan to let state leaders derail progress he’s hoping to make in the Biden era. And SMU’s Jillson suggested that the Biden administration will work to enable cities to deal with EPA and other federal entities knowing that some red states will be reluctant.

"They’ll craft policies that are open to blue cities in red states like Houston and Dallas and Austin," Jillson said.

Reporters Mike Lee contributed and Heather Richards contributed.