Why environmentalists should support repealing Texas’ RPS
R Street is generally opposed to energy mandates, including an RPS. In this post, however, I would like to make the slightly counter-intuitive case that even environmentalists should welcome a move to repeal the Texas RPS mandate.
Why should environmentalists go along with getting rid of the RPS? Well, for one thing, the RPS is not doing anything to increase use of renewable energy in the state. Wind energy capacity in 2017 was 19,800 MW, or virtually double what is required by the state RPS. The current RPS is sort of like having a minimum wage of ten cents an hour. It’s on the books, but it is at best a symbolic gesture. And while many environmentalists would no doubt like to see Texas’ RPS raised, they have got to know that it is just not realistic politically.
In fact, there is reason to believe Texas’ RPS never did much to encourage renewable energy in the state. If the mandate was a major driver behind renewable energy growth, you would expect renewable energy growth to taper off once the mandated level was reached. You would also expect the required level of generation not to be reached early. After all, for a mandate to change behavior, it has to require businesses to do things they otherwise would not want to do.
By contrast, wind energy growth in Texas shot past the mandated level in 2010, 15 years early, and kept growing rapidly even after the mandated level had been surpassed. In fact, wind capacity in Texas has grown faster and farther than even in states like California which have relied heavily on mandates to push growth.
If the RPS didn’t do anything to boost renewable energy growth, then how do you explain the fact that renewables did grow so rapidly? It’s likely that federal subsidies, such as the production tax credit and investment tax credit (which R Street also opposes) played a role. Also important, though, has been the substantial fall in wind prices over the last decade. The average levelized price of a wind power purchase agreement has fallen by half since 2009. In addition to having lots of wind energy potential, Texas’ competitive electrical grid has allowed wind to be integrated into the system more rapidly than in some other more regulated systems.
This gets to the reason environmentalists should be glad to see the RPS go. As I noted above, the RPS is mostly symbolic. But it’s a bad symbol. Having an RPS on the books sends the message that wind needs to be propped up by government and that it can’t stand on its own in the marketplace. Wind subsidies like the RPS thus undercut the emerging story of wind as a competitive source of energy in the open marketplace. Greens should therefore bite the bullet and let market competition, not mandates, make the case for wind power.
