Perry Has Sought Energy Diversification — Within Some Important Limits

In the opening days of his presidential campaign, Gov. Rick Perry of Texas has railed against a favorite target, the Environmental Protection Agency, and declared himself a “skeptic” that humans are the cause of global warming.

If Perry wins the White House, his national energy policy will focus on cutting federal regulations, especially at the EPA, said his spokesman, Mark Miner. Miner wrote in an email to the Tribune:

The governor's energy priorities will be centered around scaling back the EPA's intrusive, misguided and job-killing policies, which will empower states to foster their own energy resources without crippling mandates and open the doors for our nation to pursue and strengthen an all-of the above energy approach. America is rich in energy resources, both traditional and renewable, and those resources should all be utilized so we can decrease our dependence on foreign energy sources and help generate greater job growth, which our nation desperately needs. Under Gov. Perry's leadership, Texas has remained the nation's leader in energy production, all while cleaning its air more than most other states and protecting jobs. As president, he will apply the same priorities on a national level, with a focus of empowering the states to regulate their own energy industries and make decisions that are the best fit for their respective state.

To unpack what this means, it is worth reviewing Perry’s record on energy, a huge driver of the Texas economy. One theme that Perry often emphasizes, and that Miner suggested would help shape a nationwide policy, has been energy diversification. Over Perry’s decade as governor, natural gas drilling has surged, and wind last year supplied nearly 8 percent of the electricity on the Texas grid, up from less than 1 percent in 2000, when Perry took office. The state’s first biomass power plant began operating this month, and, contrary to the national trend, Perry has also backed construction of new coal-fired power plants. He has, however, stopped short of supporting incentives for solar power.

States’ rights are another Perry talking point, and he has spoken out against federal constraints on coal, oil and gas, as well as against a federal ethanol-blending mandate.

Many of the changes — the gas and wind booms, for example — might have happened with or without the governor. But he has had a hand in advancing them. 

Oil and Gas

Unlike many past Texas governors, including George W. Bush, Perry is not an oilman. But the oil and gas industries have applauded his policies. Mostly, of course, drillers like Texas’s low-tax, low-regulation environment, which Perry did not create but has maintained. Oilmen cheered his call to end the Obama administration’s moratorium on new deepwater drilling after the Gulf of Mexico was damaged by last year’s BP oil spill, which Perry suggested was an “act of God.” "Rick Perry has pushed back" against the Obama administration, said Bill Stevens, executive vice president of the Texas Alliance of Energy Producers, which represents independent oil and gas companies.

Natural gas drilling has exploded during Perry’s tenure, with Texas production climbing 28 percent between 2000 and 2010. That is mainly due to the expansion of hydraulic fracturing, or fracking, the process of sending water, sand and chemicals underground to break up shale and release gas or oil. Fracking has become far more efficient and effective in the last 10 years, but it has also stirred concerns about groundwater and air pollution.

Perry does not control the state’s top oil and gas regulators, who are elected (though Perry has appointed the most recent commissioner, Barry Smitherman, after the position came open, and also appointed Victor Carrillo, who was subsequently re-elected, in 2003). But he has spoken out in support of fracking. Last week in Iowa, he accused the Obama administration of “trying to scare people, and saying that hydraulic fracking somehow or another is going to damage the groundwater.” He said that he knew of no cases in which fracking had affected groundwater, and that ample natural gas might even be lying beneath Iowa. 

This summer Perry signed a bill that requires disclosure of many chemicals in the fracking process. State Rep. Jim Keffer, R-Eastland, who was the bill’s champion, said that while the governor was “not that involved” in the legislative process,  “certainly at times where we needed a little push here and there, his staff was willing and able to do that.” Last year, Keffer noted, Perry served as chair of the Interstate Oil and Gas Compact Commission, which has developed a disclosure forum that Texas will use.

Perry also signed a bill in 2003 that made permanent (quietly, critics argue) a reduction in the severance tax paid on “high-cost gas,” which includes gas retrieved through hydraulic fracturing. This break came under scrutiny this session as the Legislature hunted around for new sources of revenue, but ultimately it remained in place.

The gas industry is a fan. “He’s been governor for 11 years, and he’s had a lot of opportunities to make mistakes and detract from the climate that has allowed us the predictability” to make investments, said David Blackmon, the Texas state committee chairman for America's Natural Gas Alliance. “And he hasn’t done that."

Coal

Under Perry, Texas has moved eagerly to build coal-fired power plants, even as many other states have stopped issuing permits for the plants because of pollution concerns.

In 2005, the governor issued an executive order that allowed a more rapid approval of coal plant permits. A major electric company, TXU, sought to build 11 coal-plant units, though those plans ultimately were scaled back after private equity firms bought the company and committed to environmental improvements. “The biggest thing Perry did on energy was to try to fast-track 11 coal plants,” said Jim Marston, the Texas head of the Environmental Defense Fund.  “And I think everybody in Texas ought to be glad that Perry’s plan failed.” 

The Texas Commission on Environmental Quality, the state’s environmental agency, which is headed by three Perry appointees, continues to award coal plant permits. Nine proposed plants have received permits, though just two have begun construction so far. (Nineteen coal plants already operate across the state.) Perry also lashes out regularly against the EPA, which wants to tighten restrictions on air pollutants like ozone and mercury that could shut down older coal plants. Texas is also leading the fight against federal greenhouse gas regulation. Technically Attorney General Greg Abbott, an elected official, is spearheading that fight, but Perry loses few chances to lay into the EPA, or his former associate Al Gore, on climate issues.

Perry has also been an outspoken fan of clean coal: He set up a coal-coal technology council in 2002 and signed a bill containing tax incentives for clean-coal plants two years ago.

Renewables

Arguably, Perry’s most interesting energy efforts have related to wind power, which has boomed under his administration. Today, after a decade of rapid growth, Texas is the nation’s wind leader.

The groundwork was laid by Bush, who in 1999 signed a major bill that — besides deregulating the electric sector — established a renewable energy requirement that kick-started wind development.

But Perry has added to that. In 2005, after bringing renewables onto the agenda during a special session of the Legislature, he signed a bill requiring Texas to have 5,880 megawatts of renewables capacity installed by 2015. The state has already surpassed that requirement, with more than 10,000 megawatts currently.

Perry has also strongly backed a $5 billion project to build transmission lines to ferry power from remote West Texas to big cities, despite strong opposition from landowners in places like the Hill Country and Palo Duro Canyon. “He has been a stalwart in defense of wind energy in this state — no question about it,” said Paul Sadler, executive director of the Wind Coalition. An extra charge of about $4 to $5 per month on Texans’ electric bills will pay for construction of the lines, a funding model often referred to as "socialized costs."

But Perry seems to be backing away from mandates (witness: the HPV walk-back), and his support for renewables has limits. Solar power advocates have been frustrated by his failure to support a requirement for nonwind renewables, which both the Legislature and the Public Utility Commission (whose commissioners Perry appoints) have considered but not acted on. Perry also, according to environmentalists, declined to support a bill this session that would have added $1 to most monthly residential electric bills to fund solar projects.

Asked about Perry's renewables policies, including why he supported one mandate but not another, Miner, Perry's spokesman, replied:

Texas adopted a small requirement (less than 10 percent of peak demand) for renewable energy in 1999 and 2005 with bipartisan support. To date, the market has always built more renewable energy than was required, so there was no significant impact on consumer prices. In fact, our state has already exceeded our 10,000 megawatt target set for 2015. The state did not pick winners and losers by mandating a specific renewable technology, which some have proposed; rather, we created a system to incent the development of the most economic renewable generation, which for our state was wind. If you mandate a specific technology, you run the risk of getting stuck with high costs, and such mandates have failed to pass the Legislature in the past. The state making a decision based on its own conditions is different than forcing a one-size-fits-all approach on the whole nation. For example, South Dakota, Texas, and other states in the Plains have great potential for wind because of the climate and geography; other states have good potential for solar, but that is not the same for every state. 

Nuclear

Texas finished building its two nuclear plants in the 1980s and 1990s, and plans for expansion appear stalled in the wake of the the disaster in Japan. But Perry has helped the industry in a few ways. In 2007, he signed a bill that lays out a process for decommissioning the reactors — including a provision that passes the costs onto Texas ratepayers, in the event that the operators' special funds cannot cover the full expense.

This summer, Perry also signed a bill that expands a West Texas dump site accepting low-level radioactive waste so that states other than Vermont and Texas can now send their waste to Andrews County. Dallas billionaire Harold Simmons, who along with his family is the majority owner of the company that will operate the site, has showered campaign contributions on mostly Republican candidates, including Perry.