Renewable energy proponents brace for last-minute attack on tax breaks for wind and solar

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Any day now.

That’s a phrase on the minds of renewable energy proponents who have been fighting to preserve what they say is a key tool for their industry.

In the waning days of the 86th legislative session, as House and Senate lawmakers spend hours debating and voting on bills, wind and solar groups are watching for any last-minute attempt to make renewable projects ineligible for a local tax abatement program that benefits all types of industrial and commercial developments.

They have good reason to be on high alert.

Ahead of the legislative session, the conservative Texas Public Policy Foundation — the Austin-based policy institute that is an ideological beacon for many Republicans — launched a crusade against renewable energy subsidies at all levels of government. Locally, the foundation has zeroed in on property tax abatements granted under chapters 312 and 313 of the state tax code that cities, counties, school districts and other taxing entities have wielded for almost two decades to lure oil refineries and — more recently — wind farms.

The crux of the foundation’s argument against renewable energy subsidies is that they distort the electric market, leading to artificially low prices.

The billions in taxpayer-funded subsidies that have been awarded to renewable projects at the local, state and federal level — $16 billion, according to the foundation — have “allowed renewable energy generators ... to sell their electricity at whatever price they need to get it onto the market, which drives prices low, into negative territory,” Bill Peacock, the foundation’s vice president for research, said in an interview earlier this year.

Yet while lawmakers are moving to renew both programs — Chapter 312 would otherwise expire this year, followed by 313 in 2022 — legislation that would strip renewables from the abatement programs has stalled.

But lawmakers always have the option of proposing last-minute amendments to bills just before the House or Senate votes on them.

And that’s what Jeffrey Clark, president of the pro-renewables Advanced Power Alliance, is expecting.

“There’s been an orchestrated misinformation campaign about renewable energy, so we’re on our toes responding to that,” he said.

The public sparring over renewables comes amid warnings from the state’s main electric grid operator that there may not be enough power generated this summer to meet demand.

But some energy experts say it’s cheap and abundant natural gas — not renewables — that is to blame for big market impacts such as the recent closure of several coal-fired power plants. (Many also believe that grid will perform just fine this summer, despite tight operating reserves.)

“The price declines in natural gas are responsible for 85 percent of reductions in … wholesale market prices; renewables are responsible for just a few percent,” said Joshua Rhodes, a researcher at the University of Texas at Austin’s Energy Institute. “Renewables are not the cause of the troubles that we’re having on the grid right now.”

Rhodes noted that the natural gas industry actually receives the bulk of state-level subsidies. A recent analysis by his institute found that Texas’ support for that cleaner-burning fossil fuel accounts for 64 percent of the overall support it provides to the energy sector and that fossil fuels receive about twice as much state support as renewables. That excludes state support for the construction of additional power transmission lines to bring wind energy from West Texas to the state’s urban areas, which the report said cannot be considered a true subsidy because the lines benefit utilities rather than wind farm developers, among other reasons.

Peacock countered in an email that "energy experts have a much more varied opinion."

The abatement programs have been unpopular for other reasons. Groups from across the political spectrum see them as corporate welfare, and Chapter 313 in particular has been a prime target because it allows school districts to waive most property taxes for industries even if those businesses might have moved within their boundaries without tax abatements — a loss in revenue the state must make up for.

But the renewable industry argues the programs are still needed to prop up wind farms, in particular, and have been a key component in Texas’ rise to becoming the top wind energy-producing state.

The Texas Public Policy Foundation wouldn’t say if it is working with lawmakers on last-minute bill amendments. Peacock noted in a statement that bills that would require more public participation in the abatement-granting process and require Texas to study the impact of renewables on the state’s electric market are moving forward.

“We are pleased that the Legislature is moving forward with bills that increase the opportunity for local citizens to participate in the 312/313 process and call for a study to examine the harm being caused by renewable energy subsidies,” he said. “And look forward to seeing these bills become law.”

Even if a lawmaker takes aim at tax abatements for renewables, rural Republican lawmakers whose districts have benefited from wind energy developments are likely to join with Democrats to block that effort. And the oil and gas industry, which has been a financial supporter of the foundation, has largely stayed out of the fray, backing legislation that extends 312 and 313 without tweaking eligibility.

Any reforms to the programs “must be focused on attracting more capital and jobs to Texas,” Todd Staples, president of the Texas Oil and Gas Association, said in a statement at the beginning of the session, outlining the group’s legislative priorities.

Disclosure: The University of Texas at Austin has been a financial supporter of The Texas Tribune, a nonprofit, nonpartisan news organization that is funded in part by donations from members, foundations and corporate sponsors. Financial supporters play no role in the Tribune's journalism. Find a complete list of them here.

Correction: A previous version of this story incorrectly stated that legislation hasn't been filed that would strip renewables from the Chapter 312 and 313 programs. Such legislation has been filed but has failed to gain traction.