TPPF Energy Report Shows Lack of Vision

Keynote’s promotion of coal leans heavily on unrealistic view of the Texas energy market

In a forum held last Thursday the conservative Texas Public Policy Foundation (TPPF) unveiled a report that attempts to sway the debate about Texas energy policy off its current trajectory – namely ideas put forward by high-profile Republicans officials like Lt. Gov. David Dewhurst and Senator Troy Fraser to help transition the state’s electric supply away from coal and towards natural gas.

Unfortunately, the report wasn’t precisely accurate in its representation of the facts. Here’s perhaps the most important chart in the entire TPPF report (entitled Texas Energy and the Energy of Texas co-authored by Dr. Steven Hayward who was the forum’s keynote speaker) with a couple modifications to try and make it a little more accurate:

Modified chart from TPPF report

As you will note from my (clearly marked) changes, TPPF was not presenting the actual cost of electricity from different fuel sources, but the cost of the fuels themselves. That makes the chart inaccurate since the cost of electricity also depends on things like the cost of building a power plant. Of course that’s a minor expenditure of only several billion dollars in the case of most coal and nuclear plants and hundreds of millions of dollars for natural gas plants.

The TPPF chart was also misleading in three important ways, and one can only really conclude that it was intentionally so.

  1. They used the price of natural gas from 2008 when it hit an anomalous record high – natural gas prices are now less than half of what they were 2 years ago
  2. They left wind and solar off the cart entirely

Think about it – TPPF and the American Enterprise Institute (where Dr. Hayward is a research fellow) have been saying for years that renewable energy is just too darn expensive. But they left those technologies off a chart that would clearly show exactly that… why?

Once you realize they’re actually showing the cost of fuel, it becomes obvious why wind and solar aren’t on the chart – their fuel costs are zero. Wind and sunshine are free (at least for now, I’m really looking forward to the first think tank to propose commodifying those resources, too). A chart showing the fuel costs of wind and solar being below those of any traditional technology is just too much nuance for an ideologue and it might confuse the faithful, so they decided to leave that inconvenient fact out.

So it looks like Texas will not be immune to the infighting between pragmatic Republicans who want to govern effectively and conservative ideologues drunk with power after a Tea Party infused election cycle.

According to the report, “Texas should not do to the energy sector what it would not do to any other sector of its economy.” In other words, let the free market make decisions based on profitability alone.

So while most Americans are still feeling the effects of a major recession caused by a failure to adequately regulate financial markets, TPPF is suggesting government get its grubby hands off our energy producers, too.

But there’s a small problem – if you think scarce liquid credit can tank an economy, just wait until you see what poor energy planning can do.

For example, let’s say we take TPPF’s advice and keep building coal plants – it’s the cheapest way to make electricity and everyone acknowledges that climate change policy is a non-starter this Congress. But what happens if, say, the Democrats win back the White House and their majorities in 2012? Or if an ice sheet the size of Ohio pops off of Greenland and scares some sense into climate-deniers? Cap-and-trade could move forward, and suddenly Texas would be saddled with a 30 year supply of really really expensive energy.

Remember, what makes a profit in this quarter may bankrupt you in the next.

This is why governments tend to get involved in guiding energy production. What Dewhurst and Fraser are so far proposing is to take advantage of natural gas prices that have dropped and have every appearance of being stable to start cleaning up our electricity production. It’s economical, natural gas is produced in abundance in Texas which is good for jobs and the state tax-base, and while it is far from carbon-neutral or emissions-free it is a drastic improvement over coal for all Texans who breathe air.

Premising their entire argument on a fundamentally flawed assumption was one thing, but TPPF and Dr. Hayward went a bridge too far when they decided to sell their conclusions on misconstrued data and inarticulate ideology.

I’ve already explained their flawed presentation of data, so now let’s examine the rhetoric. During his presentation, Dr. Hayward warned that fuel-switching legislation (that is, policies that would move us away from coal and towards natural gas) could somehow contradict or undo Governor Perry’s efforts to stop the EPA from regulating air permits in Texas. When he was asked to elaborate on what he meant by that (the questioner worked for another conservative think tank) Dr. Hayward stumbled through an inarticulate confession that fuel-switching legislation wasn’t “exactly” the same as what the EPA was doing in taking over Texas air permitting.

The truth is that Dr. Hayward was trying to rally the troops against fuel-switching proposals by invoking a popular conservative cause. The problem is that, in fact, he got it exactly wrong.

Governor Perry’s popular offensive against the EPA is based on the idea of states’ rights. In defending the TCEQ, Perry is basically saying that “unelected bureaucrats” in Washington (like EPA director Lisa Jackson and the justices on the US Supreme Court) shouldn’t tell Texans how to run their economy. Fuel-switching, on the other hand, is an idea developed right here in Texas by a Republican state senator and a Republican lieutenant governor.

I’ll conclude all of this by saying there is one thing in the TPPF report I do agree with, and it’s right on the first page. It says “Just as the Midwest is regarded as the “breadbasket of America,” Texas should be regarded as the “energy breadbasket of America.” It turns out that Texas has the greatest renewable energy potential of any state in the country. We should create policies that will let Texas export clean energy, and as a result, clean energy technologies that could be developed and manufactured right here. Doing that is going to take a little bit of vision, and at present TPPF can’t see past its own nose.


By promoting cleaner energy, cleaner government, and cleaner air for all Texans, we hope to provide for a healthy place to live and prosper. We are Public Citizen Texas.