Understanding the Texas Blackouts, Prospects for Climate Legislation, and More

Cole Martin, Charlotte Rosenblum, and Elizabeth Wason

Each week, we’re compiling the most relevant news stories from diverse sources online, connecting the latest environmental and energy economics research to global current events, real-time public discourse, and policy decisions. Here are some questions we’re asking and addressing with our research chops this week:

Given last week’s electricity crisis in Texas and last year’s rolling outages in California, what can policymakers and grid operators across the nation do to keep the power on?

An unexpectedly severe winter storm in Texas brought the state’s grid to the brink of collapse last week, sending energy bills skyrocketing, prompting outages in millions of households, and resulting in dozens of deaths. Power has since been restored to most of the state, but the fallout of the crisis will linger for much longer. Already, four board members from the Electric Reliability Council of Texas, which manages the state’s grid, have resigned, and both state and federal policymakers are calling for investigations of what went wrong. The crisis likely was exacerbated by the unique grid system in Texas—which is isolated from other grids and is largely unregulated—and the local energy infrastructure, which was unprepared to withstand the winter weather. The situation in Texas resembles a smaller but similar crisis that forced rolling blackouts in California last year; both incidents underscore the challenges grid operators face as they prepare the nation’s energy infrastructure for the accumulating, and increasingly severe, weather events that will come with climate change.

On a new episode of the Resources Radio podcast, Severin Borenstein, a Haas School of Business professor at the University of California, Berkeley, and a member of the Board of Governors of the California Independent System Operator, reflects on lessons learned from California’s blackouts and offers guidance to policymakers in the wake of the Texas crisis. The immediate cause of both events was extreme weather conditions—an “unprecedented heat wave” in California and “extreme cold” in Texas—but Borenstein points to other factors, such as increasing renewable penetration, which grid operators need to take into account as well. Texas could improve its grid by employing more stringent resource adequacy requirements, like those that exist in California. And both grid systems could benefit from penalties for energy operators that do not meet demand in critical moments, along with more granular data on when resources will be available. “The way we’ve drawn the requirements don’t actually match the realities of production,” Borenstein concludes.

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President Joe Biden has used executive orders to assert his support for climate action and now is poised to include climate provisions in a major infrastructure package. Does the American public back the Biden administration’s environmental plans?

President Biden has signaled his commitment to climate action by reentering the Paris Agreement, appointing climate-focused officials to top positions, and issuing executive orders with far-reaching implications for US emissions. Now, the administration has plans for “addressing the climate crisis head-on” in a forthcoming economic recovery package oriented mostly around infrastructure. What such legislation could look like remains unclear, though Senator Chuck Schumer (D-NY) has pushed a plan to speed the deployment of electric vehicles, and some business groups have called for market-based incentives to reduce emissions. Given the narrowly divided Senate and the failure of the previous Democratic administration to align around major climate policy, however, such a package is far from guaranteed to garner broad support. Actions taken by the Biden administration, such as pausing new oil and gas leases on federal lands, already have alienated some legislators, while other possible policies, such as a carbon tax or a clean energy standard, could face resistance from policymakers in energy-producing states.

But as a recent series of RFF reports makes clear, support for climate action is strong across party lines and even in states with robust fossil fuel sectors. And in a new synthesis report released this week, RFF University Fellow Jon A. Krosnick and Stanford University’s Bo MacInnis and Jared McDonald present all the major findings from their survey series. In the report’s conclusion, Krosnick and coauthors reflect on how environmental policy has already shifted since they conducted their surveys, given the Biden administration’s climate-related executive orders and new commitments from companies to reduce their emissions. “The president’s decision to focus a great deal of his initial policymaking efforts on climate change … is, in spirit, very much in line with this report’s evidence that the American public is supportive of government efforts to reduce future greenhouse gas emissions,” they write.

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To reduce greenhouse gas emissions without imposing undue economic burdens, how might the US Department of the Interior under the Biden administration approach limits on new oil and gas leases on federal lands?

This week, the US Senate Committee on Energy and Natural Resources held a confirmation hearing for Representative Deb Haaland (D-NM), President Joe Biden’s nominee for Secretary of the Interior. During her Senate testimony, Haaland was probed in particular about Biden’s 60-day suspension of new oil and gas leases on federal lands, which, if made permanent, would fulfill a promise Biden made during his campaign. While Haaland promised that fossil fuels would continue to “play a major role” in US energy production, some senators voiced their objections to restrictions on new leases, citing concerns over revenue loss in energy-producing states such as Wyoming and New Mexico. In 2020, federal oil and gas leases raised more than $8 billion, much of which was distributed among states and counties or used to fund reclamation efforts and conservation. However, oil and gas production on federal lands currently accounts for nearly 25 percent of US greenhouse gas emissions—a potential obstacle to Biden’s promise of swift action on climate change.

In a recent article, RFF Fellow Brian Prest—who contends that the order pausing new oil and gas leases leaves room for reforms other than a permanent leasing moratorium—outlines policy options that the Biden administration could consider while reevaluating fossil fuel leases on federal lands. These policy mechanisms include modifying royalties by charging a “carbon adder” on new oil and gas leases, potentially based on the social cost of carbon. Although a carbon adder reduces emissions by just two-thirds as much as a leasing ban, such a policy could generate $7 billion in annual revenue, while a leasing ban would cost nearly $6 billion. “A carbon adder also could be an easier political lift than a leasing ban,” says Prest, “as it still allows companies access to federal land, but only for projects that can pass a benefit-cost hurdle that accounts for climate damages.” For many more insights about how the Biden administration can take an effective approach to climate policy, check out the new issue of Resources magazine.

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