Texas Bill Would Require REPs To Meet Portfolio Standard For Zero-Carbon Resources

January 13, 2021

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Reporting by Paul Ring • ring@energychoicematters.com

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A bill, H.B. No. 685, has been filed in the Texas Senate that would establish a state goal for, "competitive zero-carbon electric generation."

The bill defines "zero-carbon energy technology" as a technology that relies exclusively on an energy source that does not emit a greenhouse gas in the production of electricity. The term includes a technology that effectively captures and sequesters greenhouse gases before their release into the atmosphere.

The bill provides that it is the "intent" of the legislature that the amount of electric power generated in this state from zero-carbon energy technology for delivery by a retail electric provider, municipally owned utility, or electric cooperative each year will increase to meet the following percentages on or before the specified dates:

(1) by January 1, 2025, not less than 65 percent of the annual total;

(2) by January 1, 2030, not less than 85 percent of the annual total; and

(3) by January 1, 2035, 100 percent of the annual total.

The bill provides that the PUC by rule shall:

(1) establish the minimum annual zero-carbon energy technology generation requirement for each retail electric provider, municipally owned utility, and electric cooperative operating in this state in a manner designed to produce, on a statewide basis, compliance with the requirement prescribed above

(2) specify reasonable standards that zero-carbon energy generation must meet to count toward compliance with the requirement prescribed above and that:

(A) are designed and operated so as to maximize the use of all resources available to meet electric demand and reliability needs from the capacity additions in accordance with then-current industry standards; and

(B) encourage the development, construction, and operation of new zero-carbon energy technology projects at sites in this state that have the greatest economic potential for capture and development of resources for zero-carbon energy technology.

The bill would require that the PUC develop a zero-carbon energy generation credits trading program.

The bill would require that the PUC establish a means for a retail electric provider, municipally owned utility, or electric cooperative to satisfy the zero carbon requirements by generating electricity using biomass fuel instead of directly owning or purchasing energy generated using zero-carbon energy technologies.

Under the bill, the PUC may cap the price of zero-carbon energy credits and may suspend the goal established above as necessary to protect the reliability and operation of the grid. A price cap established must equal or exceed the social cost of carbon as determined by the United States Environmental Protection Agency.

Under the bill, the PUC shall establish a carbon offset alternative payment program. An entity required to purchase a zero-carbon energy generation credit may choose to purchase and apply a carbon capture and sequestration credit instead of a zero-carbon energy generation credit toward the satisfaction of the entity's obligation. A carbon capture and sequestration credit must be purchased through a marketplace certified by the commission to offset the same amount of carbon as is produced by the entity's carbon energy generation. The offset payment must equal or exceed the social cost of carbon as determined by the United States Environmental Protection Agency. In implementing this provision, the commission shall consider: (1) the effects of zero-carbon energy credit prices on electric rates; and (2) the effects of the carbon offset alternative payments on the zero-carbon energy credit market.

The bill is authored by Sen. Sarah Eckhardt, D

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