Investment plan

Abbott Hedges Grid bets as EU advances controversial green investment plan

Texas Governor Greg Abbott hedged his bets yesterday at a Texas grid integrity news conference as another winter storm approaches the Lone Star State.

While reassuring Texans of the overall integrity of the network, Abbott, who told everyone within earshot that “I guarantee” the network would not fail in any weather event this winter for 3 months, said yesterday that neither he nor anyone else could guarantee that any Texans would experience power outages during this storm.

“Either the ice on the power lines … could cause a power line to fall, or the ice on the trees that would cause a tree to fall on the power lines,” Abbott said, as reported by the Texas Tribune.

He’s right, of course, but he didn’t throw that qualifier in every time he made his absolute “guarantee” on the overall integrity of the grid. ERCOT officials, meanwhile, issued a winter weather advisory, highlighting their estimate that they will have 15,000 megawatts of excess generating capacity during this storm. While this is likely an accurate number thanks to around 13,000 MW being added to the grid in 2021, everyone should understand that almost all of this new capacity is in the form of wind and solar power.

Researchers at Rice University’s Baker Institute demonstrated last fall that wind and solar power were the first generation sources to disconnect from the grid when winter storm Uri rolled into Texas last February. Since the PUC has no requirements in place for wind or solar installations to winterize, they will likely be the first to disconnect from the grid when ice sets in from this storm.

The Grid will most likely weather this storm – which pales in comparison to Uri – just fine, meaning Abbott will likely survive in his re-election bid as well. But no one should think that means the Texas grid has been fixed, because it certainly isn’t.

In Europe, meanwhile, the European Commission (EC), an executive arm of the European Union (EU), has advanced its plan to declare many natural gas- or nuclear-powered power plants as projects. “green” qualified for the purposes of qualified sustainable development. invest. On Wednesday, as reported by The Wall Street Journal, the EC released its revised proposal, containing some revisions to qualification requirements.

The plan’s advancement comes despite objections from several EU member countries, including Austria and Luxembourg, who have both threatened to sue the EC if the plan is ultimately passed. But other EU members have chosen to support the proposal, which is part of the EU’s ‘green taxonomy’, which details the requirements of the sustainable investment criteria, as the European continent faces a potential energy crisis this winter.

“People need a reference, to say ‘I can hang my hat on something,’ and I think that’s where taxonomy comes in,” said law firm partner Shashank Krishna. Baker Botts, specializing in sustainable energy investments. “Depending on how this whole gas versus nuclear debate evolves, it could actually become, by default, the global benchmark.”

This would be a positive development, both for Europe and for the rest of the world, given the increasingly clear reality that, despite the green dreams expressed in the ‘energy transition’ discourse, the world will need more of all forms of energy in the future. . Efforts by governments and ESG investors to hamper investment in oil and natural gas in recent years are partly responsible for today’s high oil prices and surprisingly high natural gas prices in Europe today. Any official decision to remove these restrictions will serve as a mitigating factor for future cost increases.

Specific to the proposal, the international climate change investor group, which controls trillions of dollars of investment, has called for the removal of natural gas from the EU plan. EU member countries will now have up to 6 months to review and consider it before having to vote to approve or reject it.

Their ultimate vote will be a choice between policies of energy abundance and affordability versus policies of energy deprivation and instability. Given the current situation on the European continent, this would seem a fairly easy choice to make.