State leaders vow to exclude renewable energy from any revived economic incentive program

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As Gov. Greg Abbott signals stronger support for the creation of a new program to replace a multibillion dollar corporate tax break program that expired last year, he’s also drawing a clear line in the sand: wind and solar energy projects need not apply.

“I support [the program] not providing economic incentives for renewables,” Abbott said during a news conference in Austin. “There’s already federal incentives for renewable projects, and those will continue to be allowed. As it concerns especially energy and power and the power grid, our focus is on dispatchable power,” such as natural gas or coal.

Abbott’s comments lay down a clear marker as a massive coalition of business groups try to revamp Texas’ economic development tools following the expiration of the program known as Chapter 313. In 2021, the Texas Senate declined to consider a bill extending the program, which discounted local property taxes to lure big companies to the state. It had become plagued with bipartisan accusations of “corporate welfare.”

For Republicans, one of the most contentious aspects of Chapter 313 was how much it was benefiting renewable energy projects. Lt. Gov. Dan Patrick boasted in January that he killed the program because it had been “misused,” claiming “about 60% of all 313 projects were renewable windmills.”

Renewable energy has proliferated in Texas: The number of wind turbines has grown significantly over the past decade, and the number of solar farms is rising, too. Texas produces more wind energy than any other state. It rivals California for solar. Both types of power don’t pollute the air and are cheap, generally beating out sources such as natural gas to sell the electricity they produce.

Small, rural counties especially benefited from using Chapter 313 to bring renewable energy companies to their areas, said Judd Messer, Texas vice president of the Advanced Power Alliance, in a statement. Those companies generated funding for local schools, government and landowners.

“It would be unfortunate for Texas to risk the continued economic prosperity of these rural communities by enacting an economic development program that is exclusionary in nature,” Messer said.

Abbott’s comments come a day after state House Speaker Dade Phelan gave priority status to a new bill that seeks to chart a post-Chapter 313 future for economic development in Texas. That legislation, House Bill 5, is light on details as written but appears to leave the door open for it to benefit renewable energy projects.

Asked about that bill Wednesday, Abbott applauded it as “an innovative approach” but did not explicitly endorse it. He said it is “one potential idea, and there will be others.”

Both Abbott and Phelan are keenly interested in finding a way to beef up Texas’ economic development tools after the expiration of Chapter 313. But it is less clear what Patrick will tolerate in the Senate, especially as he pushes aggressively to build more natural gas capacity across the state in response to the 2021 power grid collapse.

In response to that storm, the Legislature is considering a change to the electricity market that is designed to provide a financial incentive for more weather-independent resources, such as natural gas-fueled plants and batteries, to be built. The House and Senate have both been debating the Public Utility Commission’s controversial plan to do that. It is expected to increase electricity costs, and some experts don’t think it will work.

Patrick said in January that renewable energy resources are “fine to have, keep energy price low and helps the environment, but you have to have enough dispatchable to meet the needs” of the state.

On Wednesday, one of Patrick’s lieutenants in the Senate, Sen. Bryan Hughes, R-Mineola, also made clear that renewable energy projects would be a red line for him in considering any post-Chapter 313 proposal.

“Let me be clear,” Hughes said at an event in Austin. “If there is a proposal for a new economic development program, to give incentives, if it has wind and solar, I’m not just gonna vote no. I’m gonna do everything I can to kill it. I can tell you that will not pass the Texas Senate with wind and solar in it.”

Hughes’ comments were seconded by state Rep. Charlie Geren, R-Fort Worth, a powerful House veteran who serves as Phelan’s speaker pro tem. “I agree,” Geren tweeted.

Hughes made the comments on a panel discussion for the Texas Public Policy Foundation alongside Comptroller Glenn Hegar, whose office was responsible for reviewing Chapter 313 applications. He said two-thirds of the Chapter 313 agreements that were signed in 2022 — the last year of the program — were for renewable energy projects.

​​“That was the biggest … state-of-Texas program that enabled more renewable wind and solar,” Hegar said.

Emily Foxhall contributed to this report.

Disclosure: The Advanced Power Alliance and Texas Public Policy Foundation have been financial supporters 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.