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How will the $750B climate bill affect Texas?

The Lone Star State has always been known as an “oil and gas state” as it leads the nation in the production of both resources. It is also in the top 10 for coal mining. But for 16 years, Texas has also been first in wind power generation and ranks No. 2 in solar power behind California.

Energy analysts say Texas stands to benefit greatly from the recently passed Inflation Reduction Act, which includes three-quarters of a trillion dollars to reduce the effects of climate change. Last year, Texas was one of a few states that saw significant growth in clean energy jobs, including investments in solar and wind energy as well as the batteries to store it.

Provisions of the climate legislation

About half of the law’s funding – $370 billion – creates tax credits for producing clean energy and building energy-efficient vehicles and appliances. In addition to incentives for wind and solar projects, money is included for hydrogen fuel along with inducements for power companies to reduce carbon emissions.

The law contains a program that tries to reduce significant methane emissions, forcing some energy producers that exceed standards to pay a fee. Analysts say some of that will be offset by $1 billion in loans, grants and incentives for larger emitters to update their facilities with cleaner technology. However, Texas must decide whether to accept this funding.

The law encourages big advances in green energy projects

University of Texas, Austin professor and wind energy expert Michael Webber says the most obvious sign of the increased funding will be new solar and wind projects. Current data shows Texas has more capacity for wind energy than most countries, except the U.S., China, India and Germany.

The state’s current wind energy output is 36.8 gigawatts, followed by Iowa and Oklahoma. That number is expected to increase greatly in the coming two years as nearly two dozen wind power projects expected to go online were planned before the law was passed.

Wind and solar accounted for 23% of the state’s energy demand last year. With the provisions included in the law, many say that it could be as high as 50% by 2025.

Does the law portend the end for fossil fuels?

While the oil and natural gas supply is finite, the new law is not expected to induce the swift demise of carbon-emitting fuels. Some analysts say all Texas energy industries should benefit from increased renewables, upgraded transmission lines and batteries. Many expect Texas’ oil and gas production to survive longer than others due to low-cost resources and world-class infrastructure.

Analysts add that Texas oil and gas exports could gain a competitive advantage as energy companies reduce methane emissions and the power grid becomes more efficient. For those reasons and others, Exxon Mobil CEO Darren Woods signaled cautious support before the legislation was approved.

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