Texas Comptroller of Public Accounts

Texas Comptroller of Public Accounts, Glenn Hegar

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For Immediate Release
June 17, 2009

Cap and Trade: The Best Way Forward for Texas?

By Susan Combs
Texas Comptroller of Public Accounts

As Texans swelter this summer, we are turning up our air conditioning and hitting the road for vacation. These seasonal routines — as well as many aspects of daily life — would become more expensive because of proposals pending in Washington.

The cap and trade provisions of the American Clean Energy and Security Act of 2009 will have a significant impact on Texas families, businesses and consumers.

The legislation would cap emissions and allow companies to buy and sell their rights to emit carbon dioxide. The concept is that industries would reduce emissions over time as the government lowered the cap and it became too expensive for companies to continue to buy allowances to emit carbon dioxide.

I am worried about the disproportionate impact on the Texas economy.

Texas has the nation’s second largest population and a high concentration of energy-intensive industries producing products used around the world. These and other factors, such as our climate, make Texas one of the country’s leading energy users.

The proposal to regulate greenhouse gas emissions will weigh far more on Texas than other regions.  Costs will increase for energy-intensive industries such as aluminum, chemicals, forest products, glass manufacturing and petroleum refining, among others. Houston, the corporate home to more energy companies than anywhere else in the world, could be especially hard hit.

Many studies of the legislation show decreased employment and increased energy prices. My office’s initial look at the cap and trade provisions of the bill concluded that Texas could lose 135,000 to 277,000 jobs in 2012. Those losses could increase up to 400,000 by the year 2030. 

The impact would fall disproportionately on Texas but the legislation’s impact will be felt nationwide as higher costs are passed to every sector of the economy.

Texans will pay more to fuel their vehicles, cool their homes and purchase everyday goods. Our office estimates that as a result of the cap and trade provisions of current legislation, the typical Texas household might spend up to $1,100 a year more on goods and services. This includes ordinary items such as diapers, cell phones, aspirin and lipstick. 

Texas has been blessed. Our diverse economy has helped the state weather the recession. But, as Texans look to the future, we must employ all of our resources to sustain our prosperity and global economic competitiveness as we address environmental concerns.

Our experience with a diverse energy industry can help achieve environmental goals with innovation instead of burdening vital industries with too much regulation.

A leader in oil and gas production, Texas is already enhancing its renewable energy potential and making its industries even more efficient.

Just this month, the Pew Charitable Trusts identified Texas as a leader in creating clean energy jobs. Employment in the emerging field has grown 15.5 percent in the past decade.

Texas is the nation’s leader in wind energy, with almost three times the megawatts of the next closest state, Iowa. New transmission lines under construction will increase our wind energy capacity to more than 18,000 megawatts.

Texas also has enormous potential to develop solar, nuclear, biomass and other alternative sources of energy. And to stay competitive, Texas businesses are constantly finding ways to be more energy efficient.

As a result, our economy’s energy intensity — a measure of how much energy is used per unit of output — fell by almost 68 percent between 1970 and 2005. 

Congress should stop its rush to pass this legislation without ensuring that its burdens and benefits will flow fairly to everyone. A clean environment is everyone’s goal, but it is rational and appropriate to look at the costs.

Learn more on our Cap and Trade Web site.


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