Natural gas squares off against competitors for Texas emissions money


Highlights

Lt. Gov. Dan Patrick has made natural gas program extensions a priority.

But natural gas programs are not the most efficient reducer of smog-forming pollutants.

Far from the more prominent disputes over bathrooms and gender or the disposal of fetal tissue, a more arcane battle, but one worth tens of millions of dollars, is brewing this legislative session.

The natural gas industry is squaring off against an odd-bedfellow coalition of environmentalists and big business over the size of their shares of a pot of air quality improvement money.

As with so much this session, the man in the middle appears to be Lt. Gov. Dan Patrick, who has strong ties to the gas industry and is pushing lawmakers to extend a suite of programs that promote the use of natural gas in cars and trucks that are set to expire. The environmentalist-business coalition says the programs — in the form of grants or mandates involving state fleets or the construction of natural gas refueling stations — don’t actually do that much to improve air quality and that the money would be better spent in other ways.

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A big pot of money is involved — about $235 million is being spent this biennium out of the Texas Emissions Reduction Plan fund. The money comes from a variety of vehicle fees and surcharges, especially those in the smoggier areas of the state, including Austin.

The state Legislature established the Texas Emissions Reduction Plan in 2001 to provide voluntary incentives to eligible individuals, businesses or local governments to reduce emissions and improve air quality in Texas.

The plan offers incentives to convert or replace dirty engines with cleaner ones. Five of the incentive grant programs are designed to encourage the use of vehicles that take alternative fuels, which generally have fewer tailpipe emissions than gasoline and diesel. Those alternative fuel programs will expire in 2017 and 2018 if they are not renewed this session.

The remainder of the Texas Emissions Reduction Plan, whose more than $1 billion fund balance has been used to certify the budget, will expire in 2019 if not extended.

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Legislative proposals would extend the current programs and expand them. One measure, for example, would require that any state agency that operates a fleet of more than 15 vehicles replace them with vehicles that use compressed natural gas, liquefied natural gas, hydrogen fuel cells or electricity.

The natural gas industry argues that the programs are more important than ever, a way to support a homegrown Texas fuel that’s critical to the state’s economy and facing an uncertain period.

The emissions reduction programs are meant to bring the state’s polluted areas into compliance with federal pollution standards. But environmentalists who care chiefly about air quality and the businesses that operate in those areas say the natural gas programs are a relatively inefficient way to improve air quality.

About a third of the emissions reduction program appropriation goes to alternative fuel programs, which often emphasize natural gas. Through these programs, taken together, it costs about $68,000 to cut 1 ton of one smog pollutant — nitrogen oxide. By comparison, it costs $10,000 to remove 1 ton of nitrogen oxide through the diesel emissions reduction program, according to data from the Texas Commission on Environmental Quality.

A 2016 report by the state Senate Natural Resources and Economic Development Committee, headed by Sen. Craig Estes, R-Wichita Falls, recommended that “the Legislature should appropriate the overwhelming majority of the increased funding to the diesel emission reduction incentive program.”

Still, the natural gas measures appear likely to get extended: Similar measures passed the Senate in 2015 and made it out of committee in the House. Estes himself is carrying Senate Bill 26, despite his committee’s lukewarm report before the session kicked off.

That might be because the measure is a priority for Patrick. (State Rep. Brooks Landgraf, R-Odessa, who serves on key committees in the House, is carrying companion legislation.)

Patrick got about 16 percent of the campaign cash he raised between 2013 and 2016 from the oil and gas industry; Estes got about 10 percent; and Landgraf, who hails from the oil-rich Permian Basin, got 19 percent.

“Texas has significantly improved air quality over the last 30 years,” Estes said upon filing the bill in January, “and this bill will continue that progress without damaging our economy.

“Legislators, have a duty to ensure that our children, grandchildren and future generations have both clean air and a strong economy,” he said. “This bill keeps Texas on track to have both.”

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Neither Estes nor Patrick responded to a request for comment.

Landgraf told the American-Statesman the gas programs are part of the overall solution for improving air quality while using a key, abundant Texas natural resource.

Natural gas development “helps schools, improves tax base and adds money to the rainy day fund,” said Kirk Edwards, a past president of the Permian Basin Petroleum Association, president of Latigo Petroleum and a member of Patrick’s energy advisory committee. Burning gas, he said, “is way cleaner than burning diesel or gasoline.”

Steve Minick, who worked from 1984 to 2008 at the Commission on Environmental Quality, the state agency that administers the emissions reduction program, and now does government affairs work for the Texas Association of Business, said the emissions reduction fund has been eyed for all sorts of purposes in recent years.

“There are always people at the fringes looking at a large revenue stream that isn’t being spent and wondering what we can do with it,” he said.

Last session, for example, the gas industry collaborated with environmental groups to fend off efforts to raid the fund for state highway projects.

“We recognize the value of using a domestic energy product to improve our fleets,” Minick said, “but we should not be spending money on natural gas vehicles until we’ve exhausted cost-effective control methods in order of their effectiveness.”

The conventional wisdom, said Cyrus Reed, conservation director of the state chapter of the Sierra Club, is that the program extensions “would primarily benefit natural gas trucks and conversion.”

Texas Natural Gas Foundation Executive Director Heather Ball said the programs were not a subsidy as much as an investment by the state.

“There are upturns and downturns in the oil and gas industry in Texas,” Ball said. “Part of the role of these programs is to even that out.”



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