Renewable energy is booming in Texas as a result of recent legislation and an innovative system of credit trading. Mike Sloan explains how the system has evolved and considers where it might lead in the future.
Texas, the quintessential oil and gas state, is expected to install around 1,000MW of new renewable energy power plants this year – more than has been built in the state during the previous 100 years. The state’s emergence as one of North America’s most active renewable energy markets has much to do with recent actions revamping the Texas electric utility industry. The restructuring effort included a mandate that sellers of electricity must, in future, obtain a specified amount of renewable energy and facilitated the creation of a system for tradeable renewable energy credits (RECs).Tradeable credits represent an intriguing new instrument for environmental traders and are a significant development in the quest for cost efficiencies in improving environmental quality.