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Two bills that were advanced by the Texas Legislature this week attempt to protect the state’s oil and gas industry from efforts to reduce greenhouse gas emissions.
The House on Tuesday gave its final approval to Senate Bill 13, which would require state entities — including state pension funds and Texas’ massive K-12 school endowment — to divest from companies that cut ties with or “boycott” fossil fuel companies. The legislation bites back at some Wall Street investors that have pulled financial support for the oil industry in an effort to curb carbon emissions that contribute to climate change.
“Oil and gas is the lifeblood of the Texas economy,” state Rep. Phil King, R-Weatherford, said on the House floor Monday. “In the world of capital, there’s a movement to deny funds to businesses that will not sign on to extreme anti-fossil fuel policy.”
The bill will be reviewed again in the Senate with the new amendment before it heads to the governor’s desk.
In the Senate, lawmakers on Tuesday sent a bill to Gov. Greg Abbott that would bar local municipalities from banning natural gas as a fuel source when constructing new homes, subdivisions and other buildings. It’s a response to trends in California and other states where cities have, in climate action plans, required new homes or buildings be heated with electricity, rather than gas, to reduce greenhouse gas emissions.
At least a dozen similar bills have been filed in states including Kansas, Minnesota and Ohio. In Texas, however, House Bill 17 has been pushed as a response to the power outages caused by the February winter storm and resulting power crisis. The bill would prevent cities or municipalities from “discriminating” against natural gas by barring them from restricting the use of a utility provider.
Abbott is likely to sign the bill to prohibit bans on gas having announced his support for legislation that prohibits counties from restricting use of natural gas appliances while visiting Midland in January.
Senate Bill 13 also has the support of top Republican leaders in the state. In February, Lt. Gov. Dan Patrick said legislation to prohibit the state from doing business with firms that “boycott” oil and gas companies was a priority and would “pass easily,” according to the Austin American-Statesman.
House Democrats who voted no on SB 13 called the bill anti-free speech, and argued that Texas should pursue legislation that rewards industries important to Texas, rather than punishing others.
“We say we want to protect people’s ability to speak their mind, but once again, we have another bill that does the opposite,” said state Rep. Gene Wu, D-Houston. “We punish companies for their thoughts and internal policies, whether they carry them out or not. We punish thought. We punish speech.”
Pressure is increasing on Wall Street for companies and investment funds to reduce financial support for oil and gas companies due to the outsized impact the industry has on carbon emissions that contribute to climate change. Last year, Larry Fink, founder and chief executive of BlackRock, one of the world’s largest investment companies, wrote to shareholders that the firm would make climate change “a defining factor” in its investment strategy.
King said he spoke to an engineer in the energy industry who said the “virtue signaling” by BlackRock has changed capital availability to oil companies.
Senate Bill 13 would require the state’s comptroller to create a list of publicly traded investment companies that “boycott” energy companies, which would be used by the state-run investment funds to guide disinvestments. Texas state funds identified in the bill include the $46 billion Texas Permanent School Fund, the largest such K-12 fund in the U.S; the Teacher Retirement System of Texas, which manages nearly $165 billion in investments; and the Employees Retirement System of Texas and Texas Municipal Retirement System of Texas, which each manage $31 billion.
An amendment in the House, however, says the requirement wouldn’t apply if the fund determines that doing so would be inconsistent with its fiduciary duties.