The climate-driven crisis in Texas warrants our attention first and foremost because of the scale of the suffering and loss experienced by millions. It should also grab your attention because it is an object lesson about infrastructure resilience, the free market, and domestic politics. To understand the root causes of the Texas case, it is important to realize that the Texas energy market is unregulated. Texas chose to let the market drive investment with the notion that an unregulated market would lower consumer costs, and that would be a good thing for consumers. Maybe it was, until last week when it clearly wasn’t. But why?
An unregulated market that focusses on price lacks both the incentive and requirement that someone pay attention to the health and reliability of the entire system. Individual actors respond to price signals that place the emphasis on profit, and nothing forces the reinvestment of just even a small amount of capital into making sure that the energy system is prepared for stress. Given that most of the energy supply agreements are pegged to the market price of fuels, and the general lack of public understanding of that risk by the buying public, the suppliers just pass on price hikes to their customers. Again, great when prices are low, but I suspect this downside risk came as a rude surprise to the consumers who started getting $10,000 power bills last week. The utilities did just fine as they passed the higher cost of energy onto their unsuspecting and cold customers.
Layered on top of the failures of the power system structure to service the needs of Texans was the initial impulse of Texas political leaders and their allies on TV and elsewhere to fallaciously blame the power crisis on renewable power. Sure, there were wind turbines that froze and failed, but they fared no better or worse than the oil, natural gas and nuclear fuel sources last week. Why? Because deregulation allowed all of the owners of any of these power sources to avoid investing in winterizing of equipment that would have allowed them all to function in cold weather. Is it any wonder that the champions of what was now clearly a failed overreliance on the free market would seek to distract attention from the real causes of the failure and their role in it?
Bringing this back to Cape Cod, what lessons do we need to learn? There are several, and they are all hard. First and foremost is a recognition that again we are reminded that the unrestrained free market does a lot of wonderful things–one of them isn’t allocating resources for the common good. In this instance, the common good is having a robust, well-maintained and increasingly smart power grid. Massachusetts dabbled in deregulation a few decades ago and I don’t know about you, but it is my impression the electricity goes out around here more frequently and with less provocation than when I was a kid. Cape Cod’s analogous event will be a hurricane or another bomb cyclone storm in the winter that will test our power grid. We need to make sure that additional investments are made now to improve the ability of the grid to absorb this inevitable shock, so that we are not all plunged into the dark and cold for weeks. The same commitment to investment is needed at the local level to enhance public infrastructure like low-lying roads, water and sewer systems, and restoring wetland resources so that we are better able to cope with increased flooding and storm intensity that we know is coming as a result of climate change. We have already seen it, and more is on the way.
Lastly, reality matters. There is a lot about the future we don’t know, but some things are pretty clear. We know that extreme weather events are on the rise. We know that our infrastructure is fragile and in need of investment. We know, with Texas being just the latest, but not last example, that we are not ready. We all need to admit this and then get busy trying to fix it. But as hard as it may be, getting ahead of the looming disaster is better that living through the next one. We all know that keeping the heat on is cheaper than fixing the burst pipes because the heat failed. If you doubt that, then call someone you know in Texas and ask how their week was, but wait until they have enough power to charge their phone so your call doesn’t go right to voicemail.