Good morning, and apologies for the delay. (It’s our software that should be apologizing, but unless Alphabet Inc. surprises in its earnings report today, even the most sophisticated technology is still incapable of feeling remorse.)
While Alberta has restricted its once-booming renewable energy sector, Texas is embracing the industry as a money-maker that co-exists with oil and gas. Today, we look at how one of the reddest states in America is becoming a leader in wind and solar power, while its Canadian counterpart is hitting the brakes. But first:
In the news
House calls: Federal Conservative Leader Pierre Poilievre says he would eliminate the federal goods and services tax on new homes priced under $1-million.
In court: Opening arguments in the high-profile fraud trial of Fortress Real Developments Inc.’s co-founders kick off weeks of testimony over the sale of higher-risk syndicated mortgage products to retail investors.
Gearing down: Volkswagen plans to shut at least three factories in Germany, lay off tens of thousands of staff and scale down its remaining plants.
Low on fibre: Canada’s telecom regulator has set rates at which telephone companies must grant rivals access to their fibre network. But some providers say they’re not low enough.
Happening today
- Bank of Canada Governor Tiff Macklem and senior deputy governor Carolyn Rogers are scheduled to appear before the House Standing Committee on Finance this afternoon.
- The U.S. Conference Board issues its consumer confidence index for October.
- Earnings include Alphabet Inc., Advanced Micro Devices Inc., Visa Inc., Paypal Holdings Inc., McDonald’s Corp., Chipotle Mexican Grill Inc. and Pfizer Inc.
Sunset in Knox County, TX.Sandy Carson/The Globe and Mail
In focus
Texas v. Alberta
In October, 2022, The Globe and Mail’s Jeffrey Jones embarked on a road trip along Highway 3 in Alberta, where a multibillion-dollar renewables boom was transforming the landscape. With the sector now stalled or in retreat in the province, he travelled to Texas to chronicle how the state’s deregulated power market has become a mecca for developers of wind and solar power, and now battery storage. The state that oil built isn’t abandoning fossil fuels any time soon, Jones told me, but it’s not about to leave money on the table.
What compelled you to write this piece?
We often think of Texas as a fellow traveler with Alberta when it comes to oil development and conservative politics. It’s the reddest of red states. But Texas has not only welcomed billions of dollars in wind, solar and battery projects, it’s leading the U.S. in installed capacity and that looks set to only increase. I wanted to find out why that is.
What surprised you most?
First, the scale. I explored a large chunk of West Texas, between Dallas and Lubbock. (The birthplace of Buddy Holly!) On some stretches of highway there are wind turbines in every direction, on hills, on flat lands, you name it. The technology is well established around the world, but it still looks otherworldly when spread across so much landscape.
Secondly, a high degree of local acceptance. I found few landowners and residents who see growth as key to decarbonizing the Texas economy and fighting climate change, but so many of them are supportive of the economic benefits the industry brings to their communities.
Over decades of movies, music and literature, Texas has been synonymous with oil wells, speculators, explorers. How much is that still the case?
It is still very evident. Texas has been the epicentre of the shale oil boom that has propelled the United States to its top ranking among global oil producers, surpassing Saudi Arabia. Its Permian Basin pumps out almost half the crude in the country. The state makes no secret of its pride in that.
Given that, was it surprising how much industry has taken up clean energy?
At first blush, no question. Another surprise was that Texas is among states that have been the largest recipients of clean energy subsidies made available under President Joe Biden’s Inflation Reduction Act.
Your piece contrasts Texas and Alberta, noting in part similar terrain and of course access to fossil fuels. And Alberta, too, has built its economy and some of its culture around oil. If the reddest state in America is going green, what’s stopping Alberta?
As I mentioned, in Texas, going green may be secondary to earning green, but I get your point. Alberta has a couple of major differences. One is the weather – in deepest, darkest January, days are short and on many days there tends to be little in the way of breeze. Though, to be clear, no one expects renewables to provide baseload power, especially with storage installation still in its early stages. Another driver has to do with oil and gas, according to an academic I spoke to who knows both markets well. Gas feeds generating stations that supply about 60 per cent of the province’s power. Unlike Texas, where oil and gas producers pay royalties to landowners, Alberta takes in that revenue, and it accounts for a major part of the public purse. So, there is an economic incentive to favour fossil fuels.
Did you get the sense people who have embraced (or at least invested in) wind power, for example, are worried about what Donald Trump might do to the Inflation Reduction Act?
It may seem counterintuitive, but folks I spoke with did not foresee a possible second Trump administration standing in the way of this economic boom, given the importance of Texas to the Republican cause. And this is despite the former president’s past doozies about wind power. (Noise from turbines may cause cancer, the ground around them is littered with bird carcasses, etc.) Texas is becoming a hotbed for manufacturing, data centres and AI computing, and its population is growing fast. It appears the state will need all the power it can generate, and developers believe the government will be agnostic to generation sources.
You can read the full feature here.
Reader poll
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But beware the shrinkflation monster: A recent report in the U.S. showed 38 per cent of candy items are now sold in smaller amounts, including party-size Reese’s miniatures and party-size milk chocolate M&M’s.
The outlook
On our radar and reading list
Workin’ it: 24 warm wardrobe picks to wear to the office this winter.
Watch out: Is a luxury timepiece a good investment? It depends.
Wait: This is the moment yield-hungry investors have been waiting for. And it might be a bust, Tim Kiladze writes.
Morning markets
Global markets were mixed with investors cautiously eyeing megacap tech earnings and key U.S. jobs data this week. Wall Street futures and TSX futures pointed lower.
Overseas, the pan-European STOXX 600 was flat in morning trading. Britain’s FTSE 100 slid 0.17 per cent, Germany’s DAX gained 0.21 per cent and France’s CAC 40 advanced 0.19 per cent.
In Asia, Japan’s Nikkei closed 0.77 per cent higher, while Hong Kong’s Hang Seng rose 0.49 per cent.
The Canadian dollar traded at 71.93 U.S. cents.
