Pillsbury Winthrop Shaw Pittman LLP

The Greater Houston Partnership’s new Energy Transition Strategy report makes an economic case that the Houston region is poised to lead the energy transition, articulating an industry-driven vision that builds on the City of Houston’s 2020 Climate Action Plan, and following surging investments and the rapid proliferation of technology incubators and accelerators.

TAKEAWAYS

  • The Greater Houston Partnership has developed a strategy to pivot the region from Energy Capital of the World to the nation’s Energy Transition Capital.
  • The strategy blueprint argues that Houston is uniquely positioned to lead the energy transition with its workforce, existing energy infrastructure, renewable energy expertise, local government support and well-developed transportation infrastructure.
  • Houston is an increasingly active hub of energy innovation with well-supported technology incubators and accelerators proliferating alongside established energy and technology players.

This summer the Greater Houston Partnership, Houston’s largest chamber of commerce, presented a blueprint strategy to position Houston as the nation’s Energy Transition Capital—both pivoting from and building on the City of Houston’s reputation as the “Energy Capital of the World.” It follows a nearly two-year period of rapid advancement in the City’s technology incubation infrastructure and investment and draws heavily on the City of Houston’s Climate Action Plan released in April last year.

The concise, 15-page strategy document presents a stark economic choice for the region: either Houston takes a “business as usual” approach and stands to shed approximately 270,000 jobs, compounding the 125,000 jobs lost in the oil and gas sector since 2014, or Houston takes the lead in the Energy Transition and realizes up 400,000-560,000 new jobs, capturing as much as $210B revenue annually.

Houston, the Greater Houston Partnership’s Energy Transition Strategy (Strategy) argues, is positioned to take the lead on Energy Transition due to five (5) attributes:

1) The area’s large, diverse, existing technical workforce;

2) An existing concentration of energy infrastructure;

3) An established renewable energy capacity and project expertise;

4) Local government that vocally supports energy innovation and growth through policy; and

5) Houston’s status as a logistics haven of port, rail, and air infrastructure, with the potential for global reach of its decarbonization efforts.

In effect, the Greater Houston Partnership’s Strategy proposes a multi-pronged approach to leveraging Houston’s energy leadership to help accelerate global activity to meet growing energy demand while decarbonizing, and in the process growing (or saving) the regional economy, equitably creating new jobs, exporting low-carbon solutions, products and expertise, and helping Houston itself achieve its net-zero emissions target. The Strategy document complements the Mayor’s Climate Action Plan issued last year, which similarly draws upon Houston’s role and legacy as the Energy Capital of the World to set a vision for leadership in the global energy transition. The Strategy highlights the City’s history of “innovation, growth and prosperity” linked to the energy industry and the City’s robust capability to address global energy challenges.

In addition, it encourages new energy companies to take residence within its region, a trend already well underway. The Strategy “represents Houston’s collective ambition,” garnering insight from local business leaders, elected officials, academic researchers, bankers, investors, and environmental and social justice advocates. The Strategy roots itself in “the city’s eagerness for innovation; its appetite for high-risk and high-reward business investments; and its capacity for executing” massive projects around the globe. The energy transition strategy means to highlight the City’s “plans and commitments, not just talk and ideas.” By example, the blueprint notes ExxonMobil’s April 2021 “call to action” to industry and government to invest $100B to turn the Houston Ship Channel into a multi-user carbon-capture & storage hub.

Local policy essentially accords with and undergirds the Greater Houston Partnership’s global leadership strategy and vision. The Mayor’s Climate Action Plan (Plan), published in 2020 and the first for the city, professes that “no other city is better suited to tackle climate change than Houston.” “Houston has the natural resources, the scientific expertise, and the investment capabilities necessary to spark the technological innovations needed to make industrial and nature-based carbon management programs cost-effective and deployable on an international scale.” Drawing on that premise, the Plan outlines broad, potentially transformative actions to make the City of Houston carbon-neutral by 2050 in accordance with the Paris Climate Agreement, with interim targets in 2030 and 2040. The Plan focuses on four areas: transportation, energy transition, building optimization and materials management. The Greater Houston Partnership’s Strategy is more regional and originates with industry versus government but is complementary, building on the Plan’s three goals and targets for the City of Houston’s energy transition:

Goal 1: Grow Houston’s investment in renewable and resilient energy systems.
Target 1: 5 million MWh local solar by year 2050.

Goal 2: Make Houston the leader in carbon capture technology and energy innovation.
Target 2: Attract or incubate 50 Energy 2.0 companies in the greater Houston area by 2025.

Goal 3: Restore, protect and enhance the City of Houston’s natural ability to capture and store carbon.
Target 3: 4.6 million new native trees planted by 2030.

These goals are the framework of the Strategy, which in turn sets three objectives as benchmarks to measure success in five-year increments:

  • Focus on multifaceted solutions to a complex problem: with the uncertainty of the energy transition, the strategy looks to advertise the City of Houston’s environment as a desirable location fostering investment and deployment of a wide range of potential energy solutions.
  • Jumpstart local policy and scientific research, where Houston has a strategic advantage: using the established City of Houston market to develop new carbon technologies such as Carbon Capture, Use and Storage (CCUS) and Low-Carbon Hydrogen Production.
  • Focus on supporting “New Energy” industries, particularly solar and wind development, by attracting the necessary financiers, developers and asset owners.

Not incidentally, just one year since the Mayor’s Climate Action Plan was released, and also on Earth Day, Greentown Labs, the Boston-based innovation incubator focused on energy transition and decarbonization, announced the grand opening of its Houston campus in the former midtown Fiesta store. Recognizing the central role Houston will play in the energy transition, Greentown expanded to Houston, lauding the City’s “world-leading energy organizations and incredible engineering strength, talent, and assets that can—and must—be redeployed toward a decarbonized future.” Shortly thereafter, the Ion Accelerator Hub opened, a homegrown innovation hub developed by Rice University for advancing and sustaining economic growth in Houston across the street from Greentown in a converted former Sears building. The Ion is a tech-focused center in a building designed to foster interactions among its innovation-focused mostly startup tenants, but also including Chevron Technology Ventures, which will range from startups, to major public corporations, to investors, to academics, and to others in the innovation space. Collectively, Greentown Labs and the Ion are anchoring a frenetically growing 16-acre innovation district in Houston’s Midtown focused on technology, community, and sustainability.

Conclusion

The Greater Houston Partnership Energy Transition Strategy articulates a concerted and growing public-private effort to position Houston as the North American leader of the global energy transition, aiming to leverage the City’s unique combination of history, human and natural resources, massive and sprawling industrial infrastructure, and policy and business climate. For industry investing in energy innovation, it is yet another signal that Houston means business when it comes to decarbonization, and that the pace of transition activity is accelerating.

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