Houston has made strides in the energy transition, a new report from the Greater Houston Partnership found.
The Greater Houston Partnership's Houston Facts report, an annual data publication about Houston’s population and economics, found that excluding traditional transmission and distribution, there were an estimated 71,305 workers across multiple clean energy sectors in 2022, the highest since 2019’s 64,924 workers. With non-fossil fuel transmission and distribution included, that number rose to an estimated 110,324 workers in 2022.
Private market investment into Houston’s energy transition businesses also soared in 2022, with startups, businesses and companies securing $6.1 billion in financing, a 61% increase compared to the previous year.
The report found that even with decreased overall private investment compared to previous years, energy transition spending made up a larger portion of where that money flowed, with 8.9% of the $67.8 billion total investment landing in the sector.
Another investment trend in the Bayou City is the dominance of corporate and strategic mergers and acquisitions in 2022 deals. In 2019, corporate investment in the energy transition was nearly nonexistent, but in 2022, those investors contributed to approximately $4 billion in deals. The venture arms of companies such as Occidental Petroleum Corp. (NYSE: OXY) have been active investors in Houston startups building technology for carbon capture and hydrogen applications.
Areas of decline in Houston’s clean tech jobs were clean fuels and grid and storage applications, which decreased from 6,142 and 5,217 workers in 2021 respectively to 2,126 and 3,918 workers, the report found.
The decrease in clean fuels comes despite the efforts of startups such as Syzygy Plasmonics and Cemvita, which secured funding and expanded testing facilities in the past 18 months. Additionally, major Houston-based energy giants such as Exxon Mobil Corp. (NYSE: XOM) have announced hydrogen production projects, while others like HIF Global are developing sustainable aviation fuels plants in Texas.
Meanwhile, startups for grid and storage applications had some of the largest funding rounds in Houston, such as microgrid provider VoltaGrid’s $150 million equity round in October 2022.
The report’s economic findings come against the backdrop of Houston’s rising carbon dioxide and greenhouse gas emissions. Data shows that in 2021, industrial emissions reached 119 million tons of CO2 equivalent, the highest point in the past decade. Emissions from the petroleum and natural gas sector have increased steadily, while other sectors such as power plants have seen fluctuations but have otherwise remained relatively constant.
The city also saw 241 metric tons of CO2 equivalent emitted per $1 million of real gross domestic product, the highest rate since 2012.
A significant development in the energy transition movement both in Houston and nationwide is the deployment of energy transition funding from the federal government, authorized by bills such as the 2022 Inflation Reduction Act signed into law in August 2022. While companies and investors are still waiting to see the full impact of the bill’s provisions, the targeted tax credits have already spurred investment into industries such as sustainable aviation fuel.
Houston companies have already been selected for funding from the Department of Energy in 2023. Startups such as the battery technology company Zeta Energy have landed grants to continue their developments, while several Texas companies and Gulf Coast-area infrastructure projects were selected for over $100 million in federal funding in May.
One of the biggest federal funding prizes up for grabs is the DOE’s $8 billion commitment to hydrogen hubs across the country. Two Houston-based consortiums submitted separate bids known as the HyVelocity Hub and the LIGH2T Hub in April. The funding would be used as an eventual stepping stone to create a marketplace for clean hydrogen.
