- Houston’s shift from traditional oil and gas to renewables is supported by numerous startups, academic programs, and innovation spaces like The Ion and Greentown Labs.
- The city has become a significant destination for clean tech, attracting over $6 billion in venture capital in five years and hosting the largest engineering workforce in the U.S.
- Houston’s commitment to sustainability is evident in its transition to renewable energy for municipal facilities and ambitious goals for achieving carbon neutrality by mid-century.
While Silicon Valley may be known as the world’s biggest tech hub, Houston is quickly catching up when it comes to clean tech. The major Texan energy hub is rapidly branching out into the world of renewables, supported by a broad array of startups investing in innovative green technologies. The city is diversifying from oil and gas and growing its reputation as an all-round energy hub, with many leaving California to work in Houston’s bourgeoning market.
Houston has long been known for its successful oil and gas operations, with several energy majors operating out of the Texan city. Around 34 percent of all U.S. publicly traded oil and gas companies have headquarters in Houston and others are setting up energy transition headquarters there. The city is home to over 230,800 tech workers and is leading the U.S. in tech job growth, ranking as one of the top five cities for investment in companies focused on environmental, social, and corporate governance (ESG) initiatives in 2022. Companies in Houston contributed over $1.25 billion to ESG last year.
It is also an important city for academia and research and development for the energy sector, with 21 business research centres focusing on the energy transition. Several universities, such as Rice University and the University of Houston, have developed entrepreneurship programmes and other degrees that encourage youths to develop their own innovative business ideas. The University of Houston aims to launch its Innovation Hub in 2025 to drive greater student innovation. This has spurred the development of a plethora of clean tech and green energy startups, viewing Houston as the U.S. energy transition hub.
As a major city, Houston is home to a three million-strong workforce. It also has the largest population of engineers in the country. In 2022, the growth rate for tech employment in the region reached 3.5 percent, compared to the national average of 3.2 percent. Houston is reported to have attracted over $6 billion in venture capital funding in the last five years alone. It is also home to more than 80 startup development organisations (SDOs), from incubators to accelerators, maker spaces, co-working spaces, non-profits, and academic institutions.
The city is driving innovation through collaborative projects, as well as the traditional work of private energy companies. Spaces such as The Ion are popping up to offer startups the space to develop their ideas. Established in 2021, it provides 266,000 square feet of commercial office space for tech companies, individuals, and early-stage startups, as well as event spaces. The Ion currently houses 300 businesses and provides funding for the tech sector’s job training and talent pipeline.
In addition to the Ion, Boston-based Greentown Labs opened Houston’s first climate-tech incubator in 2021, a 50,000-square-foot building in Midtown. It hosts around 79 companies and runs several programmes with educational institutions aimed at driving innovation. The two projects are located within the Houston Innovation Corridor, a four-mile strip that strategically connects businesses and key destinations with light rail, bike lanes, and pedestrian walkways. It includes Downtown, Midtown, the Ion District, the Museum District, the Texas Medical Center campus, and Rice University.
As Houston rises as a clean tech hub, Silicon Valley is looking over its shoulder as Texa is rapidly attracting more young tech professionals and startups. In a 2020 survey by Blind, 29 percent of technology professionals from the Bay Area responded with the view that Texas is “the next Silicon Valley”. Several things differentiate Houston from Silicon Valley and it is using these to its advantage. Wogbe Ofori, the founder of the Houston-based venture development firm Wrx Companies, believes that it’s the city’s hard-tech orientation that differentiates it from other technology hubs. Ofori explained, “We have a lot of potential to address industrial-scale problems, not just consumer-scale problems. And these problems are mostly in the physical realm.” He added, “Houston has a lot of potential to be a global hub for hard-tech innovation… In my hope and vision, Houston will be a place where the world comes to solve some of its hardest problems.”
As well as welcoming energy transition companies, Houston is leading by example by undergoing its own transition. While it continues to support the oil and gas industry, it is also developing major renewable energy projects. Since 2020, Houston’s municipal facilities have run entirely on renewable energy and the whole city hopes to achieve carbon neutrality by the mid-century. It has become a major destination for solar and wind companies, home to over 130 firms, and it hopes to support Texas’s aim of establishing the country’s first zero-carbon grid.
As the U.S. undergoes a green transition, Houston is rapidly becoming one of the most important spots for green energy and clean tech innovation, rapidly overtaking other hotspots, such as Silicon Valley and Boston. Its long history in oil and gas, a strong population of skilled workers, and support for business and academic collaboration are driving innovation and attracting many big companies, startups, and entrepreneurs to the region. Within the next decade, Houston is expected to become an all-round energy hub as it diversifies beyond oil and gas.
By Felicity Bradstock for Oilprice.com
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