How Houston reinvented itself as a cleantech innovation hub

Houston is widely regarded as the center of the US energy industry. Despite its deep roots in fossil fuels, the city is now reinventing itself for a sustainable future. Municipal and state governments, universities, investors and the energy industry itself are all aiding its transformation.

As a global greentech investment hub, start-ups are flocking to the Texan city, attracted by its innovative ecosystem and supporting infrastructure. Traditional oil and gas businesses are also aligning themselves with a decarbonized future, investing in the next generation of clean energy initiatives.

“Houston has the perfect set-up for the cleantech industry,” says Ricky Sakai, SVP, New Business Development at Mitsubishi Heavy Industries America (MHIA), who relocated to Houston in 2015.

“With Houston’s track record in oil and gas, all the right industries are represented here, whether it’s equipment manufacturers, engineering firms, or chemical companies. There is also a pool of local talent ready to move into cleantech, including experienced professionals and graduates from local universities,” Sakai explains.

How is Houston leveraging its roots in oil and gas for clean tech innovation?

More than a third of US publicly traded oil and gas companies are headquartered in Houston. The city also boasts more than 230,000 technology workers, has the highest tech job growth in the US, and ranks among the top five cities for ESG (environmental, social, and corporate governance) investment.

The municipality and the state of Texas have succeeded in creating a start-up-friendly environment, Sakai points out. This includes low state taxes and making it easy for entrepreneurs and young companies to obtain permits for setting up.

In 2021, the Greater Houston Partnership launched its Houston Energy Transition Initiative (HETI), aiming to drive sustainable economic growth in the Greater Houston area with a range of technology, policy and market initiatives to nurture and commercialize low-carbon technologies.

How is Houston building momentum in clean tech?

Local government has also been instrumental in creating incubator spaces such as Greentown Labs and The Ion District, explains Ricky Sakai. These facilities offer cleantech start-ups a base during the earliest stages of their development. They also help make the right connections, for example with business and the investment community, to ramp up the development of cleantech initiatives around Houston.

For example, MHIA is collaborating with Greentown Labs, sponsoring green energy competitions and helping students take their ideas to the next stage.

Academic institutions have also seized this opportunity. Local universities, including the University of Houston (UH), Rice University and the University of Texas at Austin are involved with Greentown Labs and The Ion. They are also developing their own cleantech and entrepreneurship initiatives, including UH’s Energy Transition Institute and Rice’s recently announced Master of Energy Transition and Sustainability program.

“By combining start-ups, academia, corporates, investors and government officials who share a common interest, we can boost the development of technologies needed to decarbonize hard-to-abate industries,” highlighted Takajiro Ishikawa, CEO and President of MHIA.

What are the advantages of being based in Houston for MHI?

With an extensive history of supplying technology to the oil and gas sector, MHI relocated its US headquarters to Houston in 2019. Since then, Houston’s green ambitious have perfectly matched MHI’s own roadmap to achieve carbon neutrality by 2040.

“Since then, my team has invested in more than 11 cleantech start-ups,” says Sakai. “Three of these companies were already based in Houston, and one has moved here since.”

MHI’s investments highlight Houston’s dynamic blend of traditional oil and gas and emerging technology businesses, as well as the cross-pollination between the two sectors.

Syzygy Plasmonics is developing a new light-driven reactor to produce industrial chemicals, including green hydrogen, without emissions and at a lower cost.

Fervo Energy is harnessing Houston’s oil and gas heritage to harvest geothermal power in previously inaccessible areas, opening the door to always-on, carbon-free energy.

Cemvita, for example, prides itself on its multidisciplinary team of scientists, engineers, and entrepreneurs, all focused on turning waste products and CO₂ into valuable materials such as proteins, plastics and fuels.

Amogy, a spinout from the Massachusetts Institute of Technology, champions ammonia as a clean energy source for transportation.

Houston's transformation has also required its talent to adapt, as Sakai explains: “I started out in oil and gas but quickly transitioned to cleantech to support MHI's 2040 roadmap. Many of my industry friends are also moving into the cleantech innovation sector. We're applying our expertise to reducing CO₂ instead of generating it."