Late to the climate fight, Houston aims to change the strategy and slow the pace

Without a hint of irony, the city known as the world’s energy capital recently unveiled a new moniker. Houston is now — ahem — the ”Energy transition capital of the world” and Houston-based oil firms are lining up to commit to carbon-reduction platforms.  

Better late than never, of course. But Houston and other oil-producing jurisdictions don’t just want in on the action, they want to change the path to net-zero.   

Rather than decarbonizing power generation and then electrifying services like transport and heating, oil producers want to keep selling fossil fuels while marketing new services that clean up the fuels and dispose of their emissions.   

They also want to go more slowly than the 1.5-degree Celsius pathway would allow. That’s because Big Oil’s preferred abatement technologies — carbon capture and “blue” hydrogen — are unproven or uneconomic.  

Let’s look at carbon capture and storage (CCS). CCS is a potential cash cow — a self-perpetuating business model — if taxpayers continue to subsidize emissions disposal.   

That’s because oil companies not only continue producing and processing oil and gas, but in operating energy-intensive CCS systems, they sell even more fuels. After combustion, oil firms helpfully offer their services in whisking away the captured carbon in an oil company pipeline and storing it in one of their depleting oil reservoirs. For a fee, of course.   

This sounds like Kroger getting paid to operate farms, market the produce and then collect the sewage produced and pump it underground.  

Big Oil’s energy transition path has another option. That is “blue” hydrogen, made by splitting natural gas into carbon and hydrogen streams. Blue hydrogen also produces waste CO2 for companies’ capturing and transport businesses. But when hydrogen is combusted in industry or heavy transport, it emits only water vapor.   

Beyond keeping natural gas in the mix, a shift to hydrogen allows oil companies to convert filling stations, tanks and distribution lines to hydrogen. Petroleum engineers and geologists can likewise tweak their expertise and keep their salaries.   

Since oil and gas is a third of the economy in Houston — and more than that in some big Middle Eastern producer states — it’s no wonder hydrogen and carbon management businesses are seen as economic saviors.   

A similar metamorphosis is underway in Saudi Arabia and the United Arab Emirates, which supply 17 percent of global oil. Both announced net-zero goals ahead of the Glasgow climate talks, as have Russia, Bahrain, Nigeria and others.  

Oil producers embracing net-zero is a good thing, given the expertise and cash these companies can marshal. As a result, the energy transition isn’t going to follow the playbook written in the European Union and some coastal U.S. states.  

Until now, the energy transition path has been built around the idea of electrifying as much energy consumption as possible and converting electricity grids to carry zero-carbon renewables, nuclear and batteries. That path is a non-starter for Big Oil jurisdictions like Houston because it offers no role for oil and gas, the most profitable sectors in the energy business.   

But wholesale opposition to the transition hasn’t worked. As Houston’s energy captains have learned, climate denial only gets you locked out of the transition discussion — and the follow-on business opportunities. As a result, Texas’ nation-leading installation of wind power is dominated by European firms: Vestas, Siemens, E.ON, EDP Renewables, EDF, and RES Americas among them.  

But if there is money to be made, why delay the transition? It seems that Big Oil’s preferred solutions aren’t ready for prime time.  

Houston’s W.A. Parish coal plant can’t make CCS work, even with a buyer for the carbon and a $190 million government subsidy.   

That shutdown leaves just one CCS-connected power plant operating worldwide, in Saskatchewan. That plant only captured 44 percent of the emissions it produced last year, due to mechanical problems. Carbon capture and storage also can’t help us with the biggest source of oil emissions: vehicle tailpipes.  

Meanwhile, making hydrogen from natural gas may cause more emissions than it abates. A recent paper finds that making blue hydrogen in the United States would be worse for the climate than burning unabated gas or coal. That’s mainly due to the fugitive methane that reaches the atmosphere through leaky natural gas infrastructure. Modern sensors render this a fixable problem.  

Making “green” hydrogen by splitting water through electrolysis is cleaner but less interesting because it involves renewables and is more expensive, for now.  

It bears mentioning that CCS and hydrogen might be viable now had fossil fuel firms invested in them a long time ago. Instead, they spent decades — and tens of millions in potential R&D funds — lobbying to undermine the transition they now ostensibly support.   

Obstruction has made the climate fix more urgent and ceded advantages in cost and innovation to renewables.   

In reality, of course, there is only one energy transition pathway. It involves all options. 

If Houston’s preferred path plays to its competitive advantages, all the better. Competition in the transition is as welcome as anywhere else. But the train is moving. Delay is futile.  

Jim Krane is the Wallace S. Wilson Fellow for Energy Studies at Rice University’s Baker Institute for Public Policy. He is the author of the book ”Energy Kingdoms.” Follow him on Twitter at @jimkrane.