Texas Is Well-Positioned to Lead an Energy Expansion

New energy technologies have the potential for transforming our lives. And this 21st-century energy expansion, like the oil and gas revolution that reshaped the 20th century, should start in Texas.

A new study by Rice University’s Baker Institute, supported by nonpartisan think-tank Texas 2036, found that Texas is well-positioned to sustain and solidify its role as an energy capital of the world — provided the state leads the energy expansion by adopting smart policies that support the growth of emerging industries, like hydrogen, and the transition of existing ones through carbon capture technologies.

Consider hydrogen-based energy. Right now, the U.S. Department of Energy is deciding where to spend $8 billion for regional hydrogen hubs. International investors are putting hundreds of billions of dollars into this technology, and global demand is expected to surge in the coming decades. Texas is well-positioned to lead in this emerging industry: As of 2016 (the most recent year for which data is available), nearly 62% of the nation’s — and more than a third of the world’s — existing hydrogen pipelines were in Texas.

Alongside this existing energy infrastructure, an enviable range of unique geological features makes Texas fertile ground for a boom in renewable and clean energy production — one we already see unfolding across much of the state.

Some features are well-known. Texas has ample wide-open spaces where the wind blows and the sun shines. These have already helped make Texas the nation’s leader in wind power generation, and they could make the state the solar leader as soon as this year.

Other natural assets lie below the surface. Texas — southeast Texas, especially — has underground saline formations that pair well with existing energy infrastructure and dense industrial development. This makes the Gulf Coast an ideal hub for carbon capture and storage and hydrogen development.

The so-called Texas Triangle — the zone containing the Dallas, Houston, San Antonio, and Austin metropolitan areas and a significant majority of the state’s population — is a promising area for the development of geothermal energy which could provide needed power to most Texans in a way that requires relatively little new transmission infrastructure.

In addition to its natural resources and extensive infrastructure, Texas also maintains a highly-trained workforce with the skills needed to propel emergent energy industries forward.

The state’s specialized energy workforce is the result of decades of investment in education—especially higher education. Texas is home to several leading research institutions that have churned out Texans to innovate and explore the energy realm. Support for these universities and their research programs is key to the state’s long-term energy strategy.

But this potential does not come without questions. Many renewable energy facilities are located in or slated for rural areas far from the state’s population centers, and limited transmission infrastructure could prevent some resources from feasibly plugging into the state’s electricity grid.

Nevertheless, Texas’ abundant natural resources, existing infrastructure, highly skilled energy workforce, and leading research institutions are already aligned in ways that could drive an energy expansion, benefitting people in Texas and beyond for generations to come.

To capitalize on these clear advantages, state policymakers must work with all stakeholders — including industries, institutions, and the federal government — to coordinate resources and implement policies that optimize the state’s potential.

If today’s leaders take advantage of existing opportunities and embrace the coming energy expansion, they’ll ensure that future generations of Texans will continue to know their state as the Energy Capital of the World.

Barro is a public finance fellow at Rice University’s Baker Institute for Public Policy, and Diamond is director of the Center for Public Finance at the Baker Institute and the Edward A. and Hermena Hancock Kelly Fellow in Public Finance. Orr is a senior policy advisor at Texas 2036.