Houston Lures Clean Energy Companies Seeking New Home Base

As America's oil capital continues its push to build a greener economy, cleantech innovators are finding a home in an unlikely town

Houston Mayor Annise Parker
Houston Mayor Annise Parker/Credit: IABC Houston

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Houston’s Texas-sized push to build a cleaner, more competitive economy is luring alternative energy businesses and giving the nation’s oil and gas capital an increasingly green tinge. 

John Higgins, CEO of NeuTex Advanced Energy Group, said an extra-warm welcome from City Hall last year persuaded him to choose Houston to manufacture the firm’s energy-efficient LED lighting.

The development and construction company has been based in Houston for more than 20 years, but NeuTex was looking at cities across the country for its nascent lighting division after deciding to close most of its China-based operations, due partly to rising labor costs.

“Tax breaks weren’t real important to us,” Higgins told SolveClimate News. “We looked for a team in a city that would embrace energy efficiency and would embrace sustainable technology.”

Mayor Annise Parker’s office reached out to NeuTex and ensured it could support the firm by championing sustainable building initiatives and giving NeuTex visibility among developers and engineers.

“We thought that if we can be taken seriously in Houston, Texas, then we can be taken seriously anywhere in the world,” Higgins said.

In March, NeuTex began the demolition and reconstruction of a vacant facility to serve as its U.S.-based headquarters and manufacturing hub for lighting, which together will create at least 250 jobs in the next two years, Higgins said. He added that NeuTex took no incentives or tax benefits from the city for the project.

Higgins said he expects lighting to account for 90 percent of the firm’s revenues over the next year — up from just 25 percent today — while its main commercial construction division will shrink to 10 percent. The green shift could boost NeuTex’s revenue to $30 million in 2012, up from nearly $3 million last year.

Houston’s First Green Steps

The drive to raise Houston’s renewable and energy efficiency portfolio began largely with former mayor Bill White, who served from 2004 through 2009, and who challenged incumbent Gov. Rick Perry as a Democratic candidate in the 2010 gubernatorial elections.

Clean energy advocates see Houston as key to influencing the state’s clean economy due largely to its size. With 2.1 million residents, Houston has the highest city population in Texas and is the fourth most populous city in the nation behind New York, Los Angeles and Chicago.

As mayor, White signed a green building resolution to set a target for new construction projects to get LEED (Leadership in Energy and Environmental Design) certifications, and he started the Residential Energy Efficiency Program to weatherize more than 2,000 inner-city homes.

White contracted over 250 million kilowatt-hours of renewable energy for municipal use. In 2005, he set a goal of having 50 percent of the city’s non-emergency fleet be hybrid cars.

He also helped to encourage Danish wind turbine maker Vestas to locate its North American research headquarters in Houston, said Pratima Rangarajan, the division’s senior vice president of global research and innovation, in an email to SolveClimate News.

Wind Giant Finds a New Home

“We located our North American research headquarters in Houston [in 2008] after an extensive review of U.S. cities and a specific analysis of Texas,” she explained. “From the outset, we received encouragement from the State of Texas and the City of Houston, including the mayor’s office.

“Placing our research center in Houston put Vestas in close proximity to key customers and a number of top research universities. It also gives us access to a highly qualified workforce with an exceptional depth and range of relevant engineering talents from the energy and aerospace industries,” she said.

Rangarajan added that Texas has the largest number of installed wind projects in the United States, with more than 10,000 megawatts of power, about a quarter of the nation’s total wind capacity.

Parker has set out to continue to raise the city’s green energy profile since starting her first mayoral term last year. As part of the effort, she brought on board Laura Spanjian, who was working for San Francisco’s Public Utility Commission, to serve as Houston’s sustainability director and resident “green guru.”

Mayor Wins Green Award

The mayor on Tuesday was chosen as the winner in the large city category of the 2011 Mayors’ Climate Protection Awards for her sustainability efforts. The annual award program was sponsored by the U.S. Conference of Mayors and Walmart.

“This city has a perception of being only an oil and gas town, but the city is looking to the future … and it wants to be cutting edge. It wants to be innovative,” Spanjian told SolveClimate News.

“We’re trying to launch a number of initiatives to really try and reduce our greenhouse gas emissions and show our leadership in the sustainable world.”

Spanjian said that the mayor’s office is aiming to get 50 percent of the city’s energy from renewable resources by early 2012 — and 75 percent by 2013 — by purchasing more renewable energy credits from existing wind farms and large-scale solar projects in development.

Houston is already recognized by the Environmental Protection Agency as the top municipal purchaser of renewable energy in the country, with 33 percent of its energy coming primarily from wind farms in West Texas.

Green Buildings, Electric Cars

In September, Parker’s office launched the yearlong Green Office Challenge, which awards businesses 20 percent of up-front costs needed to retrofit buildings and reduce energy consumption, water usage and waste production by 10 to 50 percent.

The city’s goal is to make Houston No. 1 for the number of buildings certified by both LEED and Energy Star, a joint initiative of the EPA and the Department of Energy. Houston is currently the eighth and sixth top state for each program, respectively.

David Knox, spokesperson for Princeton, N.J.-based utility NRG Energy, said that the city’s push for electric vehicle adoption persuaded the power plant operator to launch its first citywide EV charging network in Houston.

More than half of NRG Energy’s 24,000 megawatts of generating capacity are in Texas, and its state office is based in Houston, though Knox said the firm looked nationwide for potential hosts of its eVgo charger rollout.

“The city’s embrace of electric vehicles specifically … was very important to us [as we were asking], ‘Where do we want to start this?'” he said.

“They have supported us, and support doesn’t necessarily need to be financial in nature.”

Houston was an early adopter of alternative vehicles with a fleet of more than 500 Toyota Prius hybrids. The city now has two all-electric Nissan Leafs and aims to have 25 of the cars plus hybrid models by the end of the year.

The mayor’s office plans to allow EVs to use the high occupancy vehicle lanes on local freeways and will possibly reduce fees for EVs on area toll roads. The city will also issue permits for installation of home charging stations within 24 hours and provide free or reduced-cost charging stations to drivers of the Leaf or Chevrolet Volt.

Spanjian said Houston would probably have close to 250 charging stations by the end of the year, including ones installed by the city itself and 50 stations from San Francisco-based Ecotality, which is leading a $230 million public-private partnership to install 15,000 charging stations in 16 U.S. cities and the District of Columbia.

Knox said that NRG Energy is also looking to install its eVgo network along the state highways from Houston to Dallas-Fort Worth and San Antonio.

Qualified Praise from Enviro Groups

Environmental advocacy groups in Texas have praised Parker and Spanjian for their efforts to transform Houston into a clean energy capital. But they point to various challenges the city must face to extend its reach beyond a few key voluntary programs.

Luke Metzger, director of Environment Texas, an Austin-based advocacy group, noted that Houston has struggled to encourage renewable energy consumption among its residents despite being the nation’s leading municipal buyer of green power.

Unlike Austin and San Antonio, Houston does not own any utilities and has so far been unable to coax CenterPoint Energy, the local electricity supplier, to offer solar power incentives to its customers, he said.

The city’s energy efficiency initiatives “are a good start, but we need to see tougher policies implemented to require energy efficiency, and more twisting of arms at CenterPoint to get the kind of programs that Houstonians want, like solar rebates,” he said.

Metzger added that he was hopeful that Parker would make her sustainable city initiatives an even bigger priority should she be elected to a second term this fall.

Matthew Tejada, executive director of Air Alliance Houston, said that tackling high energy consumption among Houstonians was a “massive undertaking” for any city official, due in part to the overall lack of leadership on such issues at the state level.

“It is going to have to be a very laborious, long-term grassroots effort to get the citizens of Houston behind these programs, and that is going to be a chore, but that is really the ultimate step that anybody … is going to have to take if they really want to turn the tide and make this city clean and sustainable,” he said.

“I hope that, should [Parker] win a second term, she will renew the city’s commitment to getting everyday Houstonians to be less energy intensive.”

Fossil Fuel Industries Entrenched

Juan Parras, director of community outreach for CLEAN (Citizens League for Environmental Action Now) in Houston, said he would like to see Parker’s office focus more on challenging the area’s prominent fossil fuel industries.

He said that the Houston ship channel, a 50-mile-long stretch of oil refineries and petrochemicals, continues to produce at least 12 hazardous air pollutants, eight of which are cancer-causing chemicals, that blow into neighboring low-income communities.

Parras argued that projects like the proposed $7 billion Keystone XL oil sands pipeline, which would carry Canadian tar sands crude from Alberta mines to refineries in Houston and Port Arthur, Texas, could create “a lot of toxic emissions in our communities.

“Switching to [cleaner energy] creates a cleaner environment, but it doesn’t keep us from being exposed to toxins” produced from new and old fossil fuel projects, he said.

In March, Mayor Parker sent a letter to Secretary of State Hillary Clinton urging the State Department to consider the impact of potential increases of air pollutants on Houston from Keystone XL. Due to the international nature of the pipeline, the agency must grant a presidential permit required to cross the U.S.-Canadian border. A thumbs-up or thumbs-down is expected before December.