The rise of renewables, with Beijing in the driver’s seat, will force Houston to think beyond oil if it is to retain its position as a global economic powerhouse, according to a recent editorial in the Houston Chronicle.
With oil prices in the US$70 per barrel range and domestic exports “expected to skyrocket over the summer” as China’s thirst for crude grows, the Texas industry may be feeling flush today, the paper states. But oil wealth now has a best-before date, with even top producers predicting peak global demand for petroleum to be short decades away. Veteran energy analyst Daniel Yergin is forecasting that 30% of all U.S. cars will be electric by 2040.
“Global campaigns to prevent climate change will only accelerate the transition,” the Chronicle notes, adding that China is driving and steering the shift. The editorial cites a 2017 analysis by the Institute for Energy Economics and Financial Analysis (IEEFA), which concluded that Beijing “will certainly be very comfortable providing technology leadership and financial capacity so as to dominate fast-growing sectors such as solar energy, electric vehicles, and batteries.”
So while “Houston is still the energy capital of the globe, and probably will be for some time,” it should heed “a friendly warning that things can change quickly,” the hometown paper states. To avoid “going Rustbelt,” the city must reconfigure the sources of its economic power. One path forward is diversification beyond energy, building on the city’s growing strengths in biomedical research and tech startups.
To remain an international player within the energy sector itself, the Chronicle adds, Houston needs to get serious about investing locally in all aspects of renewables, including battery research, taking advantage of its status as “the global centre for technology and managerial experience in the energy industry.”
A Houston which was truly leveraging its know-how might want, for example, to begin thinking about “retooling deepwater rigs for offshore wind power,” the editorial states.