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APRIL 26, 2022

Geothermal energy, hydrogen production and carbon capture, present unique opportunities for Texas

[Houston, TX] As part of a new Texas 2036-sponsored series of studies focused on key investment opportunities for the state, the Center for Public Finance at Rice University’s Baker Institute released its first study on how Texas could continue its energy leadership as the need for energy expansion grows worldwide.

Using carbon capture, geothermal energy and hydrogen as examples, the report highlights how Texas is well-positioned to sustain and solidify its role as the energy capital of the world, thanks to abundant natural resources, existing infrastructure, a highly skilled energy workforce and leading research institutions.

“Our state’s wealth of existing infrastructure and expertise demonstrate that Texas should be ground zero for energy technologies and innovations that will drive the 21st century energy expansion,” said John Diamond, Ph.D., who is the director of the Center for Public Finance at the Baker Institute and the Edward A. and Hermena Hancock Kelly Fellow in Public Finance.

Also, Texas offers an enviable range of unique geographical and geological features that make our state fertile ground for a boom in renewable and clean energy production—one we already see unfolding across much of the state.

“One of the clear areas of future energy opportunity in Texas is hydrogen. As of 2016, nearly 62% of the nation’s — and more than a third of the world’s — existing hydrogen pipelines were in Texas,” said Jorge Barro. “Besides hydrogen pipelines, Texas — southeast Texas especially — also 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.”

State government’s deep and wide experience with oil and gas policy also leave us well-positioned to develop the legal and regulatory scaffolding to support emergent energy industries. Property rights considerations, environmental regulations, permitting systems, public investment plans, and fiscal policy have all played significant roles in balancing the interests of the energy industry with those of affected constituents.

By extending this 20th century framework of policies and practices to reflect 21st century needs, the state can support the development of new and alternative energy generation in ways that protect the overall economy and the rights of individual Texans.

“Right now, the U.S. Department of Energy (DOE) is sifting through thousands of pages of information, deciding where to spend $8 billion that was allocated in last year’s bipartisan infrastructure law for regional hydrogen hubs,” said Rob Orr, senior policy advisor at Texas 2036. “Texas could also apply for more than $2.5 billion in funding for carbon capture demonstration projects. In total $20 billion in funding is available from the DOE for clean energy demonstrations and research hubs to move technology from the lab to commercialization.”

Nevertheless, Texas’ abundant natural resources, existing infrastructure, highly skilled 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.

“These promising new sectors being added to Texas’ energy portfolio — carbon capture, hydrogen, and geothermal — are part of an on-going energy expansion in this state,” said Jeremy Mazur, senior policy advisor at Texas 2036. “Our longstanding and continued leadership in oil and gas production positions Texas to be the nation’s and the world’s leader in developing and deploying new, promising sources of clean energy.”

What is it? Why Texas?
Carbon Capture, Use and Storage Carbon capture, use and storage captures carbon dioxide produced by power generation or industrial activity, transports it and then uses it or stores it underground.
  • Nearby geological formations in the Gulf Coast are ideal storage sites
  • A concentration of existing oil and gas wells offer plenty of sites to capture CO2
  • Experts in engineering, geology, chemistry, and supply chain management simplify the transition
  • Job creation and revenue offsets shift to low-carbon energy sources
Geothermal Energy Geothermal energy is tapped by drilling a mile or more underground to reservoirs of hot water and steam to drive turbines for electricity production.
  • Existing oil and gas industry skills, including directional drilling, chemical and structural engineering, and geology are used
  • This established technology provides a clean source of energy
  • Geothermal power plants produce dispatchable power supplies, increasing power grid reliability
  • Boosts GDP and creates more jobs relative to wind and solar
Hydrogen Energy Hydrogen, which can be produced from natural gas or renewable energy, can be transported to where it is needed to be stored energy or used in transportation or production.
  • More than 60% of the U.S. hydrogen pipeline and 30% of the world’s hydrogen pipeline are in Texas
  • The state’s access to ports makes it ideal for future exportation
  • Natural geological hydrogen storage capacity is currently in use
  • Innovations in hydrogen-powered long-haul trucking and the use of liquefied hydrogen in aerospace rocket fuel create opportunities for future industry growth

To download the report, visit

About Texas 2036
Texas 2036 is a nonprofit organization building long-term, data-driven strategies to secure Texas’ prosperity through our state’s bicentennial and beyond. We offer non-partisan ideas and modern solutions that are grounded in research and data on issues that matter most to all Texans. For more information, visit

About the Center for Public Finance
The Center for Public Finance (CPF) at Rice University’s Baker Institute focuses on the economic effects of major U.S. fiscal policies. Given the complexity of the U.S. tax system and the unsustainable nature of current U.S. tax and spending policies, the center examines the potential effects of various fiscal reforms on economic growth and the distribution of income in an effort to inform policymakers, stakeholders and the general public. In addition, CPF examines the challenges facing the country if policymakers continue to delay implementing solutions to these critical issues. CPF scholars actively participate in the policymaking process by advising various national government agencies, state and international governments, and multilateral development institutions, as well as various key individual policymakers. CPF scholars routinely present their work at CPF sponsored events, other public and private events, and in testimony before federal and state government committees.”

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