For decades Texas has been the largest producer of transportation fuels in the United States. Our refineries have produced gasoline, diesel and jet fuel that mobilized the nation and made the state rich. But based on current projections, demand for gasoline will decrease significantly in the coming decades because of a combination of fuel economy improvements and the dramatic shift to electric vehicles.
These trends could give Texas cause for worry because they might undercut global demand for gasoline. But Texas industry can also play a key role in the era of electrified transportation.
In the U.S., electric vehicles are expected to account for up to 35 percent of new car sales by 2030. Because of performance, energy diversity and environmental- and climate-related benefits and the impending arrival of autonomous vehicles, the surge in electric vehicles will continue worldwide. Furthermore, an increasing number of cities are proposing to ban diesel vehicles — most recently, Athens, Madrid, Mexico City and Paris — thereby adding uncertainty to the future of light-duty diesel vehicles.
Currently, there are two ways to electrify vehicles — with fuel cells or with batteries. Most attention today is focused on battery electric vehicles, and given recent improvements, rightly so. However, fuel cell electric vehicles, which derive their electricity by combining hydrogen and oxygen from the air over a catalyst, with water being the only emission, are gaining traction with manufacturers. Fuel cells have been used by NASA for decades, so they just might be a space-age technology whose time has come.
Texas is ideally situated to be a leader in producing hydrogen for the new energy system and for the next generation of electrically powered vehicles. Texas is the largest producer in the nation of hydrogen and has accumulated excellent knowledge of the production, storage, transport and safe handling of hydrogen.
Texas also has excellent resources of natural gas — the main feedstock for manufacturing hydrogen — and of solar and wind, which can be used to produce renewable hydrogen by electrolyzing water. Hydrogen production and storage also can help to stabilize the electricity grid as more intermittent renewables come on line.
More broadly, hydrogen can be used to power turbines to create heat and electricity, as a feedstock in several industrial applications such as the production of steel and chemicals including ammonia for fertilizers, and in the semiconductor industry.
It seems clear that an energy transition is afoot, and hydrogen might play a key role in multiple sectors simultaneously. Texas can use that transition as a way to propagate its leadership position.
The hydrogen society has been talked about for decades, but its potential has gained attention recently. For example, 13 major international companies recently created a “Hydrogen Council” to pool their resources to promote hydrogen in the energy transition. These companies invest about $2 billion per year on hydrogen and fuel cells. They are accelerating their investment in the hopes that this private sector leadership will provide the platform for government and policymakers to develop policies and frameworks that build hydrogen into economic growth and environmental protection efforts.
To put it in context, that level of research investment is on a par with traditional research and development budgets for the U.S. Department of Energy for all nonnuclear forms of energy combined.
Of the 13 companies in the council, three have significant operations in Texas — Air Liquide, Shell and Toyota. Air Liquide already is a major hydrogen producer in Texas. Shell has its U.S. corporate headquarters in Houston and has major oil and gas production and exploration, refinery and gas station network operations in the state. Toyota has a manufacturing plant in San Antonio and recently moved its U.S. corporate headquarters to Plano.
Texas has a great opportunity to join with these companies not only to be the leader for today’s fuel but to keep making money while the energy sector reduces its environmental footprint and gets transformed. This is where Texas has excelled — not through mandates but in partnering with industry to create an environment to attract business and create jobs.
Alan C. Lloyd is a senior research fellow at The University of Texas at Austin’s Energy Institute. Michael E. Webber is deputy director at the Energy Institute.