The following article delves into Houston’s workforce readiness for the energy transition, the challenges and opportunities that lie ahead. It draws from McKinsey’s 2022 report on ‘Perspective on The Energy Transition Capital of the World: Houston’s Opportunity to Win by Catalyzing Capital Formation‘. This report has been elaborated in partnership with the Houston Energy Transition Initiative and other partners. For a detailed source list please refer to the end of the page.

Introduction

The global push toward a sustainable, low-carbon future has accelerated the need for an energy transition. This is prompting cities worldwide to adapt and innovate. As the traditional “Energy Capital of the World,” Houston is uniquely positioned to lead this transition. But as the city shifts from a fossil fuel-dominated economy to one powered by renewable energy, a critical question emerges. Does Houston have the proper workforce to spearhead this transformation?

This article delves into Houston’s workforce readiness for the energy transition, the challenges and opportunities that lie ahead. As well as the role that WTS Energy plays in ensuring that companies have the talent they need to thrive in this evolving landscape.

Houston’s Legacy: A Foundation for Energy Transition

Houston’s reputation as the Energy Capital of the World is deeply rooted in its historical dominance in the oil and gas sector. With a century of expertise, the city has developed an unparalleled infrastructure. This supports a vast network of energy companies, and a workforce skilled in all aspects of the energy industry. Ranging from exploration and production to refining and distribution.

This legacy provides a solid foundation for Houston to transition into a leader in the new energy economy. The city’s established energy infrastructure, coupled with its strategic location and access to global markets, makes it an attractive hub for renewable energy projects. Some areas areas like hydrogen production, carbon capture and storage (CCUS), and wind and solar energy are thriving.

Why Houston (and its workforce) is Poised to Lead the Energy Transition

With the growing importance of a net-zero future, Houston, a formally oil and gas centric city, is now part of the goal. Nowadays, the region has numerous benefits that can be leveraged to become a leader in the energy transition arena. These thanks to the years of economic flourishing, an established workforce, and others such as:

• Established industry expertise, including a large group of capital allocation decision makers in integrated energy companies

• a successful record of traditional energy financing

• established energy industry financiers and a strong base of PE talent

• access to low-cost power

• a diverse talent pool with a varied skill set, including engineering and project management

• academic institutions that focus on developing and scaling energy transition technologies

• direct access to large ports and other critical infrastructure for certain energy transition technologies

• energy industry infrastructure such as refineries and pipelines

• integrated energy incumbents with net-zero commitments to fund, develop, and scale projects

• access to permitting

Houston is an attractive destination for energy transition companies and investors looking to drive innovation and maximize their return on investment. The ease of doing business, its accessibility to industry partners, and diverse talent pool, create an ideal environment. There is support coming from the Houstonian population. As much as 87% of young adults said the transition from oil and gas to alternative sources is necessary for Houston’s economic future, this according to the 2024 Kinder Houston Area Survey.

The Economic Impact of a Skilled Workforce

Skilled and adaptable workforce is essential for Houston’s leadership in the energy transition and for the region’s broader economic health. The shift to renewable energy is expected to create significant economic opportunities. New jobs continue to emerge in areas such as renewable energy development, energy efficiency, and environmental management.

The hydrogen economy, for example, is projected to create approximately 180,000 new jobs in the Houston area alone. These jobs will require technical expertise and innovative thinking, underscoring the importance of a skilled and adaptable workforce.

Houston has seen an increasing number of investment from various sources in the latest years. These investments towards the energy transition are fueling the road to net-zero. Source

Assessing Houston’s Workforce for the energy transition: Gaps and challenges

As mentioned before, Houston’s workforce is one of its greatest assets in the energy transition. The city is home to a large pool of highly skilled professionals. They bring with them expertise in engineering, project management, energy finance, and technology development. This talent pool is crucial as the energy sector shifts towards cleaner technologies and more sustainable practices.

However, the transition also highlights significant gaps in the workforce. Many of the skills that are critical in the oil and gas industry, such as petroleum engineering and drilling operations, do not directly currently translate to the renewable energy sector. As a result, there is a growing need for reskilling and upskilling programs. This, to equip workers with the competencies required for new roles in clean energy.

It is also a must to identify and speed-up the hiring process to keep this transition as seamless as possible. At WTS Energy, we are ready to work as consultants providing up-to-date labor market data to attract the right talent.

The Importance of Reskilling and Upskilling

Reskilling and upskilling the existing workforce is essential for Houston to maintain its leadership in the energy sector. According to a study by the University of Houston, the energy transition will require a broad array of new skills. These include expertise in renewable energy technologies, data analytics, and environmental science. This presents an opportunity for educational institutions, employers, and government agencies to collaborate on training programs that prepare workers for the jobs of the future.

In addition to technical skills, soft skills such as adaptability, problem-solving, and cross-disciplinary collaboration will be increasingly important. The energy transition is a complex, multi-faceted challenge that requires innovative thinking and a willingness to embrace new approaches. Workers who can navigate this complexity and drive change will be invaluable to Houston’s future success.

Challenges in Workforce Transition

Houston’s workforce is well-positioned to lead the energy transition. But the shift presents significant challenges. With a new generation coming for these new roles, demand for benefits and good working conditions are to be expected. On the other hand, for the workforce that is expected to transition to these roles is used to the higher salaries and long tenures associated with the O&G industry. It is important to attract the right people with the right incentives if we want to be on the good path towards net-zero.

Of course, there is also the need to bridge the gap between the skills workers currently possess and those required in the new energy economy. In these two scenarios, WTS Energy plays a critical role in aiding companies with consultancy and streamlining their recruitment processes.

The Role of WTS Energy

WTS Energy is a global workforce solutions provider specializing in the energy sector. As companies in Houston transition from traditional energy to new energy, WTS Energy offers a range of services within our recruitment offering designed to make the recruitment process seamless and efficient. These services include:

• Talent Acquisition: WTS Energy leverages its extensive global network to identify and  attract top talent for roles in the energy transition. This includes both technical positions and leadership roles that are crucial for guiding companies through this period of change.

• Labor Market Insights: WTS Energy provides up-to-date labor market data and insights, helping companies understand the evolving talent landscape and make informed decisions about their workforce strategies. This includes identifying emerging skills gaps and developing strategies to address them.

• Consulting Services: WTS Energy offers consulting services to help companies navigate the complexities of the energy transition. This includes workforce planning, organizational change management, and talent strategy development.

By providing these services, WTS Energy ensures that companies in Houston can successfully transition to new energy while minimizing disruption to their operations. Our expertise in recruitment and workforce development is a critical asset for HR managers and energy companies navigating this complex landscape.

The Future of Houston’s Workforce: A Model for Other Cities

As Houston continues to evolve as a leader in the energy transition, its workforce development strategies offer valuable lessons for other cities facing similar challenges. The city’s approach to reskilling and upskilling demonstrates the importance of proactive planning. It is essential to collaborate in building a workforce that can thrive in the new energy economy.

By investing in its workforce, Houston is not only positioning itself as the next energy transition capital of the world but also setting a standard for other cities to follow. As more regions embrace the energy transition, Houston’s experience will serve as a blueprint for how to navigate this complex process successfully.

Conclusion: The Path Forward for Houston’s Workforce

Houston is at a critical juncture in its history. As the world moves toward a low-carbon future, the city has the opportunity to redefine its role in the global energy landscape. A skilled and adaptable workforce is central to this transition, and with the support of partners like WTS Energy, companies are well-positioned to lead the way.

For HR managers and energy companies in Houston, the energy transition represents both a challenge and an opportunity. The need for new skills and talent is urgent, but so too is the potential for economic growth and innovation. By working with WTS Energy, companies can ensure that they have the right people in place to navigate this transition successfully and capitalize on the opportunities it presents.

As Houston charts its course toward becoming the next energy transition capital, the city’s workforce will be its most valuable asset. With the right strategies and support, Houston can not only maintain its status as the Energy Capital of the World but also lead the global effort to build a sustainable energy future.

Sources

Houston Skills Gap Report (jpmorganchase.com)

Preparing Houston’s workforce for the shift towards low-carbon energy solutions (sciencex.com)

Houston as the epicenter of a global clean-hydrogen hub | McKinsey

Energy Transition – Capital Formation Whitepaper.pdf (houston.org)