Q+A: Energy and Houston’s Future

Photo: Flickr user Alfre32.

After a year of planning and retooling, the Center for Houston’s Future announced Brett Perlman would be taking the helm of the non-profit with a focus on critical issues including energy, economic opportunity, quality of life and immigration. Perlman comes to the center after a four-year stint with the Public Utility Commission of Texas during the state’s deregulation of its electricity market, years of consulting and most recently a fellowship with the Harvard Advanced Leadership Initiative.

The Urban Edge talked with the Houston native about the city’s strengths, many challenges and its future in an interview that has been lightly edited and condensed for clarity.

Let’s talk about your time with the utility commission. It’s been more than a decade now, do you think the effort to deregulate has worked out?

I think that if you look at it at the highest level, what we were trying to accomplish was two main things: we were trying to sort of shift the risk from rate payers to shareholders if you will. What had happened in the 70s and 80s, not only in Texas but across the country – and we are seeing it again – we built these expensive nuclear plants that the rate payers had to pay for. In the 90s, there was this new technology that was very competitive in the market. We were trying to provide incentives for people to come in and build that new capacity and do that on Wall Street’s ticket instead of the rate payers ticket. And we accomplished that.

The second thing we were trying to do was to give people the power to choose, to give them choices. I think it’s had a major impact in terms of getting people to think about choice in a different way.

I think the third thing what was a bit of a surprise. We just had this explosion of development in wind primarily, and now we’re seeing an explosion in solar. And that was really facilitated by having a competitive market with low barriers to entry.

There are some issues that have to be addressed but I think by and large this has been viewed – this is somewhat self-serving for me to say – this has been incredibly successful in attracting new generation.

As you take the helm here, what do you think Houston’s strengths are?

The energy industry in particular is a real strength. The challenge for us going forward is we’ve seen major waves of disruption, and I’m just talking about the power side not the oil and gas side.

I think Houston is very strong on diversity. That’s another issue we at the center are going to work on; how we strengthen and build instituions that support the diversity of the city.

I think we have a number of assets, like the port and the the global airports, which are huge strengths in terms of the global competition we’re going to have for jobs, capital and business.

We’ve done a lot in the health care industry, I think that’s also a strength. That is changing rapidly as well, so how do we look at all the new innovation coming on in healthcare and how are we relevant?

You’ve touched on a number already but what are some of the big challenges facing Houston?

In the sort of battle for talent and capital, we have some liabilities we have to deal with: our school systems aren’t where they need to be, quality of life is an issue. I think we’ve done a lot to improve quality of life and greenspace but I think there’s a lot more to be done. People don’t like sprawl, I think that’s an issue we have to deal with.

I think we have a lot to build on in Houston.

Your appointment also came with a sort of reconfiguring of focus areas for the Center, can you talk about how that list came to be and why each area is important for Houston?

I think the immigration issue really came out of some of the things we’re doing building on this idea of diversity and how can we be a community that supports the immigrant community we have, that is attractive to people and that deals with some of the issues around undocumented workers.

Diversity and immigration are a real strength of our community.

On energy, I think we’re in this major transition from a fossil fuel-based economy to a low carbon economy and Houston has to be part of that transition because the industry runs through Houston. How do we understand and adapt and build the institutions that are going to support the next generation of cleaner energy technologies?

So is Houston well-poised for this transition now?

Energy innovation is tough because it doesn’t really fit the innovation model that has worked so well in software and social media. It’s not just a Houston problem, it’s a bigger picture problem. We have to find ways of innovating in energy as a country that fit the model for an industry where innovation takes a long time and uses a lot of capital.

I think, we’re well-positioned but we’re not where we need to be. Brookings just published a report looking at traditional venture capital, which is just a barometer, but if you look at the number of dollars over the last four or five years, 56 percent of the venture capital dollars in clean technology were invested in [Silicon Valley]. Houston is a part of the next three regions where there was significant investment, so we’re well behind. Clean technology patents, not a dissimilar story there. There’s a lot that we need to do in Houston to continue to evolve as the industry evolves.

You’ve talked a lot about strengthening institutions, what do you make of Houston’s current institutional landscape, particularly when you think about support from local government? I know Mayor Sylvester Turner has high hopes for this Innovation District.

I think it’s gotten a lot better. We created the Houston Technology Center, I was involved in that. Some of the same people involved in the innovation plan the mayor has were active in that. I think we’ve done a lot in the 20 years that I’ve been involved with this. Are we where we need to be? No, we’re obviously not…but I think we’ve identified this as an issue for the city. In the next 10 years, perhaps, we could surprise people in innovation in the industries in which we are strong in.

And what if we don’t innovate, what happens to Houston?

This has happened in a number of industries where the incumbents don’t pay attention to small companies that seem like almost a distraction and all the sudden they completely disrupt their industry. That has happened over and over again. Complaceny would not be a good thing.

But it’s not just a question of competitiveness, there’s also the reality of climate change. What happens to Houston if we don’t get serious about that?

When you live at a community at sea level that is in the path of hurricanes, whether you think about climate change as naturally occurring or man-made, doesn’t really matter quite frankly. We have to build resiliency into our infrastructure because we are going to have to deal with these problems. I think we are moving to address both the need for low-carbon fuel sources but also to address the issue of energy access. There are a couple billion people in this world who don’t have access to energy and that’s almost as big a challenge as climate change in some ways. Those are both major trends we are going to have to address going forward.

Unless we address this issue of resiliency, we are somewhat living on borrowed time.

Do you think companies and officials get that urgency?

I think there’s more to be done there frankly. It’s an area that I think we ought to be involved at the center. We ought to understand what the implications of climate change are on our community and we ought to be looking at building infrastructure, changing our building codes, looking forward enough, trying to understand what the implications are. There’s more to be done there.

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Leah Binkovitz

Leah Binkovitz is Senior Editor with the Kinder Institute for Urban Research.

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