Houston climate nonprofit has close ties with oil giants. Here's why. - Houston Chronicle

Houston climate nonprofit has close ties with oil giants. Here's why.

Greentown Labs, a nonprofit incubator for climate solution startups, is wrestling with a key question three years after its launch in Houston: Which oil companies can it partner with without damaging its reputation?

The fix it settled on was to judge potential oil and gas industry sponsors based on their commitments to addressing climate change, the organization's CEO told the Chronicle in a recent interview. It was a decision that chafed some of the world’s biggest oil companies in recent months and sparked friction within the Boston-based nonprofit tasked with boosting "green" technologies in the heart of the nation's energy capital.

Greentown’s board considered a motion late last year that would have ended its three-year partnership with oil giant Saudi Aramco, sources said, but the motion failed narrowly. The partnership's term expires in 2026.

Advertisement

Article continues below this ad

Greentown and Exxon Mobil were discussing a partnership agreement until late last year, when those talks abruptly broke down, leaving the Houston oil giant disappointed, sources close to the matter said. Greentown confirmed that it had discussions with Exxon and said it remains open to continuing them. Exxon declined to comment. Saudi Aramco did not reply to requests for comment.

HOUSTON NONPROFIT: Greentown Labs gains support in guiding Houston to cleaner future

Both Exxon and Aramco ranked poorly in a September report by Carbon Tracker, a climate-focused financial think tank that ranks oil companies based on the strength of their pledges to reduce emissions from their activities. Carbon Tracker's metrics are among the third-party work Greentown is using to determine partnership eligibility, Kevin Knobloch, Greentown’s Boston-based CEO, said in an interview last month.

A mission-driven organization such as Greentown should be selective about which companies it works with, he said.

“It is important to proactively partner with companies that are leading the charge at the vanguard of climate responsibility,” he said.

Advertisement

Article continues below this ad

Greentown declined to discuss the details of its discussions with current and prospective partners, but said its partnership with Aramco remains in good standing.

RENEWABLES LEADER: Texas installed more solar than any other state in 2023, report finds

Oil companies were among the early backers when Greentown came to Houston in 2021. Now, the revised approach to industry money comes as it faces financial challenges. The incubator cut the size of its staff by 30% last month, eliminating 18 positions — 12 in Boston and six in Houston. Eleven people were laid off, while other eliminated positions were vacant, Greentown said. It did not say where the 11 were located.
Houston Mayor Sylvester Turner speaks during the grand opening of the new Greentown Labs facility in April 2021. The clean-energy incubator is housed in the former Fiesta store in Midtown. Mark Mulligan/Staff photographer

While there are more oil companies in Houston that could contribute to Greentown's cause, accepting oil money inevitably poses an existential dilemma, according to nonprofits working in the climate and environment space.

Advertisement

Article continues below this ad

"There’s not a way for climate nonprofits to take money from oil companies that won’t dilute the product or subvert the mission in some way," said Josh Eisenfeld, Earthworks' corporate accountability campaign manager.

From Boston to Houston

Greentown Labs opened its Houston outpost in April 2021 to much fanfare.

At the time, Ajay Mehta, vice president of engineering technology at Shell, said Greentown was positioned to leverage many of Houston’s assets to help it become “the energy-transition capital of the world.”

Advertisement

Article continues below this ad

“I hope this starts creating that culture — developing an ecosystem in Houston that is much more welcoming to the green-tech community,” he said at the time. “Here is a place we can assemble and come together, that connects industry and academic partners to solve this complex problem together.”

Big oil companies, flush with cash, remain interested in cozying up to emerging energy technologies as the transition to cleaner forms of energy accelerates. Startups often need partnerships with big oil companies to achieve the massive industrial scale required to make a difference for the climate, billionaire investor Bill Gates said in a recent visit to Houston.

CLIMATE GIANT: How Houston billionaire John Arnold went from energy trader to climate philanthropist

The shift to cleaner energy can’t happen without the oil and gas industry's skills and balance sheets, said Bobby Tudor, chairman of the Houston Energy Transition Initiative, an offshoot of the Greater Houston Partnership, which provided some initial funding to Greentown when it launched in Houston in 2021. Plus, oil and gas continues to play a fundamental role in serving the world's energy needs, which points to what Tudor described as a common conflict confounding conversations about addressing climate change: meeting the world's energy needs has to have equal footing with the need to drive down greenhouse gas emissions.

"We’re very supportive of Greentown Labs in Houston. We want them to be a growing and important part of our ecosystem," Tudor said. "We also hope that, over time, they will clearly embrace the importance of the incumbent industry in meeting these dual challenges."

Advertisement

Article continues below this ad
Greentown Labs CEO Emily Reichert gives Houston Mayor Sylvester Turner a tour of the Greentown Labs facility during its grand opening event in April 2021. Mark Mulligan/Staff photographer

Greentown's Knobloch maintains that oil and gas companies will continue to play an important role in the organization, which counts Shell and Chevron among its earliest and largest financial sponsors.

"We're not winnowing at all,” he said, noting recent partnership deals reached with oil giants Total and SLB. "If anything, we're expanding our corporate partnerships."

More from Amanda Drane: The oil industry's trash could become desert riches as wastewater recycling gains traction

Knobloch, who served as president of the Union of Concerned Scientists and the Department of Energy’s chief of staff under former President Barack Obama, said he’s been working to realign the nonprofit’s business model since he took the top job in September. Knobloch aims to bring in new forms of revenues, such as donations from charitable foundations, and aims to build a major gifts program.

“This is what I did very successfully at the Union of Concerned Scientists,” he said. “People who support action on climate change don't necessarily think about Greentown because they don't know we’re a nonprofit.”

According to the nonprofit's 2022 tax filings, Greentown brought in $7.64 million in revenue for the year. It had $3.95 million in expenses during the same period, including $3.02 million in salaries and employee benefits. Figures for last year were not available.

'A contentious topic'

The struggle involving partnerships with oil companies and their potential to “greenwash” oil and gas activities came to a head in Boston last year, shortly before Greentown hired Knobloch.

“Working with oil and gas companies will always be a contentious topic for us — both internally and externally,” Kevin Taylor, who served as Greentown’s interim CEO from December 2022 to June 2023, said in an email to the Greentown community last June after the Boston Globe published a piece headlined “Greenwashing at Greentown Labs? The Somerville climate-tech hub’s new partner is raising alarms.”
Attendees listen to a panel discussion at Greentown Labs’ one year anniversary in Houston on Thursday, April 21, 2022. The largest energy tech and climate tech business incubator opened its second location in Houston on Earth Day 2021. Since then, it has grown from housing about 20 start ups to 60s and has attracted investment and curiosity in the Houston region. Elizabeth Conley, Houston Chronicle / Staff photographer

Taylor, who is no longer with the organization, said at the time that there was a role for oil companies “willing to make genuine strides forward.” When announcing the Aramco partnership in April 2023, he said the company “exemplified what we look for in a partner” because of its support for entrepreneurs “in the spirit of sustainability and climate action.”

POTENTIAL BAYTOWN BOOM: Exxon's Baytown, other area projects to receive hundreds of millions in Biden admin funding for climate

Knobloch, too, asserted oil and gas majors have an important role to play in the energy transition because of their ability to develop large projects, their engineering and project management skills and resources.

But Knobloch offered a key caveat for any oil and gas partner, current or prospective, who decided to roll back climate commitments: “We’d want to talk.”