By John B. Kelly
The future of natural gas is at risk due to efforts to transition to an electrified/low carbon energy world. This is good for the environment, but a risk for Philadelphia Gas Works.
However, the PGW infrastructure can be leveraged to produce and distribute multiple green fuels. This transition to greener fuels at PGW will save 1,600 jobs, avoid default on almost $1 billion in debt owed by PGW and create hundreds of new jobs.
PGW is a city-owned utility that has more than $900 million of debt on the books. More importantly, PGW has a number of underutilized assets that could be adapted to benefit the environment, create green jobs and support the transition to green fuels.
When we look at what’s happening in neighboring states, PGW in its current form is at risk:
• The NY City Council in 2021 banned the use of gas stoves in new buildings starting in 2024.
• The NY governor wants to extend this ban to gas heating equipment in 2030.
• In recognition of the impending challenges for the natural gas sector represented by these and other similar trends, in February 2023 the governor of NJ issued an executive order establishing a process to develop a “Plan for the Future of the Natural Gas Utility in New Jersey.”
There are a number of existing technologies that can be implemented over the next decade to make Philadelphia a leader in cleaner green energy. Investing in green technology:
• fights climate change
• ensures PGW and its 1,600 jobs survive
• avoids a massive financial crisis for PGW’s debt
• creates new union jobs producing and selling green energy to the Mid-Atlantic region.
PGW already owns assets that may be useful in the production and distribution of the low-carbon fuels at market-leading prices in PA, NJ, DE and even New York – positioning Philadelphia as a green energy center. PGW also has assets and experience in liquid natural gas services that can be expanded to support the transition to green fuels and could be used with green fuels in the future to expand the capabilities of our future green energy center.
To position Philadelphia as a leader in green energy, first-mover advantage is critical. The opportunities discussed below should be reviewed for feasibility. The most viable should be implemented quickly, to meet our goals of reducing our impact on climate change, preserving and creating jobs and establishing Philadelphia as a leader in green energy.
• Offshore wind producers in NJ and DE produce electricity during all hours of the day and night – whenever the wind blows – resulting in a glut of supply during off-peak consumption periods. We can convert low-cost electricity at night into hydrogen and convert it back to electricity when prices are higher at peak hours. PGW already has assets that it could redeploy to get into this market faster and at a lower cost than others. This electricity should also be eligible for green energy pricing premiums.
• Our region has excess nuclear capacity at night, which may be yet another source of inexpensive off-peak power.
• The Philadelphia Water Department produces tons of sewage sludge that can be converted into gas derived from organic material, also known as biogas. Instead of shipping this sludge to landfills where it emits methane or for use as fertilizer that pollutes streams and rivers, it could be converted into green biogas onsite and sold through the existing PGW system.
• According to the city Department of Public Health, there are over 12,000 food establishments in the city. Food waste from these restaurants and the food distribution center can be converted into biogas instead of being sent to landfills that leak methane.
Renewable biogas can be used as a direct replacement for fossil fuel-based gas. Instead of paying Texas for our natural gas, we could keep the money and the jobs here.
• With future developments in carbon capture, we could combine hydrogen capacity and carbon capture to make synthetic gas — known as syngas — for distribution via PGW. PGW was founded to make syngas out of coal, a dirty process that was replaced with natural gas when the pipelines from Texas were built. It would be a natural progression to return to making our own syngas, but now with clean, green technology.
Let’s leverage existing assets, federal grants, tax credits, municipal buying power and other municipal funding tools to accelerate Philadelphia’s transition to green energy technologies and to position Philadelphia as a green energy center.
• Use existing PGW infrastructure to store hydrogen overnight. Select the most effective and efficient technology to convert cheap/free, night-time, wind-generated electricity (or nuclear power) to hydrogen, store it in existing tanks and re-convert to electricity during peak hours at maximum price.
• Use and expand PGW’s liquid natural gas assets and services to support the transition to green fuels. LNG is used to provide safety and security when sold in markets where pipeline access is insufficient. It’s used as a fuel for electric peaking when electric supply is critically required. It supplants gasoline and diesel in many commercial fleets, long-haul trucking and industrial applications. And it provides other utilities critical supply to meet their demands for service on the coldest days and winter periods.
• Invest in technology to convert sewage sludge into biogas. This would save municipal budget dollars and create high-paying green jobs.
• Establish a program to collect food waste from the local food and restaurant industry for use as a feedstock for a biogas production plant. The technology to support such a program exists currently and is proven to work from a design and operational perspective.
• Create a special green biogas SKU that can be utilized by companies to verify their participation in the green energy program. This will allow customers to upgrade to biogas and improve their carbon positioning by purchasing a low-carbon fuel.
• The federal government has earmarked $7 billion to create green Hydrogen Hubs. Philadelphia is included in the proposal, but we’re competing against other potential hubs that are in the Ohio River Valley area. Philadelphia must strengthen its green energy positioning so we can become the official regional Hydrogen Hub, unlocking federal funding.
Green energy is an excellent example of how we, the citizens of Philadelphia, must look forward at market and societal trends to avoid risks and find ways for our city and region to grow and prosper.
In this case, because of my experience with environmental issues and municipal finance, we looked at the environmental and energy market and the trend toward decarbonization. There are great risks for PGW as a natural gas distributor, but also great opportunities. We believe that Philadelphia has the resources – skilled labor, existing infrastructure and market position – to take advantage of the opportunities to be a major player in the green energy economy of the 21st century, improving the environment while also creating jobs and wealth for Philadelphians.
We need at least one City Council at-large member who has the experience and interest to tackle these issues. The world is changing faster than ever. We will either be run over, or we will be prepared and will prosper. ••
John B. Kelly is a Democratic candidate for City Council at large.