Can Philadelphians Forge an Energy Hub?

Editor's Note: This post is a condensed version of a paper available at the Kleinman Center.

By Mark Alan Hughes

For almost two years now, Philadelphia has engaged in an increasingly contentious debate over the role that energy should play in the region’s economic future. An initial vision emerged from the Chamber of Commerce based on infrastructure investments (especially pipelines) that would allow Philadelphia to play an active role in Pennsylvania’s natural gas boom. That vision mobilized a vocal alternative view that focused on risks and costs associated with a natural-gas-based, petro-chemical supply chain.

The “Philadelphia energy hub” is stuck in the promotional stage of the issue attention-cycle, in which boosters and doomsayers each try to create a narrative that benefits a strategic interest. To have a real discussion about a Philadelphia energy hub, we need to move beyond simplistic references to good things like “a manufacturing revival” and bad things like “an environmental sacrifice zone." Now, we have two monologues: one saying “absolutely yes” and one saying “absolutely no.” The extremes have a right to state their positions, and personally I’m glad to have them both on the scene. But the question for the large majority of us is not, “yes or no?” The question is, “under what conditions?”

Can Philadelphia turn a “yes or no” debate -- in which blunt instruments of power are likely to produce either a pyrrhic victory or a stalemate -- into an “under what conditions” debate, in which legitimate concerns are accommodated in ways that advance the whole region on a sustainable pathway to a better future. This goal requires a delicate dance between analysis and compromise — toward a coherent strategy for using natural gas as an economic development driver for Philadelphia, the nation’s poorest big city.

The reason natural gas makes a powerful claim as a necessary bridge to the future is that CCS, renewables, storage, energy efficiency and every other option alone or in combination almost certainly takes more time to implement than we have to avoid the worst environmental consequences of a carbon-intensive energy system. (These consequences are outlined in many studies, but for a bi-partisan and establishment version, see Risky Business.)

But just calling natural gas “a bridge” doesn’t make it one. It’s time — past time — to design this bridge with at least as much seriousness as if we were planning to literally drive across one. Major design choices must go into a bridge before it can be built and used. Where do we get on, and where do we get off? How long is it, and what’s the speed limit? How much weight does it bear? What’s the toll charge? And once we’re across it, what does it connect us with and where have we bypassed?

So far, the Philadelphia energy hub debate has been dominated by narrow (which is not to say unimportant) interests. It’s like a bridge being designed by a bridge-painting company. They wouldn’t care about all those questions above; they’d only want a bridge that is ready for the next repainting as soon as the last repainting is completed. We need to design a bridge that serves everyone, not just the bridge painters.

The first principle of this design effort should be that no assumption is above interrogation. For example, why isn’t carbon-based natural gas a total non-starter for anyone who believes in climate change and its risks? Fair enough.

A January 2015 study published in the journal Nature provides a helpful answer. Informed by science over decades and from around the world, policymakers from every nation agreed in 2009 that average global temperatures should not be allowed to increase more than 3.6 degrees Fahrenheit (usually measured as 2 degrees Celsius above normal temperatures before industrialization). The accepted estimate for having at least a 50 percent chance of staying below that dangerous threshold states that the total additional amount of carbon emissions added to the atmosphere between now and 2050 cannot exceed the emissions contained in about a third of the world’s fossil fuel reserves.

What’s new and interesting in the Nature paper is that the authors ask which two-thirds should be left in the ground as “unburnable” fuels? Using well-established models that run both economic and climate data, they identify the most cost-effective third to burn before 2050 in order to stay under the 3.6 degrees Fahrenheit threshold. For the whole world, they estimate that 33 percent of oil, 49 percent of natural gas and 82 percent of coal is unburnable. But they also calculate these estimates for all the regions of the world with reserves. For the United States, they estimate that 6 percent of oil, 4 percent of natural gas and 92 percent of coal is unburnable. Even under the strictest scientific constraints with respect to global warming, the optimal global scenario for the U.S. energy system almost completely exploits our existing oil and natural gas reserves (and almost completely halts coal burning and further fossil fuel exploration).

Okay, that’s a smart accounting exercise by researchers who modeled a world committed to saving the planet. But what if we consider the question from a completely different perspective? How would a high-functioning government in the U.S. use a natural gas option to pursue a carbon reduction goal under some meaningful conditions like keeping the lights on and the bills affordable? Forget scientific research. How about long-term planning in the real world? Again, fair enough.

In September 2014, a group of 25 companies, organizations and foundations known as the Low-Carbon Grid Study (LCGS) released a report to determine a pathway for meeting California’s ambitious goal of cutting in half its greenhouse gas emissions by 2050.

The analysis shows that meeting the goal is possible with minimal impact on electricity rates and no compromise in electric grid reliability. The keys to the transition are energy efficiency, renewable energy sources, energy storage, electric vehicles, regional cooperation in energy markets, and the strategic and efficient use of natural gas dispatched to provide energy to the grid. Even in California, where stars align to an extent that climate hawks in other states can only dream about, natural gas is a critical element of getting to 2050 when real plans are being made for a real energy system.

All of these long-term accounting and planning scenarios, even if we accept their assumptions and methods, skip past the feasibility of actually implementing the changes they describe. What good are these exercises if they don’t take into consideration the difficulty of actually making the changes needed to realize them? One last time, fair enough.

A Jan/Feb 2015 study of this question is so on-point that I’ll just recite the title: “A critical review of global decarbonization scenarios: What do they tell us about feasibility?” The authors examine 17 scenarios from 11 studies. The most important conclusion for our present purposes is this: “Finally, all of the studies present comparatively little detail on strategies to decarbonize the industrial and transportation sectors, and most give superficial treatment to relevant constraints on energy system transformations. To be reliable guides for policymaking, scenarios such as these need to be supplemented by more detailed analyses realistically addressing the key constraints on energy system transformation.”

We have useful examples of collaborative processes addressing real-world constraints, including one centered on natural gas. The Salem Harbor Power Station opened in 1952 and burned coal for 60 years to supply the Boston area with electricity. In 2010, the Conservation Law Foundation (CLF) won a lawsuit based on the Clean Air Act against Salem Harbor’s owner, Dominion, and secured an order from the U.S. District court to approve a consent decree that would shut down coal operations by 2014 and prevent any future owner from ever burning coal on the site. In 2012, an energy company called Footprint bought Salem Harbor with a plan to convert it into a 630-megawatt, $800 million combined-cycle gas-fired turbine power station. But CLF went to court to stop the plan, arguing that natural gas is better than coal but still not good enough to meet Massachusetts' own carbon emissions goals set for 2050.

That’s when things got interesting. CLF and Footprint negotiated a deal that aligned all the salient concerns: Massachusetts’ carbon reduction targets, Footprint’s stated business plan, and CLF’s mission of environmental protection in accordance with state and federal laws. The basics of the deal are (1) the plant will open in 2016, (2) it must begin to reduce its CO2 emissions by 2026, and (3) its emissions must be 25 percent of its 2016 emissions by 2049. If Footprint can’t meet these conditions with technology that reduces its emissions, then it must either reduce operations accordingly or purchase renewable offsets.

The deal makes the “bridge to the future” a real thing, writing the specifics of the agreement into Footprint's permit to operate, which was approved by the state in 2014. The agreement designates how much CO2 may be emitted over a specific period of time and delineates remedies if the emissions exceed the permissible levels at given points in the future.

Admittedly, this is a simple and well-defined deal compared with the multiple of competing concerns wrapped up in the Philadelphia energy hub. But it does illustrate the point and shows that it’s at least possible to design compromises that create an acceptable balance among economic and environmental concerns in using natural gas to transform the energy system.

In the end, are Philadelphia and Pennsylvania up to the challenge of drafting a deal like Salem Harbor but on a much more complex issue? Can we identify the elements of such a deal and convene legitimate voices to explore the specific tradeoffs among those elements? Is there a compromise that a majority can embrace and that ensures protections and opportunities for all?

These questions will demand self-governance. There is no single trigger, like a lawsuit before a U.S. District Court, that will lead to a negotiation like that among CLF, Footprint, and Massachusetts’s energy and environmental regulators that produced the Salem Harbor agreement. A Philadelphia energy hub worth having will require a voluntary process among civic-minded parties capable of advancing all the important interests at stake.

Nothing about the energy hub discussion to date sounds even remotely like the above. Boosters and doomers talking without listening have more in common with an Eagles game than with a facilitated process of structured decision-making. But that process is the only way to move toward a Philadelphia energy hub worth having.

Image credit: flickr/Philadelphia Night Skyline

Mark Alan Hughes, Ph.D., is Professor of Practice at PennDesign and Director of the Kleinman Center for Energy Policy at the University of Pennsylvania.