What will Pennsylvania’s future with respect to energy look like 25 years from now? What role will shale gas play? And how will that role affect the state? A group of 35 people began to study that question in the summer of 2017 and the end result, a new study, has just been released (full copy below). According to the study’s results, there are two distinct paths PA can take, resulting in two very different outcomes.
Team PA, a Harrisburg-based public-private nonprofit that promotes workforce and economic development, has just released the report “Pennsylvania Energy Horizons” (see below). However, it was Shell, builders of the ethane cracker in Monaca, PA, that led the research effort and paid for it. But lest you jump to the wrong conclusion, Shell hired a bunch of eggheads from the London School of Economics to do the research. The end result was, as is admitted by folks not in the industry, an unbiased analysis.
The eggheads agree that PA’s energy future turns on shale gas. In one scenario, PA works to keep much of that gas in the state and grows its manufacturing base, leveraging its own abundant resources. In a second scenario, politics prevent the state from fully leveraging the gas and much of it goes out of state, even out of the region, and so PA does not take full advantage of its own resources.
The study is not so much fixated on predicting the future, as it is in identifying the forces that will influence which direction the future goes.
Tangentially related to the release of the study is news that PA Gov. Wolf has established a new Governor’s Office of Energy. He put Denise Brinley from the Dept. of Community and Economic Development in charge of the new department. So far Wolf has not mentioned this new development. Not a peep–we’re not sure why other than he wants to avoid blow back from radical environmentalists who keep targeting him because he’s not as crazy as they are.
At any rate, the following article by the Post-Gazette’s Anya Litvak (only reporter there worth reading) explains the recently released study, and mentions Brinley’s new gig.
In summer 2017, Pennsylvania convened a group of 35 people to envision the state’s energy future. Leading the exercise was a team from Royal Dutch Shell, the company behind the sprawling petrochemical campus rising in Beaver County.
The group’s assignment was grand: to imagine “how might Pennsylvania’s energy system evolve in 25 years, and what might it mean for Pennsylvanians?”
Will there be nuclear plants? Will cities horde the profits from energy resources? What does the decline of coal have to do with the opioid epidemic?
It was fair to wonder if a group so diverse that the phrase “climate change” was ruled too much of a “trigger” in their early sessions could reach any sort of consensus.
And there was another question that the group knew would require a public justification: Why was Shell shepherding these discussions?
For Katrina Kelly-Pitou, a research associate at the University of Pittsburgh’s Swanson School of Engineering, it was among the most “contentious document(s) I’ve ever been involved in.”
The participants — even some inclined to be wary of the involvement of a major energy company like Shell — say the process turned out to be enlightening and unbiased.
The Pennsylvania report is now ready for prime time. According to Team PA, a Harrisburg-based public-private nonprofit that promotes workforce and economic development and that led the effort, the intent is to take it on the road and launch discussions among groups across the state.
Looking at the whole system
Shell’s Scenarios team, based in London, has been doing these kinds of exercises since the early 1970s. The goal isn’t to forecast the future — at least not a single future — but to identify forces that could swing outcomes.
This particular effort “forced us to look at the entire energy system,” said Denise Brinley, executive director of a newly-created Pennsylvania Governor’s Office of Energy.
It was a way to organize disparate variables like an aging workforce, shale gas, automation, the state’s public pension crisis and severe flooding into a framework that shows how pulling the lever on one condition impacts the others, Ms. Brinley said.
This is the first time that Shell has facilitated this kind of effort for a U.S. state.
Shell was “pleased” to do so, free of charge, said spokesman Ray Fisher, “as a core extension of Shell’s efforts to begin productive dialogues on the long-term energy transition at a state level.”
The transition, he clarified, would be to low-carbon energy.
Two possible futures
After more than a year of meetings, Shell’s experts — many from the London School of Economics — produced a report that imagines two scenarios. Both begin with gridlock in Harrisburg and pivot on what the state decides to do with its natural gas resources.
If shale gas appears to play an outsized role, it’s because Pennsylvania has a ton of it and that is pushing the state into a position of global importance as international players — like Shell — clamor to take advantage of it.
In the first scenario, legislators work together and come up with a policy that encourages using shale gas to expand industry and fund innovation, bring in more manufacturing, and launch “the fourth Industrial Revolution.”
Employment and GDP grow. Pennsylvania becomes a global powerhouse. With tax revenue from a healthy economy, the state invests in carbon capture and low-carbon energy to drive down emissions.
The second scenario takes Pennsylvania inward and its gas elsewhere. Partisanship in the Legislature leaves towns to fend for themselves. So they develop disconnected, artisan economies and distributed energy resources.
In this version, the shale gas mostly finds its way through pipelines to other markets. Then the pipelines get harder to build. Economic growth is stagnant. People learn to enjoy their “grounded, connected, and self-sufficient” lives.
The report says neither scenario is good or bad, although it’s hard to imagine a Pennsylvania state politician advocating for the second trajectory.
A new state Office of Energy
Pennsylvania consumes less than a quarter of the gas it produces, and the number is even lower for natural gas liquids that currently get shipped to chemical plants, mostly on the Gulf Coast.
For those inclined toward the first scenario, the role of Harrisburg in coming up with a cohesive stance on energy cannot be overstated.
Today, disparate departments dole out energy grants or help retrain displaced coal miners, advocate for energy microgrids, write policies to encourage combined heat and power projects, and guide development of new pipelines.
That’s where the new Office of Energy comes in.
It is housed in Pennsylvania’s Department of Community and Economic Development — to create a new stand-alone state agency would require approval of the Legislature -— and is, thus far, an amorphous entity with six employees and no publicly disclosed mission statement.
Its formation was not announced and its sole public whimper was a change in Ms. Brinley’s LinkedIn profile. She was a senior energy adviser at DCED until a few weeks ago.
“We are really lifting this up from the ground,” she said in an interview.
‘A gift from Shell’
Christina Simeone, a senior fellow at the Kleinman Center for Energy Policy in Philadelphia, knew that the optics of Shell helping Pennsylvanians think through their energy future might ruffle feathers.
Shell Chemical Appalachia is building a $6 billion facility on the Ohio River that will turn ethane from shale gas into plastic pellets — a project the state wooed with more than $1 billion in incentives.
“Given the cracker plant and given the gas industry, I think those are appropriate questions to ask,” Ms. Simeone said.
Appropriate but unfounded, she added.
A half-dozen members of the group interviewed for this story, including Mark Brownstein, senior vice president of energy at the Environmental Defense Council, said the Shell facilitators did not steer the group toward any particular policies.
There were discussions about economic equity between urban and rural areas, about Pennsylvania’s legacy of environmental stewardship and energy innovation, about what role immigration will play in the state’s future.
The group included representatives from utilities, coal plants, environmental groups, Habitat for Humanity, pipelines, labor, and state regulatory agencies.
Ms. Kelly-Pitou, the Pitt researcher whose last gig was writing energy scenarios at the World Energy Council in London, has been through this before. She said that when she worked on scenario projects in the European Union, the conversations started with a baseline agreement that climate change is established science and that human activities are a driving force.
In Pennsylvania, the group took a few sessions to get past all that, she said.
“In our second session, we weren’t allowed to use the word ‘climate change’ because it was a ‘trigger,’” Ms. Kelly-Pitou said.
It was suggested that ‘extreme weather variability’ would be a more neutral term. “Then people really started coming on board and saying, ‘Yeah, there is something funny happening,’” she said.
‘An asset no matter what’
By the end, the discussion turned to what would best offer incentives to transition to a low-carbon economy in Pennsylvania — a carbon tax or a carbon price, she said.
The major gas decision appears to be whether the state generally favors keeping the gas within its borders by encouraging industrial and petrochemical uses, or whether a hands-off approach results in most of the shale bounty being piped to other regions.
“It’s an asset no matter how you look at it,” said Ryan Unger, executive director of Team PA, the Harrisburg economic development organization.
What happens affects whether emissions decrease when dirtier coal plants are pushed out by cheaper and cleaner natural gas. And whether that same gas inches out zero-carbon nuclear plants, pushing emissions higher.
It’s not just a philosophical discussion. Even now, the Legislature is considering bills to support what sponsors say are 16,000 nuclear industry jobs by shifting millions of dollars from electricity ratepayers to save the state’s nuclear plants from early retirement.
But determining how to guide the use of the state’s shale gas resources also will affect what’s left of the farmland in Greene and Washington counties after the fracking equipment has come and gone.
“We don’t want what took place following the coal boom to take place during this,” Mr. Unger said, in a nod to the legacy of streams that run orange from acid mine drainage to this day.
The economic and jobs impact of keeping those molecules within the state, whether they power a paper mill or a chemical plant, is undeniable, said Gideon Gradman, CEO and managing director at Integrated Energy Advisors.
He said it was “a gift from Shell” that the company was willing to facilitate this kind of effort and establish the “banks of the river” of what’s possible in Pennsylvania.
“Frankly, the government in general can learn from processes like this,” he said.*
*Pittsburgh (PA) Post-Gazette (Apr 8, 2019) – Pennsylvania’s energy future pivots on what Harrisburg does with all this gas, deliberators decide
Copy of Pennsylvania Energy Horizons report:
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