Can Philadelphia’s gas utility survive in a climate where fossil fuels are shunned?

A study exploring a climate-change strategy for Philadelphia Gas Works has laid out several pathways for the city-owned gas utility to reduce greenhouse gas emissions, all of them daunting alternatives for an enterprise whose current mission is to deliver affordable fossil fuel to 500,000 customers.

On Tuesday, the Philadelphia Gas Commission heard testimony from about 27 people, mostly climate activists, on a draft study exploring a “just transition” for PGW, the nation’s largest municipal gas utility. The city’s Office of Sustainability is leading the effort to rethink the gas utility’s business model to meet Mayor Jim Kenney’s goal of achieving a 100% reduction in carbon emissions by 2050.

The study presents the city with alternative approaches to reducing PGW emissions. They include replacing the natural gas the utility delivers in its pipes with renewable gas from landfills or other sources to decommissioning the gas distribution system completely and converting the utility’s customers to electric heat.

All the alternatives reduce the utility’s carbon footprint, but they are also potentially more expensive for ratepayers, the authors said. Some result in declining revenue for the utility and an uncertain future for its workforce of 1,600.

“In each of these scenarios, PGW is going to face challenges that are sort of cross-cutting and warrant consideration as we evaluate diversification to decarbonization,” said Dan Aas, managing consultant for Energy and Environmental Economics Inc. (e3) a San Francisco consultancy that headed the study.

The study was commissioned in 2019 and funded by the Bloomberg American Cities Climate Challenge. A final report is expected in June, and City Councilman Derek Green, chairman of the gas commission, said the council will conduct additional hearings at that time.

PGW has committed itself to undertake at least one pilot project to reduce carbon emissions due to the study. Several activists expressed support for replacing gas service with geothermal micro-districts, which would connect clusters of homes and businesses to a common geothermal heat source, built and managed by PGW. Several micro-district pilot projects are underway in Massachusetts.

But the study leaves unresolved how to balance the city’s conflicting missions of operating a commercial enterprise, providing affordable energy to the city’s low-income residents, and meeting climate goals.

“How can PGW continue to thrive in the future, retain its workforce and be economically viable while also helping us achieve our carbon neutrality goal?” said Christine Knapp, the director of the city’s sustainability office.

Nearly everybody who testified urged the city and PGW to take action quickly.

“PGW can either invest in the future or get lost in the past,” said Lisa Hastings, a Philadelphia environmental activist who was among the witnesses who testified Tuesday during the online meeting.

Health advocates suggested that renewable natural gas was just as harmful as natural gas and endorsed converting gas customers to electricity, which they say will be supplied increasingly from renewable energy sources.

“If we’re going to spend the money, let’s do it right,” said Walter Tsou, former city health commissioner and a board member of Physicians for Social Responsibility Pennsylvania.

Activists urged the city to ban PGW officials from advocating against decarbonization efforts, including Pennsylvania legislation that would bar municipalities from restricting types of energy used in buildings. Senate Bill 275, which was inspired by municipal natural-gas bans in other states, was the subject of a hearing Tuesday in Harrisburg.

“This lobbying is directly opposed to the city’s interest,” said Dwayne Royster, executive director of POWER, an interfaith environmental advocacy group. He urged PGW to renounce its membership in gas industry trade groups, such as the American Gas Association.

No PGW representative testified at the hearing, but a company spokesman said in an email that the gas association provided valuable training information “that directly benefit our customers and support the safe and reliable delivery of service.”

The utility also said it had not conducted any lobbying efforts related to Senate Bill 275. But Keith Holmes, president of the Gas Works Employees Union, which represents 1,150 of PGW’s workers, did submit written testimony supporting the legislation.

No union representative testified at Tuesday’s gas commission hearing.

The lone voice of dissent during the city’s hearing on the PGW study came from Christina Coleman, the energy action team manager of the Chamber of Commerce for Greater Philadelphia. She said the report’s findings understate the costs, overstate the environmental benefits and fail to meet the utility’s goals of safe, reliable gas service and retention of PGW’s workforce.

“We need decision-making that balances the economic and environmental costs,” she said.