The Path “From A to Z”

To achieve carbon neutrality, Philadelphia must decarbonize its buildings, which account for about 70 percent of the city’s carbon emissions. Across the country, there is a growing consensus that electrifying buildings presents the clearest path to decarbonization. Cities like New York, Berkeley, California, and Brookline, Massachusetts have recently banned natural gas hookups in new buildings. Other cities and states have passed building codes that require electrification or offer incentives for it.

But the gas industry, desperate to stay in business, is working to keep buildings hooked on gas. With backing from the industry, nineteen states have passed so-called “energy choice” legislation similar to SB 275, which preempts local governments from passing laws to ban natural gas utility hookups. The industry is also making the case that electrification isn’t the only way to decarbonize, and that “renewable natural gas” (RNG) — that is, gas captured from trash and manure — could be a better renewable replacement for natural gas.

But studies show that RNG is not as low-carbon as the industry claims, it’s prohibitively expensive, and there isn’t nearly enough of it. It also brings many of the same health and safety risks as traditional natural gas. The industry has also promoted hydrogen as a promising “clean energy” fuel, but research has poked major holes in that argument.

It’s hardly surprising that private gas companies and industry groups are pushing to preserve their business model at all costs. But one might imagine that cities with public gas utilities — free of the imperative to provide returns for shareholders — would be more likely to work toward a carbon-free transformation. That, unfortunately, is not the case. While leaders in cities like Richmond, Virginia and Philadelphia have recognized that the current business models of municipal gas utilities stand in the way of citywide net-zero goals, they have not presented any immediate plans to radically transform those utilities for a carbon-free future. And there’s little consensus on what such a transformation should look like.

The utilities themselves, meanwhile, remain deeply tied to the gas industry. According to the Climate Investigation Center, several public gas utilities in cities pursuing decarbonization including San Antonio, Tallahassee, Palo Alto, Richmond, and, yes, Philadelphia are members of the American Public Gas Association (APGA), an organization that is fighting efforts to curb the use of natural gas nationwide.

In Philadelphia, membership in APGA is just one sign of PGW’s allegiance to the industry. PGW also spends hundreds of thousands of ratepayer dollars annually on membership dues for the American Gas Association (AGA), the industry group leading the effort to keep cities locked into fossil fuels. PGW president and CEO Seth Shapiro is a director at AGA, and Gregory Stunder, who just stepped down as a PGW vice president at the end of 2021, was a member of an AGA strategy group dedicated to passing preemption bills like SB 275 around the country. In 2019, PGW representatives sided with the AGA over the city of Philadelphia and the Philadelphia Office of Sustainability in voting down cleaner building codes through the International Code Council.

PGW claims to be an “environmental steward” eager to usher in an “eco-friendly future.” But time and again, the utility has demonstrated a complete lack of concern for the climate crisis. According to a 2020 filing by Sierra Club and Clean Air Council, PGW has “not studied or even quantified the stranded risk exposure that accompanies the City’s commitment to make reliance on natural gas obsolete by 2050.” PGW also hired an expert witness who testified that the Pennsylvania Public Utility Commission lacks jurisdiction to consider evidence about “the perceived effects of global warming” and who refused to admit that one of the effects of climate change is rising temperatures.

Clearly, PGW is more committed to gas than a “clean climate.” In a recent statement, PGW representatives claimed that “natural gas will continue to be an essential tool toward carbon reduction.” And while the utility is planning to investigate the potential of networked geothermal systems — a model, championed by some grassroots groups, which warms buildings by pulling the earth’s heat out of the ground — it’s also exploring a RNG pilot. According to the Natural Resources Defense Council, the pilot has “no promise as a scalable and affordable decarbonization solution.”

Shapiro, meanwhile, is in no hurry to decarbonize. “You can’t go from A to Z quickly,” he said in 2020. In the coming years, Shaprio, a former real estate executive, wants the utility to expand sales of natural gas to industrial customers, or expand production of liquefied natural gas (LNG). “I think LNG is really efficient, really smart,” he said. “And it’s all part of a path that ultimately gets you to Z, even if Z is 50 years from now.” Waiting half a century to decarbonize PGW would, of course, be an environmental catastrophe.

It would also be a disaster for working-class residents and PGW workers. Due to warmer winters and the development of more energy efficient appliances, the use of gas is already declining. That has caused PGW to request rate hikes, increasing the energy burden on one of the country’s most energy-burdened urban populations. In the coming years, as gas use continues to decline, PGW’s costs will likely increase, resulting in more people reducing or eliminating their gas consumption, leading to more rate hikes — a situation energy officials call a “utility death spiral.” Ultimately, sticking with natural gas (not transitioning away from it, as the president of the PGW workers union has argued) presents the greatest threat to PGW’s workforce.

But PGW’s death spiral isn’t inevitable. With careful planning and democratic decision-making, Philadelphians can ensure that PGW’s union workers remain employed, accelerate the transition to renewable energy, and expand access to good union jobs. But it will be a struggle.

Energy Democracy or Bust

The revelation that PGW leadership is working against the city’s climate goals prompted swift backlash.

Environmental nonprofit leaders stated that “all responsible PGW executives must resign immediately including the President and Chief Executive Officer, Seth Shapiro” and that new leadership needs to be appointed that will work “in tandem with Philadelphia’s climate goals.” Seven environmental groups, meanwhile, sent a letter to Philadelphia City Council, Mayor Kenney, and City Controller Rebecca Rhynhart encouraging them to investigate the matter and “hold the accountable individuals at PGW responsible.”

Those resignations and investigations are certainly warranted, but today ordinary Philadelphians have no way of making sure they’ll happen, and no way to ensure that new leadership at the utility would be any better than its current leadership.

In 2020, Mayor Kenney appointed Shapiro head of the utility without conducting a formal executive search, and over the objections of a retired PGW vice president, a former PGW CEO, and a coalition of nineteen advocacy groups. Two of the five commissioners of the Philadelphia Gas Commission, which reviews the appointment of PGW senior executives including Shapiro, are appointed by the mayor, too. The mayor also appoints the seven board members of the Philadelphia Facilities Management Corporation (PFMC), the nonprofit corporation which since 1973 has managed PGW. PFMC doesn’t host public meetings, does not publish minutes from its meetings, and releases very little information about its activities.

Activists have been calling on PGW to decarbonize — and proposing ways to do it — for years, but their demands have mostly been ignored. To have any chance of meeting the city’s climate goals, Philadelphia must not only change PGW’s leadership, but also change how that leadership is chosen and how it functions. In other words, PGW must not simply be publicly owned; it must also be directly accountable to the people who own it. Recently, Philly DSA (full disclosure: I’m a member) has begun working alongside other environmental and grassroots groups to make that vision a reality.

In other parts of the country, democratic control of public utilities has led to faster and more ambitious energy transitions. Take Nebraska, the only state in the country where electric utilities are publicly owned, and the only state where all residents vote for the people who sit on the boards of its power utilities. In recent years, renewable energy advocates have won seats on the boards of publicly owned energy companies. As a result, in December the Nebraska Public Power District joined the state’s two other electric utilities in voting to decarbonize by 2050. Nebraska is now the only Republican-controlled state in the United States with a decarbonization plan for its electricity sector.

Some of the best examples of democratized ownership come from public institutions outside the United States as Thomas M. Hanna has argued in Jacobin. Paris’s water utility, Hanna noted, has a board made up of city councilors, worker representatives, and civil society representatives, as well as an “observatory” to further involve citizens with the system. In Costa Rica, meanwhile, the country’s third-largest bank has a democratic assembly of two hundred ninety members.

Bringing PGW under democratic control — whether through an elected board, a democratic assembly, or some other arrangement — would make it far more likely that the city can keep its promises and ensure a swift transition to renewable energy. But it wouldn’t guarantee it. Decarbonization efforts could still be stymied by regulators at the city, state, or even federal level.

Ultimately, the struggle for decarbonization and a just transition in Philadelphia can’t entirely be won at the city level alone. But it can start there. Today, Philadelphians have the chance to wage that fight because eight years ago, unions, environmental groups, and other allies managed to beat back an attempt to privatize the utility. Now, they must band together again. Our city, our planet, and our lives depend on their success.