No Hydrogen Hubs if Shapiro Enacts Restrictive Natural Gas Setback Regulations

Member Group : PA Manufacturers' Assn.

Governor Josh Shapiro is trumpeting Pennsylvania’s success in securing two regional clean hydrogen hubs, one site each in Philadelphia and West Virginia, which he says will create 41,000 high-paying jobs.

However, the governor’s victory statement should have also repudiated legislation in the House, HB 170, that would virtually wipe out the natural gas industry in the Commonwealth, a key source of energy needed to produce the hydrogen. If enacted, Pennsylvania can forget about not only the new hoped-for hydrogen jobs but also the many tens of thousands of existing jobs sustained by natural gas production.

“Maximizing domestic energy production is Pennsylvania’s direct path to a prosperous economy, more family-sustaining jobs, a growing population, and a stronger tax base,” PMA President & CEO David N. Taylor said. “Efforts to suppress Pennsylvania energy development should be summarily dismissed. The House’s punitive, unscientific setback proposal is a total non-starter.”

The bill, the subject of a contentious House committee hearing held October 30, would impose half-mile setback on all wells. The distance is “completely arbitrary” and “a backdoor ban” on further gas development Marcellus Shale Coalition (MSC) President David Callahan, told members of Environmental Resources & Energy Committee.

Present setbacks already eliminate development in 30% and 40% of land in Susquehanna and Washington counties, respectively, an MSC white paper study said.  The proposed setback, however, would ban the counties from all future development.

Senate Environmental Resources & Energy Chairman Gene Yaw, whose home county of Lycoming has reaped the economic benefits of natural gas development, said in a statement that HB 170 “is horrible legislation from an environmental, economic, and property rights perspective.”

“This legislation threatens hundreds of thousands of Pennsylvania jobs and deprives Pennsylvania landowners of their property rights,” Yaw continued. “It compromises our national security, exponentially drives up the cost of energy for citizens, and weakens our state’s economy – from the hundreds of millions of tax dollars that natural gas development generates for local governments and conservation programs, to the businesses that rely on robust natural gas development for their survival, not to mention their reliable energy supply.”

In a rarity, the Mid-Atlantic Clean Hydrogen Hub in Philadelphia and the Appalachian Hydrogen Hub in West Virginia have won the support of environmentalists, energy industry officials, and lawmakers from both sides of the aisle.

“Pennsylvania’s energy resources are one of our commonwealth’s greatest assets and are a pathway to prosperity creating good-paying jobs that drive our state’s economy while also protecting our national interests,” said Senate President Pro Tempore Kim Ward (R-Westmoreland) in an earlier statement. “With the current global energy plays taking place in the Middle East and with Russia, China, and Ukraine, now is not the time to take energy options off the table. Instead, we should be investing and innovating the energy options we have right here at home in Pennsylvania.”

Other clean energy projects haven’t fared so well.

The Wall Street Journal reports that the cost of borrowing money and material for clean energy projects places their utility more out of reach than ever before.

“Rising financing costs and prices for equipment make it harder to develop clean-energy projects as industry investors increasingly weigh the risks of providing capital against the benefits of reducing carbon emissions, investment firm executives say,” David Foley, a senior manager director at Blackstone told the Journal.

“The irrational exuberance, all the excitement about clean energy is clearly getting squeezed out of a market that can no longer afford it.”

In New Jersey,  Global energy developer Orsted recently canceled two major offshore wind projects. Others planned wind projects could be cancelled as well.

The Denmark-based firm announced that the cancellation of Ocean Wind 1 and Ocean Wind 2 twin projects in response to changing macroeconomic factors, including high inflation, supply chain bottlenecks and rising interest rates.

Fox News reported that the projects had been personally backed by Democratic New Jersey Gov. Phil Murphy and cited by the White House as proof of ‘Bidenomics’ working.

In October, wind projects developers asked the New York Public Service Commission to renegotiate existing contracts amid rising persistent inflationary pressures. The Commission rejected the proposal.

“When green dreams run into hard reality, the results are never pretty,” Daniel Turner, founder and executive director of energy group Power the Future, said in a statement. “Wind power receives billions in taxpayer support, yet we see project after project failing.”

Earlier this month, Commonwealth Court ruled that an executive order issued by former Gov. Tom Wolf that Pennsylvania join the Regional Greenhouse Gas Initiative (RGGI) was unconstitutional – joining RGGI amounted to a tax on the fossil fuel industry not a fee, and only the General Assembly has the authority to impose a tax, the court said. Governor Shapiro could move the state’s energy industry forward by not appealing the ruling.

“Pennsylvania needs a pro-production agenda for domestic energy,” PMA’s Taylor stated. “To attract private sector investment, our leaders need to act like we want production to happen here instead of somewhere else. Ending the threat of the RGGI tax and the threat of this preposterous setback rule would start to show the world that Pennsylvania is serious about economic success for our workers, our citizens, and our future.”