Foreign investment will boost state’s energy industry

Team Pennsylvania, a nonprofit working to accelerate the state’s economy, is working to bring foreign investment into the state’s energy sector.

Tom Murphy, senior managing director, Strategic Energy Initiatives, Team Pennsylvania, said foreign investment in all forms of the state’s energy sector will increase the size and scale of the already strong industry.

P ennsylvania is a rapidly evolving energy powerhouse in the U.S. with natural gas, renewables, nuclear, large power generation capacities, and now major new investments in hydrogen, Murphy said.

According to the state Department of Community and Economic Development (DCED), in all industries in the state, more than 5,600 companies are 50% or more foreign-owned and employ more than 365,000 people.

Making energy a priority

Penny Ickes, a spokesperson for DCED said Gov. Josh Shapiro has made energy one of the five priority sectors in Pennsylvania’s Economic Development Strategy due to the state’s unique strengths in energy production, distribution, and innovation.

“Pennsylvania is a national leader on energy and we’re the only state in the nation to secure two regional clean hydrogen hubs, which will create tens of thousands of jobs across the commonwealth,” Ickes said.

“DCED works to have Pennsylvania known globally as an energy state that offers reliable supply, innovation and capital from sources both domestic and international because of the state’s reliable supply, good infrastructure, and solid access to large markets,” she said.

In April, Murphy represented the state in a trade mission to Denmark and Germany organized by the DCED, through its Office of International Business Development (OIBD).

During the trip to Copenhagen, Denmark and Dusseldorf, Germany, Murphy said numerous new business contacts were made, some of which have already made follow-up requests for additional information on proceeding to potential investment decisions.

“Pennsylvania is one of the leading states in power generation and one of the top two exporters of electricity to the Pennsylvania, New Jersey, Maryland grid,” he said. “We can improve on that with new technology and investments.”

International companies seek opportunity and profit in an ecosystem that is cost competitive and near major markets of businesses and consumers and Pennsylvania fits this model extremely well, Ickes said.

“For example, we are excited about how we can begin building out the hydrogen economy in the state. We know that some international companies are leading in the development of next generation clean hydrogen technologies, and we want to leverage Pennsylvania’s competitive advantages to be the place that they deploy and even manufacture these solutions,” Ickes said.

Murphy said while coal used to be the state’s top energy product, it is now natural gas.

“We are also strong in nuclear power and solar is gearing up,” he said. “We are starting to see a growth in hydrogen, which is where we are headed.”

In fact, two sites for hydrogen generation have been funded. The MidAtlantic Hydrogen Hub, known as Mach 2, has received $750 million from the federal government to generate clean zero emission hydrogen, reuse and revitalize existing infrastructure, create and retain more than 20,000 jobs, and provide economic opportunity and health improvements to benefit disadvantaged communities.

The second hub, The Appalachian Hydrogen Hub covers northwestern Pennsylvania and parts of Ohio and West Virginia.

During the trip, Murphy said five companies expressed interest in investing in Pennsylvania.

“Now we follow up to expand their interest,” he said. “Some of them already have a small footprint here and others are new. My role is to support the initiative.”

Murphy said with the emerging technology being developed here, the state can offer companies incentives that will allow them to partner with local companies to expand the industry’s growth and build the workforce.

Team Pennsylvania

Team Pennsylvania is a statewide entity co-chaired by the governor and a private sector leader.

“We convene cross-sector collaboratives on the most transformative economic opportunities in Pennsylvania: agriculture, energy, and manufacturing, with plans to launch future collaboratives in life sciences/biotech and innovation/tech,” Murphy said. “Each collaborative includes the commonwealth’s top policymakers and business leaders, as well as leaders of labor, academia, and nonprofits.”

Murphy said working together, the collaborative can tackle the issues that no one sector can address alone to position Pennsylvania as a leader among states and a competitor among nations, maximizing impact for the state while creating equity and economic opportunity.

Attracting investment

To help attract foreign investment, Murphy said the state DCED works with companies on real estate, workforce, permits, loan and grant opportunities and tax issues.

“Some of these companies have technology we don’t have,” he said. “We can provide funding to grow the industry faster by bringing these businesses here. That will lower our energy costs.”

Murphy said the team is selling companies on Pennsylvania’s markets, raw materials, workforce development, training institutions and apprenticeship programs.

“If they want to come, we can find all of this for them,” he said. “The Governor’s Action Team and the DECD’s OIBD is working on this.”

Advancing hydrogen

During the trip, Murphy said the team saw advancements in hydrogen that outshine anything in the world.

“This can advance our manufacturing and reduce waste,” he said. “Natural gas is one of the largest industries in the state and we are the largest producer of shale gas in the country.”

Murphy said hydrogen is likely to follow in the next 10 years, so the state needs to build production facilities.

Currently, 90% of hydrogen produced in the U.S. and globally is gray because it is the cheapest. Murphy said it is made by breaking down the methane from natural gas, leaving carbon as a byproduct, something the industry needs to get away from.

Murphy said the Mach 2 hub will be concentrating on producing green, orange and pink hydrogen.

Green hydrogen splits the hydrogen by electrolyzing water molecules and captures oxygen which can be captured or released into the atmosphere. Pink hydrogen is generated through electrolysis powered by nuclear energy and orange hydrogen is generated from chemical reactions which are initiated in iron-rich underground rock formations by storing CO 2 under sufficient geothermal heat and pressure.

Pennsylvania produces a lot of steel, cement and petrochemicals that Murphy said produce a lot of carbon.

“From an energy perspective, we need to decarbonize by investing in the energy sector,” he said. “We are trying to electrify and move to natural gas, hydrogen and nuclear power. We want to see a variety, so all our eggs are not in one basket.”

Murphy said there is a sense of urgency to this because federal and state incentives don’t last but so long.

“When successful investments energy or otherwise are made here, it sends an important message to the global business community that the state is open for business,” Ickes said. “This, in turn, can help instill investor confidence and lead to additional business activity. Energy investments can lead to indirect economic benefits that support business activity across a wide range of supply chains and surrounding industries.

“We want to draw them here, so they don’t go to other states,” Murphy said. “Once they are here, they will make more investments which will benefit all of our communities.”

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