Illustration by Mike Austin
Morristown Medical Center had a problem: The electrical infrastructure supplying power to the campus was aging out, vulnerable to frequent brief power outages and several extended interruptions annually that disrupted patient care. It also wasn’t particularly “green,” and with rising electric rates, it was getting more expensive to run every day.
Since installing a natural gas-fueled combined heat and power system in 2022, the 735-bed New Jersey hospital has experienced no outages and has dramatically slashed energy costs and its carbon footprint. Operational savings to date put the project on track to pay for itself two years ahead of time.
The Morristown project illustrates the vital role natural gas plays in American health care, one of four key sectors of the U.S. economy highlighted in the American Gas Association’s Advancing America series.
The reports detail how the health care, hospitality, agriculture and pharmaceuticals sectors depend on natural gas to deliver their products and services reliably, affordably and sustainably—ultimately how natural gas helps these industries succeed. They also spotlight cost implications and other effects of restricting natural gas use through bans on natural gas hookups and building electrification policies that represent de facto bans.
The series, prepared for AGA by economic research firm FTI Consulting, provides “another opportunity to discuss the benefits of natural gas to the broader economy and to engage new coalition partners,” AGA said in its 2023 annual report.
The four sectors showcased in the Advancing America reports—health care, hospitality, agriculture and pharmaceuticals—account for approximately 25% of total U.S. gross domestic product, and the impact of natural gas on these industries fuels 4.1 million jobs and adds $551 billion to the sectors’ total contribution to U.S. GDP.
The hospitality industry has been one of the most vocal sectors in speaking out about the vital importance of natural gas to meet its energy needs, ranging from ensuring the comfort of hotel guests to dishing out culinary delights.
It was the California Restaurant Association, after all, that successfully challenged Berkeley’s first-in-the-nation ban on new natural gas hookups. Berkeley announced in March it would repeal the ban in response to a federal court ruling that forced other states and cities to retreat on similar measures.
While the ban in question was local, CRA President and CEO Jot Condie expressed the sentiments of chefs everywhere when he said the ban reflected “a disregard for available cooking technologies and ultimately for small businesses in the community that rely on gas cooking equipment for their cuisines.”
Indeed, as Advancing America points out, 76% of the nation’s 695,000 restaurants use gas for cooking and rely on the open flame only gas can provide. A Blue Flame Alliance survey of 100 professional chefs found 90% prefer cooking with gas for precise heat control and “flame-dependent” cooking techniques.
Also, with the sector supporting 1 in 6 American jobs, tens of thousands of those jobs would be put at risk by mandated electrification, which would cost the U.S. economy $23.2 billion more in fuel and cut economic output by $46 billion. In an industry with a diverse workforce, any job losses would disproportionately affect women and minorities, the report notes.
The economic impact would be especially severe in tourism meccas like Nevada, one of 10 states where hospitality accounts for more than 8% of total natural gas consumption. “Our casinos and resorts rely on natural gas for drying linens, heating showers and pools, space heating and to fuel fire features,” in addition to using it for cooking, a coalition of business and industry groups, lowincome advocates and Southwest Gas wrote to Nevada’s governor in efforts to preserve fuel choice.
At one-third the unit price of electricity and nearly three times as efficient when used directly, “natural gas is the lowest-cost and most efficient option for cooking, space heating, water heating, clothes drying and industrial heat,” the coalition wrote, warning of cost impacts of electrification proposals on families and businesses.
The hospitality sector consumes about 387 billion cubic feet of natural gas a year, exceeding annual gas use for the entire state of Maryland.
As the largest sector in the Advancing America series—supporting 37 million jobs and accounting for more than 10% of U.S. GDP—health care has been active in advocating for fuel choice. Given the critical role of natural gas in hospitals and other health care facilities, it’s easy to understand why.
Seventy-four percent of all hospitals use natural gas for space heating, and 80% use it for water heating, according to the AGA report. Hospitals also widely use natural gas for the emergency power systems required to supply power for at least 96 hours following an outage.
With more frequent grid disruptions expected due to severe weather events, reliability and resilience are a growing concern for facilities like hospitals that operate around the clock. The need to control skyrocketing health care costs and meet climate goals also makes natural gas an attractive option.
Natural gas-fueled CHP systems like the one installed at Morristown Medical Center—also called cogeneration or “cogen” plants—are gaining traction in health care because they can deliver reliability, cost savings and sustainability gains, said David Gardiner, executive director for trade group CHP Alliance.
More than 200 hospitals are among 4,600 facilities operating CHP systems in the U.S. The hospitals generate 772 megawatts of power for their own needs, which the U.S. Department of Energy estimates is barely 10% of the potential generating capacity available for such systems in U.S. hospitals, according to the group.
Most hospitals have policies that require them to put off new surgeries when backup power systems are in use, creating a triple impact—“financial, operational and angry surgeon”—on hospitals, said Patrick Burke, director of engineering for Morristown Medical Center, part of Atlantic Health System.
The CHP system installed in 2022 now generates 67% of the electricity needs for MMC’s seven-building campus. With two Jersey Central Power & Light utility feeds reconfigured to provide additional redundancy, the medical center’s need to fire up emergency generators has been greatly reduced.
“We’ve got a tremendous amount of resiliency and redundancy built into the system,” Burke said. “Since we installed the equipment, we have not had to delay a single surgery because of a power outage, yet we have a surgical center that we own across the street from the hospital that is not on the cogen plant and in the last two years on at least three occasions has had to suspend surgeries until the power came back on.”
Restrictions on natural gas are particularly worrisome given its role as the predominant fuel in hospital backup-power systems. As the Washington State Hospital Association noted in response to proposed building code changes that would ban natural gas for use in space heating, no other technology currently exists that can meet hospitals’ high power demands.
CHP systems score high on efficiency and sustainability because they capture otherwise wasted heat from generating electricity and use it to produce thermal energy in the form of steam, which in MMC’s case is used for direct hot water, space heating, sterilization of medical equipment and cooking.
Generating its own electricity on-site also reduces MMC’s need to draw power from the utility grid, where significant energy value is lost on the journey from generating plant to end user—another incremental efficiency boost often overlooked among the benefits of CHP systems, Burke said.
“Essentially, our hospital is now its own little microgrid,” Burke said. “If you have these microgrids and you’re generating electricity right where you’re using it—whether it’s with solar, wind or in this case a natural gas-fired turbine—there is an inherent efficiency that you’re going to gain.”
The CHP system has allowed MMC to reduce its carbon dioxide emissions by 4,222 tons annually—the equivalent of taking 900 gasoline-powered passenger cars off the road for a year. It’s a sustainability win that helped MMC secure a $3 million grant from the New Jersey Clean Energy Fund for the project.
In an industry beset by sticker shock, the operational savings MMC has achieved—about $3.3 million a year in energy bills and other costs—also represent a significant benefit for the medical center and its patients. What MMC saves on energy can help lower costs and improve quality of care, Burke said.
The Advancing America report estimates mandated electrification would increase hospitals’ use of electricity by more than 61%, driving up operational costs $16.3 billion from 2026 through 2050, reducing GDP by $32 billion and wiping out 276,000 job-years for U.S. workers.
When it comes to the pharmaceuticals sector, few industries rely on natural gas in so many ways, using it throughout the supply chain to create, manufacture and distribute life-saving medications and other products Americans rely on every day.
Natural gas is a feedstock source for countless medicines, including cortisone, antiseptics and vitamins. It is essential in manufacturing pill vials and other pharmaceutical packaging and the face masks, syringes, hand sanitizers and gloves that got everyone through the COVID-19 pandemic. It also lights and heats 57,500 pharmacies.
Pharma manufacturing and research facilities prize natural gas as a reliable, affordable space heating fuel used for storing pharmaceuticals at stable temperatures, and for the heat used in producing chemical compounds and in compression molding to make parts for syringes, IV systems and other products.
An abundant, stable supply of natural gas has always been considered a major economic development asset, and it is certainly an important factor in location decisions for pharmaceutical manufacturers, said Jeremy Koster, vice president of gas planning and optimization for Duke Energy.
Duke Energy, which serves gas customers in the Carolinas, Tennessee, Kentucky and Ohio, has seen pharma customers locate facilities close to its natural gas infrastructure in Eastern North Carolina to ensure ample supplies to meet current and future energy needs.
“When you need the reliability that natural gas as a fuel source provides, access to the fuel source as close as you can be to it is critical for these companies,” Koster said. “They want to be close to where they can either tap into that transmission or distribution line because they’re using a lot of it.”
Duke Energy is also seeing pharmaceutical companies expressing greater interest in working with the company to introduce lower-carbon fuels such as renewable natural gas into their research and manufacturing facilities as they pursue their own climate goals.
“The pharma industry—the large hospitals, the pharmaceutical manufacturers, the assemblers—are starting to want to have conversations about this,” Koster said. “We’re not directly selling any RNG to these customers yet, and I say ‘yet’ because I really do feel that will be in the near future for us.”
Statistics from the Advancing America report put the pervasive role of natural gas in pharma into perspective: 99% of pharmaceutical feedstocks are derived from petrochemicals, and 3% of total U.S. petroleum production is used in the pharmaceutical manufacturing process. Mandated electrification would cost the industry $1.3 billion in increased fuel costs through 2050, according to the report, resulting in potential increases in prescription medications and other necessary medical products.
U.S. pharma manufacturing provides livelihoods to 1.8 million employees across the value chain while contributing $338 billion directly to GDP, FTI Consulting found. The sector and its supply chain partners use 104 Bcf of natural gas a year—equal to annual residential consumption for all of Missouri.
While most Americans think of natural gas as the energy source that provides cozy warmth in winter and cooks memorable meals, dries clothes and heats water, they may be less aware of the pivotal role it plays in putting food on their tables and growing the cotton and other fibers that go into the clothes they wear.
In fact, the agriculture sector—including agrochemicals producers, food processors and the sector’s supply chain partners—rely on natural gas to the tune of 1.7 trillion cubic feet annually—nearly 15% of all U.S. commercial and industrial consumption, the Advancing America report noted.
The dramatic expansion of domestic production over the past 15 years has made natural gas even more vital to agriculture, providing a reliable, affordable fuel for uses ranging from making fertilizer or heating and lighting farm buildings to fueling grain dryers and other equipment or hauling crops to market.
At the same time, that abundant supply has further bolstered national food security by allowing the United States to increase its production of ammonia—a key ingredient in fertilizer—and lessen our reliance on China and Russia, ranked first and second ahead of the United States in global ammonia production, respectively.
In Northwest Ohio’s farm country, Enbridge Gas Ohio—formerly Dominion Energy’s Ohio gas business—serves local farms, food processors including Bob Evans Farms, agrochemicals producers and agriculture-related manufacturers including TekniPlex, which opened a new plant in Van Wert this year to make egg cartons from recycled paper.
One of Enbridge Gas Ohio’s largest ag customers is Cooper Farms, which has three facilities in the region that use natural gas in various applications, including a plant in Van Wert where natural gas is used in a steam cooking system to process 2 million pounds of deli meat a week and to clean the facility daily.
“People don’t think we have a hand in bringing food to their tables, but there’s gas in the process somewhere,” said Peggy Ehora, Enbridge Gas Ohio’s external affairs manager for the region. “That’s just the reality.”
With some communities miles from the closest gas line, bringing natural gas to rural customers who want it is a challenge that requires creative thinking, said Mack Smith, gas development services adviser for Enbridge Gas Ohio. Leveraging capacity additions spurred by large industrial projects is part of the strategy.
The egg-carton plant—an economic development home run for Van Wert, bringing 100 jobs and $40 million in capital development—is a perfect example. To supply enough gas to meet the plant’s production goals, Enbridge Gas Ohio is installing 3,000 feet of new 12-inch pipe, double the size of the existing line and designed to allow for additional system upgrades to support future growth.
The larger line will not only make it possible for TekniPlex to ramp up to full production by the end of the summer but also adds capacity that, combined with the 6-inch pipe remaining in service, opens the door to offer service to rural customers along the route who previously had no access to natural gas.
“We would certainly be able to entertain that growth in a way that we may not have been able to do a year ago,” Ehora said.
Like other natural gas providers, Enbridge Gas Ohio is working to decarbonize its own business and the ag sector through opportunities to blend lower-carbon fuels such as RNG from agricultural waste with geologic gas and deliver it through the 22,000-mile pipeline system serving 1.2 million Ohio customers.
Including indirect jobs and induced employment created throughout the ag value chain, the agriculture ector creates 17 million jobs and $1.75 trillion in GDP, about the size of Texas, the second largest state economy after California.
“With respect to the agriculture side, we’re talking with partners that are looking to develop RNG projects in some of our rural farmland areas,” Smith said. “We have the infrastructure—or will evaluate the business case for new infrastructure—that would enable us to receive the RNG and transport it to market.”
Perhaps more than any other sector analyzed by AGA’s Advancing America series, agriculture casts into stark relief the choices implicit in proposals to take natural gas off the table as an energy choice for industries as varied as pharmaceuticals, hospitality and health care.
With the world’s population expected to increase by 2 billion people by 2050, natural gas will need to remain a critical partner to the industry that exists to meet the most basic of human needs. That’s a big reason why Enbridge Gas Ohio’s Ehora remains bullish on natural gas and the industry she’s been part of for more than three decades.
“It’s a product that’s here to stay because it works and it’s a part of how we live every day, even though people don’t understand it completely sometimes,” Ehora said. “We’ve got to find a way to tell that story about how natural gas is a great product and we’re going to find ways to make it better and more accessible. And we’re going to keep doing what we do, putting all those products in people’s homes that they don’t know we do.”
For the full Advancing America series, visit http://www.aga.org/research-policy/natural-gas-advancing-america