Inside Take: A Blueprint from Boston for Making the Philadelphia Energy Hub Work for All

The region needs a political leader with stature to step up and convene stakeholders. Now.

Philadelphia energy hub

Natural gas storage tanks. |

(Editor’s note: This is an opinion column from a Citified insider.)

Last month, I ended this column with a claim about how to build a vision of a Philadelphia energy hub worth having: “such a vision will only derive from a sustained discussion among legitimate stakeholders who are prepared to make a deal.”

Sadly, that discussion is not happening. I say sadly because we have plenty examples of such discussions leading to good outcomes. And one of my favorites has to do with natural gas.  

The Salem Harbor Power Station opened in 1952 and burned coal for sixty years to supply the Boston area with electricity. In 2010, the Conservation Law Foundation (CLF) won a lawsuit based on the Clean Air Act against Salem Harbor’s owner, Dominion, and secured an order from the U.S. District court to approve a consent decree that would shut down coal operations by 2014 and prevent any future owner from ever burning coal on the site. In 2012, an energy company called Footprint bought Salem Harbor with a plan to convert it into a 630 megawatt, $800 million combined-cycle gas-fired turbine power station. But CLF went to court to stop the plan, arguing that natural gas is better than coal but still not good enough to meet Massachusetts’s own carbon emissions goals set for 2050.

That’s when things got interesting. CLF and Footprint negotiated a deal that aligned all the salient concerns: Massachusetts’s carbon reduction targets, Footprint’s stated business plan, and CLF’s mission of environmental protection in accordance with state and federal laws. The basics of the deal are (1) the plant will open in 2016, (2) it must begin to reduce its CO2 emissions by 2026, and (3) its emissions must be one-quarter of its 2016 emissions by 2049. If Footpring can’t meet these conditions with technology that reduces its emissions, then it must either reduce operations accordingly or purchase renewable offsets.

The deal makes the “bridge to the future” a real thing, writing the specifics of the agreement into Footprint’s permit to operate, which was approved by the state in 2014.  The agreement designates how much CO2 may be emitted over a specific period of time and delineates remedies if the emissions exceed the permissible levels at given points in the future.

It’s how grown-ups roll in Boston.

According to the Boston Globe, in January 2015, Footprint secured financing for the $1 billion natural gas-fired plant. The prime contractor for the project, Iberdrola Energy Projects, received notice to proceed and started demolition and remediation work. The on-site workforce is expected to peak at 700 employees in the summer of 2016. The goal is to have the plant online in June 2017.

The quick-start combined-cycle gas turbine will have the ability to provide 674 MW of power to the grid with nearly half of that output available in 10 minutes and the remainder over the course of an hour. In the near term, as one of the most efficient units on the grid, Footprint anticipates the plant will operate most of the time. In coming years, the plant is expected to operate as a “firming” resource that is called upon when intermittent resources like wind and solar are unable to keep up with demand.

Admittedly, this is a simple and well-defined deal compared with the multiple competing concerns wrapped up in the Philadelphia energy hub. But it does illustrate the point and shows that it’s at least possible to design compromises that create an acceptable balance among economic and environmental concerns in using natural gas to transform the energy system. That balance would weigh the expected benefits against expected costs and make provisions to ensure that those who actually feel those costs are fully compensated for them.

This last point is critical. For example, some environmental costs are not distributed evenly. Global warming will affect all of us. Delaware water quality will affect virtually all of us. Protections on such concerns can be largely uniform. But a Chester County landscape along a new pipeline route or air quality next to a new gas-fed industrial facility along the Lower Schuylkill are concentrated costs that need to be recognized in any compromise. Likewise, economic benefits are not distributed evenly. If jobs are part of the benefits being weighed in the balance, then who gets those jobs matters. Would the revenues generated by the economic activities of the hub be large enough to close the skills gap in the region’s workforce to make these job opportunities meaningful for residents, and would those revenues be in fact spent on workforce preparation?

In the end, are we up to the challenge of drafting a deal like Salem Harbor but on a much more complex issue? Can we identify the elements of such a deal and convene legitimate voices to explore the specific tradeoffs among those elements? Is there a compromise that a majority can embrace and that ensures protections for all?

These questions demand self-governance. There is no single trigger like a lawsuit before a U.S. District Court that will lead to a negotiation like that among CLF and Footprint and Massachusetts’s energy and environmental regulators that produced the Salem Harbor agreement. A Philadelphia energy hub worth having will require a voluntary process among civic-minded parties capable of advancing all the important interests at stake.

Maybe no compromise exists. Maybe the benefits will be so small and narrow and/or the costs so large and widespread that civic-minded parties with skin in the game could never agree to an energy hub worth having here.

But the only way to find out is to convene those parties and facilitate that discussion. I believe it takes a political champion to convene the parties under a process that has enough legitimacy to get the right people in the room and willing to do the hard work. Once convened, however, facilitating the discussion among the parties is something that universities can help with, as trusted partners committed to open discussion and fair play.

The purpose of that facilitated discussion would be to to search for compromise among stakeholders using well-known methods. (Thanks to my Penn colleague, Elise Harrington, for bringing this particularly useful method to my attention.) These methods engage parties in a decision-oriented discussion that considers both facts (from scientists and other sources) and values.

Choosing among alternatives involves making tradeoffs among competing objectives and being exposed to those tradeoffs through discussion with other stakeholders. Stakeholders are charged with making choices in the public interest, based on their own perspective but also reflecting what they have learned in the deliberative process from experts and other stakeholders.

I realize that nothing about the energy hub discussion to date sounds even remotely like the above. Boosters and doomers talking without listening have more in common with an Eagles game than with a facilitated process of structured decision-making.

But I don’t see any other way to make real progress toward a Philadelphia energy hub worth having. If someone with sufficient political standing is prepared to convene the parties, then Penn’s Kleinman Center for Energy Policy and, I am confident, other universities are prepared to facilitate a productive conversation to search for common ground on this critical challenge.

Mark Alan Hughes teaches at Penn and directs the Kleinman Center for Energy Policy. He is also a Citified insider.