Podcast

Following Refinery Blast, Philadelphia Looks to a Cleaner Future

Last June the largest oil refinery on the East Coast blew up. In the disaster’s wake, can the city of Philadelphia and its residents transition to a cleaner, more financially sound future?

On June 21, 2019 the largest oil refinery on the East Coast exploded.  The blast released thousands of pounds of toxic hydrogen fluoride gas into the surrounding Philadelphia air, and launched bus-sized debrisacross the neighboring Schuylkill River.  Through sheer luck, the dissipating effect of winds on toxic gasses, and thanks to the clear headed emergency action of refinery operators, no one was seriously injured in the moments following the blast.  

Yet many in this city point out that the refinery leaves behind a legacy of health impacts, including elevated asthma rates in the densely populated neighborhoods that surround the site.  The refinery also leaves a vast patch of urban landscape that is so toxic that it’s doubtful that it can ever be used for residential development.  

In the months following the explosion, the city, its residents, and business interests jockeyed over the site’s fate.  Proposals were floated to repurpose the site as a logistics hub, return it to its natural state as a tidal marshland, and even to repair and reopen the damaged refinery itself.  Yet, the decision on what to do with the site would ultimately be made within the walls of a Delaware bankruptcy court, where the priorities of the refinery’s creditors would take precedence.  

On January 22 the waiting came to an end.  The court announced that a Chicago-based real-estate company had agreed to purchase the Philadelphia Energy Solutions refinery for $240 million dollars.  The buyer has not yet announced a detailed vision for the site, but has a history of redeveloping industrial locations for less-polluting uses.  Yet the auction’s losing bidders aren’t looking to go quietly, and there may be more drama to come.

Mark Alan Hughes, director of the Kleinman Center for Energy Policy and former founding sustainability manager for the city of Philadelphia, talks about the sale of Philadelphia Energy Solutions and what the future may hold for the city of Philadelphia.

Andy Stone: Welcome to the Energy Policy Now podcast from the Kleinman Center for Energy Policy at the University of Pennsylvania. I’m Andy Stone. On June 21, 2019, the largest oil refinery on the East Coast of the United States blew up. The blast released thousands of pounds of toxic hydrogen fluoride gas into the surrounding Philadelphia air and launched bus-sized debris across the neighboring Schuylkill River. Through sheer luck, the dissipating effect of winds on toxic gases — and thanks to the clear-headed emergency action of refinery operators — no one was seriously injured in the moments following the blast. Yet many in the city point out that the refinery leaves behind a legacy of health impacts, including elevated asthma rates in the densely populated neighborhoods that surround the site. The refinery also leaves a vast patch of urban landscape that is so toxic that it’s doubtful that it can ever be used for residential development.

In the months following the explosion, the city, its residents and business interests jockeyed over the site’s fate. Proposals were floated to repurpose the site as a logistics hub, return it to its natural state as a tidal marshland, and even to repair and reopen the damaged refinery itself. Yet the decision on what to do with the site would ultimately be made within the walls of a Delaware bankruptcy court, where the priorities of the refinery’s creditors would take precedence.

On January 22nd, the waiting came to an end. The court announced that a Chicago-based real estate company had agreed to purchase the Philadelphia Energy Solutions refinery for $240 million. The buyer has not yet announced a detailed vision for the site but has a history of redeveloping industrial locations for less polluting uses. It’s also important to note that the losing bidders aren’t looking to go quietly, and there may be more drama to come.

Here to talk about the sale of Philadelphia Energy Solutions and what the future may hold for the city of Philadelphia is my guest, Dr. Mark Alan Hughes. Mark is a Director of the Kleinman Center for Energy Policy and was formerly the Founding Sustainability Manager for the city of Philadelphia. In recent months, Mark was involved in a series of six public meetings convened by the city to discuss the future of the refinery. Mark, welcome back to the podcast.

Mark Alan Hughes: Thanks, Andy. It’s nice to see you outside the office and in the studio.

Stone: Good to see you, too. The Philadelphia Energy Solutions Refinery dates back 150 years. It has been a major employer in Philadelphia, and its footprint is simply huge at 1,300 acres. That’s significantly larger than Central Park in New York City. Give us a brief overview, if you will, of the refinery’s role in the city.

Hughes: I’m happy to. As many of your listeners will know, oil was first discovered and extracted and processed as an energy source in the state of Pennsylvania. It was in the western part of the state. It was around the time that the railroads were starting to emerge as the dominant force in the U.S. economy and preeminently in the state of Pennsylvania. The Pennsylvania Railroad became one of the key carriers of that new energy source from the western part of the state to the state’s primary distribution port, the city of Philadelphia. There were some early refining activities that were much closer to the historic center of the city, but in the 1860s, a new refinery, much larger than any previous one, was located on what was the boondocks of the city, far from the city’s residences and small factories of the middle of the 19th century, in a tidal marshland area near the confluence of the Schuylkill and Delaware Rivers.

That refinery grew into a much larger refining complex over the following 150 years, until today it is actually, as you noted, larger than Central Park and also larger than Philadelphia’s Central Business District by quite a few acres. So it’s larger than the historic center of the city, it’s larger than the current Central Business District, it’s downriver from four universities, four hospitals, about 80,000 jobs that are all defining the future of the life sciences and IT, slightly up the river. So there’s a wonderful juxtaposition now of a very old, legacy industry that has played a very dominant role in the state of Pennsylvania’s history and the new cutting-edge kinds of employment and research activities that are happening that will define the next century.

Stone: And it’s really unique because, as you said, it’s in the center of a very densely populated city.

Hughes: That’s right. It was once far away from all that, and now it is surrounded by, really nestled in, residential neighborhoods, the airport, our seaports, the three stadiums. It’s surrounded by the metropolitan area.

Stone: Yes, when you drive by it on I-95, you can’t help but notice it.

Hughes: That’s right.

Stone: In recent years, the refinery has struggled to make a profit. In fact, the refinery came out of bankruptcy just about a year before last summer’s explosion. Why had the refinery struggled financially?

Hughes: For a variety of reasons, starting with simply its age. It’s also very constricted. On one hand, it’s close to a bunch of different distribution infrastructure and elements and so on, but it also is in the center of a very congested metropolitan area. It has a technology that was very specific to a certain kind of crude oil, so-called “light sweet crude oil,” which is a more expensive raw product, as it was unable to compete with other gasoline refineries — in particular with other grades of crude oil.

In more recent years, there was a combination of influences that made it kind of almost momentarily profitable in the last five years. It had to do with the lack of pipelines that would carry a new source of that particular kind of oil — the Bakken shale fields. There were no pipeline connections between that new source and the petrochemical facilities on the U.S. Gulf Coast, and therefore the easiest, most economic connections for that new source of supply was to use the railways again — as it was 150 years ago — connections to Philadelphia. There was really nowhere else for that to go for quite a long time. So it was kind of a magic set of circumstances that, for a few years, made it profitable again, but those pipelines have opened. The U.S. export ban on crude oil has been lifted, so a lot of the things that helped really keep the refinery on a kind of life support in this century have all disappeared.

Stone: So the refinery lost access to that cheap Bakken crude, essentially is what you’re saying.

Hughes: It kind of lost the monopsony on that crude. So now it has been in bankruptcy twice in the last eight years, and so it really has struggled under these changing market fundamental conditions.

Stone: Now, the refinery exploded last June when a corroded pipe that held toxic gases burst. Over the following months, there was extensive discussion over what to do with the site. Tell us about some of the options that were proposed.

Hughes: Yes, the mayor very quickly, and I think wisely, constituted a set of advisors drawn from a bunch of different constituencies and expertises across the city. About two dozen people were asked to come together and not advise the city so much as organize a set of public meetings that you already have referred to that would give voice to those different constituencies and interests and expertises.

There were a number of people from the business community, from the neighboring communities, from the scientific community, and so on — the labor — that gathered together in these series of meetings and brought forth a whole variety of the different kinds of options and ideas. And also very helpfully, in addition to alternative visions of the city, but mostly there was a discussion of very difficult-to-reconcile wants for the future, these options that you’ve asked about. And those wants really ranged from largely the incumbent workers, about 1,100 or so, who had been very abruptly and pretty roughly treated by the owner of the refinery, PES — Philadelphia Energy Solutions — fairly abruptly laid off.

So in these community meetings, you would have rooms that would have one or two hundred workers from that community of workers that had been laid off very abruptly, with real questions hovering over how long their health benefits would last and whether or not they would be able to go back to work. And for that constituency, the vision, the hope was very much about “turn the operating units at the refinery back on.”

On the other end, you had representatives of fenceline neighborhood communities whose grandparents and children have suffered with respiratory and other kinds of illnesses that are associated — as the research fairly strongly shows — you know, it’s always hard to establish causality, but proximate residences of refining operations have higher incidence levels of respiratory illness like asthma and so on. So for those constituencies, the vision, the want, the hope of what to do with this site — now idled, now shuttered, then bankrupt — was that it be converted to some other kind of use. And there are a variety of visions for that. But that was the range: “Turn it back on. Let us go back to where we were the day before the incident,” versus “Never go back. And try something completely different.”

Stone: The city seemed to be in favor of a cleaner future for the site, but it had to navigate competing demands, as you’ve mentioned — one, a desire to reopen the refinery and preserve those jobs. On the other side, you had issues of environmental justice, and obviously the site provided quite a bit of tax revenue to the city, as well. What was the city’s stand?

Hughes: The city actually issued a report that is available on the Philadelphia.gov website that I think is excellent. They gathered a lot of input from a lot of sources and really produced a very fine — you know, somebody who’s in the business of producing reports produced a very fine report.

Stone: I read it. It was great.

Hughes: Yes, it’s really terrific. And in that, a vision actually emerges of what they would prefer to see at the site. There’s a lot of appropriate caution, maybe even reticence about the jurisdiction that the city has over a private parcel, especially a parcel in the bankruptcy process. But given all of that, the city actually states a fairly clear-eyed vision that they have promulgated over the last decade a set of increasingly ambitious goals on a bunch of related policy domains like greenhouse gas reduction, for example. They’ve signed on to the 80 x 50 Commitment. They have a whole series of both planning and capital investment initiatives that has to do with the energy performance of their buildings as a way of helping to mitigate the city government’s emissions footprint. They also have environmental justice commitments and policy goals that have been passed by ordinance and enforced by regulation that have to do with environmental toxins and lead paint and a bunch of different issues related to public health around this.

We can go on and on. Workforce development — training people for jobs for the future, that are sustainable jobs that actually support families. So the city has a lot of goals and a lot of financial investment on the line, and they’ve basically asked that the use of the site be consistent with those various policy statements, right? So yes, they prefer a use of the site in the coming decades that is cleaner, that is healthier, that is more productive, that is more inclusive of the employment opportunities that are available on that site.

So it was a fairly rigorous vision, and in the end, frankly, they asserted some sense of jurisdiction around that. The city can control the land use activities inside its boundaries to some extent. It can certainly regulate them. And through zoning and occupancy permitting and so on — inspections. So there are actually quite a few tools in the toolkit for a city like Philadelphia to have a say about how much they want the vision. They had stated that vision well before the bankruptcy auction process that your introduction mentioned.

Stone: So the auction results were released on January 22nd, which was just about a week ago today. We’re recording on January 29th. Hilco Redevelopment Partners, which is a company that has a history of buying and repurposing industrial sites agreed to purchase the refinery and the site for $240 million. Given the spectrum of possible auction outcomes, how does this one rate?

Hughes: Given that spectrum, which again ranged from proposals to essentially reopen the refinery, with perhaps a little biofuel or other kinds of blending activities — essentially reopen the refinery, largely status quo ante, all the way through to proposals that stepped completely away from that. We have something of a middle ground in the Hilco winning bid. They are a real estate holding and development company. They specialize in the acquisition — actually today they increasingly focus on the acquisition of brown industrial sites often in the energy or power sector and repurpose those sites to often non-energy uses. It really comes out of that tradition that Hilco has lived in for decades, really. They acquire an old department store chain, and they know exactly how to liquidate its current inventory and stock, and how to convert its real estate into more productive uses. They have articulated a vision, a little bit publicly, and a little bit as has been reported in conversations with the city about a similar kind of vision for the site. It will probably take some time, first to remediate the site and prepare it in other ways for market. It will probably be done in a series of deals, rather than one large kind of vision. They have stated a lack of interest in reopening the refining operations. That might suggest that they would think about dismantling some of the equipment and possibly selling it for either reuse or for scrap.

So there are a lot of things to be filled in, but the basic vision seems to be one of — this is 1,300 acres. It is in various degrees of dirty — very dirty to dirty — remediable to perhaps not even remediable, at least economically for some time, that over a period of decades is going to be repurposed to a lot of different kinds of activities. I would say that from the range of things that had to both have market viability, generate enough investor activity that it could actually win the bid, basically consistent with the city’s preferred vision of a cleaner use of the site. The city probably did just about as well in this auction process as the city could have hoped for.

Stone: I’d like to note that the outcome of the auction won’t be final until February 6th. That’s when the bankruptcy court is scheduled to issue its final ruling on the deal. And along these lines, I’d like to note that yesterday on January 28th, an article appeared in the Philadelphia Inquirer — that’s the local newspaper — reporting that backers of a losing bid for the refinery have solicited the help of the Trump administration in an effort to pressure the bankruptcy court to reconsider the auction result. The losing bid proposes to reopen the refinery, and its backers which include local union leaders, have met with Trump’s Assistant for Trade and Manufacturing Policy — that’s Peter Navarro — to push their case. So Mark, how seriously should we take this scenario?

Hughes: That’s a very interesting question. Let me start with this. This really is hot off the presses. I’m happy to say I only know what I read in the newspaper about what’s happening. But what we have all read in today’s newspaper about this is a little troubling for a number of reasons. And let me spend some time on this.

As you can imagine, these bankruptcy court proceedings get very complicated very fast, and I don’t want to bore you, since you’re looking right at me, and I don’t want to bore any listeners. But let me try to give a little sketch on this. So yes, we have learned since the auction closed that the Hilco bid of $240 million was the second-highest bid. This competing finalist bid was $25 million higher — about 10% higher. PES, the bankrupt company, chose Hilco. So that will be important to the story, right? It’s not that the city chose Hilco. It’s not that the bankruptcy court judge chose Hilco. The bankrupt company, the refinery, chose the Hilco bid to satisfy their creditors and other obligations.

The unsecured creditors who represent a number of — not the investors who in effect own pieces of the refinery — but other people who have invested or loaned money to the operations and the refinery over the years, and these do include several of the unions that once worked at the refinery site. The law firm that represents those unsecured creditors has asked the judge to not approve PES’s selection of the winning Hilco bid. It’s interesting, kind of extraordinary, and it has been reported both in the paper, as well as in the suit, and in many of the quotes from representatives of these unsecured creditors who have asked that IRG — this losing bidder — be reconsidered, that the agenda here is to reopen the refinery. That’s absolutely what this is about.

It would be, I think, a real red herring to think that this is about, “Oh, they didn’t pick the highest bid.” This is about somebody who sees the ultimate value of that site as repurposing it as real estate in an extraordinarily high-value location, close to the seaport, close to the airport, close to two interstate highways, close to downtown Philadelphia with a large variety of possible reuses — someone who sees that vision, that sounds like it’s got legs versus someone who’s proposing to reopen a refinery that has gone bankrupt twice in the last decade, whose future is very uncertain, and the jobs at which would be unlikely to last much longer than it takes investors to pull a few hundred million dollars of profit out of the operations, just like they did after 2012.

So that’s what this is really about. It’s about reopening the refinery, and because it’s about that, it forces us to revisit a number of the issues that your readers — probably unlike most Philadelphians at this point — many of your readers may be unfamiliar with some of the facts about that very refinery operation that we thought were long-settled, especially after the auction closed last week.

The refinery is the single largest point source of greenhouse gas emissions in the city. It’s the eighth largest in the state of Pennsylvania, and it accounts for 20% of the greenhouse gas emissions annually inside the city of Philadelphia. It is by far the largest point source emitter of toxic air pollutants in the city, accounting for 56% of the toxic pollutants, the criterion pollutants, that are emitted inside the city. It is a huge economic, environmental and public health burden on the city — economic because of the rollercoasters of bankruptcies and starts and stops and lost pension benefits and so on. A lot of profit-taking, but it has been bad for workers and very bad for both the emissions and the environmental health profile of the city. And that’s what is being proposed to reopen at this point.

I could say a lot more about this. Let me just say one more thing, which is that a lot of these discussions — and you mentioned again, as reported — a series of conversations between some of the backers of this failed IRG bid, which now includes not only the original IRG bid, but one of the previous PES CEOs of the refinery, who has now joined forces with IRG, and together now they have really amped up the arguments for reopening the refinery — that that’s very much what this proposal is really all about. And part of the discussion about the request for influence from the Trump administration — there has been mentioned made about, “One of these days, EPA is going to have to approve the permitting of any use at that site.”

Stone: The cleanup of the site.

Hughes: The cleanup of the site. And you know, it’s a little incoherent, some of these arguments, but they’re raising the specter of the regulatory powers of the EPA as being in the service of helping one bidder over another bidder, potentially for political reasons. There has been mention in these conversations in the paper today about political contributions being offered and withheld, and lots of dirty political discussion, but there’s another more technical aspect of this, too, which is that some of the pro-refinery advocates have said, “That site is so contaminated, it is going to take millions and millions of dollars to clean that site up, if it’s to be anything other than a refinery. We need to reopen it as a refinery, so that we avoid those costs.”

Reopening the refinery does not take the contamination of that site off the books. And this is a really very alarming argument, that someone is making a public appeal through the media, and hoping probably to influence the judge’s decision on the 6th, saying, “Reopen the refinery so we can avoid all these contamination issues, because if it’s a refinery, we can still kind of dirty things up.” The problem with that logic is that when that refinery inevitably shuts down — either in a few years because it’s in bankruptcy again, or in a decade or two because the policy regimes have changed so much that we’re no longer dependent on fossil fuels — when that refinery closes down inevitably, that contaminated land will remain. And that liability will remain. And for people to act as if, “I’m going to work five more years. I’m going to work ten more years. I’m going to pull profits out again or one more version of this company before the next bankruptcy, and then I’m gone, and the contamination remains,” that is a misleading, erroneous, and frankly a little too revealing an argument about what this is really all about. This is short-sighted about the limited interests of a few and really turns its back on the broader interests in the longer run of the city, its residents, and its businesses.

Stone: What you’re saying recalls to my mind the work of one of our colleagues, Christina Simeone, who during the second-to-last bankruptcy that this refinery went through in 2018 did extensive research on the market on the status of the refinery and basically came up to the conclusion that by 2022, the refinery in any event would be back in bankruptcy again. So we’re not even talking five or ten years under that scenario, right? So let me ask you this. You have called PES — Philadelphia Energy Solutions — “a microcosm for the transition from fossil to clean energy.” Can you explain what you mean by that?

Hughes: Yes, sure. I think what the PES story really brings together is all of the competing dimensions, right? We have the energy transition. We often denote that or modify the energy transition with adjectives like, “We need a just and efficient transition,” right? We need to think about people who are losing jobs, not just about people who are gaining jobs. We need to think about how to accelerate our transition quickly for a variety of reasons. Some of them have to do with climate change, but a lot of them have to do with competitive advantage in a world where the people who get there first in the development of technologies and supply chains around clean energy are going to dominate the energy economy of the coming century.

There are lots of reasons to have a just and efficient energy transition, but that transition doesn’t just go from nowhere to solar panels, especially in the United States, especially in a place like Philadelphia. The green energy transition is really a brown-to-green energy transition. And we have to think about how we finance and plan and train people in that context.

There’s a very specific example for this, that again the PES refinery story shines a light on, which is that in this bankruptcy auction process — which is never the best way — it’s never really the best way to think about big policy decisions. It’s a court of equity. It’s about getting people their money, right? But still, in this process, we had an illustration of this dynamic. You can raise money for things with market prices. You can raise money or an oil refinery. You can raise money for new logistics at a repurposed, old refinery site, like Hilco may have in mind. You can raise money for things that pay a price in the market. We can’t raise money for things that don’t have a market price.

So because we don’t have, for example, a market price on pollution, and we don’t have a market price on CO2 greenhouse gas emissions, the true full value of what, say, Hilco could do with that site is not just the value of putting some warehouses and connecting them to the amazing infrastructure at that site. But the full value of that is also suppressing 20% of the city’s greenhouse gas emissions every year. At $50 a ton, which is kind of a standard working price for the true value of an emitted metric ton of CO2 equivalent into the atmosphere — Hilco can’t receive in the marketplace the real value of their devoting a clean, green activity, certainly not the refinery, on that site. They can’t get paid for it. And because they can’t get paid for it, they can’t raise money for it. But the real value of that site is hundreds and hundreds of millions of dollars more than what the option price can raise.

What it really also illustrates is we need ways of financing the brown-to-green energy transition that recognizes when we pull back from brown activities that are polluting and are generating emissions, that are generating climate change impacts, that are making places like Florida uninsurable — that when we make that, we’re creating value. When we move from brown, and not just to green, we’re creating value when we move from brown, and we need to be able to finance that.

There are a lot of mechanisms that are under development now. The carbon tax is one thing. If there was a price on carbon emissions, then the market would kind of work, but we’re tired of waiting for big carbon tax moves by governments. There are other kinds of mechanisms that are generated now. Green bonds, green loans — there are now financial facilities, investment facilities that will do things like this. You can borrow money and pay it back to people who have lent it to you. If you pursue a green activity, the greener that activity, the more emissions you reduce from what you’re doing with the money you’ve borrowed, the lower your interest rate is. So there are all kinds of new products that are coming on. States have green bond financing. New York, California — Pennsylvania unfortunately does not have one. If it had, Hilco probably would have been able to raise its bid by many millions of dollars, because there would have been access to a green bond financing mechanism that would have —

Stone: Because of the value of that carbon abatement.

Hughes: — that would have recognized the reduction or the abatement of carbon, and also the air and water pollution that happens at the site. So all of these mechanisms, unless we recognize — and that’s why the PES refinery is such a teaching moment — recognize the complexity on the ground, where real people are both feeling costs and benefits and making decisions. Until we figure out ways to actually monetize some of that transition, so that we can finance these moves, it’ll never be just, it’ll never be efficient, it’ll never be fast enough.

Some of the work of the Kleinman Center is actually about thinking through what these mechanisms — their design, their implementation, trying to build understanding and public education around the importance of really paying attention to the details of how you implement a brown-to-green energy transition.

Stone: Let’s play around for a moment, if you don’t mind, with one of the possible future uses of the site. Now again, Hilco has not announced any specific plans yet, but as you mentioned earlier, the PES site has immediate access to major highways, waterways, and railroads. Yet as site that would be full of trains and trucks and ships, there would be a lot of air pollution continuing the problem that came with the refinery. So running with this model for a moment — which is one potential outcome or part of a package of potential outcomes — how does Philadelphia address the pollution that has been such a problem for its South Philadelphia communities?

Hughes: One of the nice things about transportation is that it is starting to connect with the power sector, the electricity sector that has proven to be one of the easier of the sectors to decarbonize, one of the easier of the parts of the economy to decarbonize, to lower its greenhouse gas footprint. As we move from oil and coal and natural gas generation of electricity and towards wind and solar and other technologies, electricity is becoming relatively clean. So now, transportation, which has long relied on fossil fuels, liquid fuels, to power the transportation sector — that’s why there’s so much attention now on electrifying transportation, because now we’ll move from very dirty energy sources to very clean.

There are solutions, actually, that can help deal with some of the, say, trucking that might be associated with a logistics site that Hilco may slowly or quickly develop at the former refinery site. So you could imagine electric trucks, even dedicated highways that are focused on electric vehicles. You can also imagine different kinds of — there’s a scholar at the Kleinman Center named Steve Viscelli who has looked at the notion of truck ports that says, “You know, we use the same truck to drive all the way across country and all the way through town to make that final delivery.” We use the same truck or the same kind of truck. And it’s extremely inefficient. Very different kinds of vehicles are best suited for local deliveries, of start-and-stop and smaller streets and slower speeds than the kinds of things that move at great, consistent speed across long distances. So he has started to think about ways we might build “truck ports,” where you change — you move the product from one kind of truck to another kind of truck.

So any logistics activities at that location could be an early version of that kind of technology, where if you’re going to be spending time in local traffic, you’re in an electric and probably much smaller kind of vehicle. If you’re on the highway, you’re on a very different kind. There are lots of exciting possibilities. When we get out from under the narrow range of options that incumbent legacy plants and sectors can find and define for us, and we break out of that, there are so many more possibilities. And it’s a possibility with a future.

Stone: Let me ask you one more question specific to Philadelphia. What power does the city have to shape the future of the PES site? Obviously the auction was a private auction. The site is privately owned, and it will continue to be privately owned. The city cannot mandate what happens there, but obviously the city has a very large vested interest. What tools are at its disposal?

Hughes: Probably the most important tool that Philadelphia or any city in the United States has at its disposal is its jurisdiction over the regulation and planning of land use, so that this is what people will recognize as “zoning.” Zoning consists of a set of physical considerations but also, like I said, of use considerations. And typically when use changes, it triggers the need for a new permit that the city can issue or not. And these permits can be highly regulated and highly restrictive.

And as both the zoning map and the underlying land use plan and the exercise of the permitting power are all in connection — are all aligned with — the city’s policy goals. Cities have the right, the power, in fact the obligation to well-regulate and manage the operation of the land market inside their borders. And this has, by longstanding agreement, been an active, appropriate use on the part of cities in the United States. So thinking about the future vision of that site, the city has a lot of jurisdiction to guide the kinds of uses and activities that ultimately happen there.

Another thing that is very specific to Philadelphia is that Philadelphia, because of some very early legislative work in the city back in the early years of the 20th century — Philadelphia actually has quite a bit of power to regulate air quality. And of course one of the things that we’ve talked about in this conversation has been the negative air quality impacts of the refinery’s operations. So it is within the city’s jurisdiction to revisit its standards for air quality around a whole array of emissions. And also to regulate the use of dangerous chemicals, to take it all the way back to your introduction — the use of dangerous chemicals like HF, like hydrofluoric acid that can be gasified into hydrogen fluoride, which covers 2% of your body and kills you, is well within Philadelphia’s specific powers because of some legislation from the 1950s. So that specifically guarantees the right of cities to set their own standards.

We’re fortunate in Philadelphia to have some really very powerful tools, but the most powerful is probably the ability to regulate land use, and that’s something that all U.S. cities have in common. And I think both bankruptcy and those kinds of zoning decisions are going to be increasingly important in the United States over the coming decades. A lot of the stress and strain on older energy activities is going to lead to bankruptcies, and learning from the PES experience and understanding how cities can participate to some extent in other interests, as well.

The judge, in defining this process, early in the process last fall, said it was legitimate that community concerns be represented in this process. And those are some pretty interesting words from the bench of the bankruptcy judge. And I think we may be seeing what happens when those concerns are actually admitted to the bankruptcy bar in Philadelphia right now and next week.

Stone: Yes, but we’ll be waiting to see what happens in February 6th.

Hughes: Yes.

Stone: Mark, thanks very much for talking.

Hughes: Thanks, Andy. My pleasure.

Stone: Today’s guest has been Dr. Mark Alan Hughes, Founding Faculty Director of the Kleinman Center for Energy Policy. Check out the Kleinman Center’s website for more energy policy news, opinions, and research — and for a listing of our upcoming events. Our web address is kleinmanenergy.upenn.edu, and our Twitter feed is @KleinmanEnergy. Thanks for listening to Energy Policy Now, and have a great day.

guest

Mark Hughes

Founding Faculty Director
Mark Alan Hughes leads the Kleinman Center as founding faculty director and publishes research on topics ranging from deep decarbonization to the future of Philadelphia’s energy landscape. He is also a professor of practice at the Weitzman School. 
host

Andy Stone

Energy Policy Now Host and Producer
Andy Stone is producer and host of Energy Policy Now, the Kleinman Center’s podcast series. He previously worked in business planning with PJM Interconnection and was a senior energy reporter at Forbes Magazine.