Friday, April 18, 2014
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Will Phila.'s new 'energy innovation hub' be powerful?

Funded with $129 million by the Department of Energy, the Navy Yard project holds the promise of new jobs and new energy-efficient products.

Will Phila.'s new 'energy innovation hub' be powerful?

So the federal government will sink $129 million into an “energy innovation hub” at the Philadelphia Navy Yard?

Tell me why I feel as if I’ve walked down this road before.

It’s not because Philadelphia’s economic development change agents have tried this particular project before. It’s that big-money, big-promises programs have been unfurled here before and generally found wanting.

As set out by the consortium led by Pennsylvania State University, the energy innovation hub sounds like an interesting experiment over the next five years. But forgive me if I don’t take to heart the 100,000 jobs that could be “created or retained” over the next decade.

There’s something about $100-million-plus projects that politicians love. The real question is whether these taxpayer- and commuter-funded projects are money well spent.

In December 1994, Philadelphia and Camden received $100 million from the Clinton administration to establish empowerment zones in economically depressed neighborhoods. Money was committed to job training, social services, and tax incentives for business in Philadelphia’s West Parkside, American Street, and North Central Philadelphia sections, and in North Camden.

At the launch of the program in mid-1995, President Bill Clinton told leaders of Philadelphia and other cities that got funding that they may be “creating the way we do business as Americans in the 21st century.”

Fast-forward to 2010 and we barely remember the program. Only 12 of the 32 cities that received empowerment-zone funding saw an increase in jobs between 1995 and 2003. (Philadelphia wasn’t one of them.)

Research by the Brookings Institution in 2005 showed that the effect of the empowerment zones nationwide was “marginal at best.”

Another big-dollar dazzler, the Aker Philadelphia Shipyard, exists today mainly because of $429 million in federal and state incentives that attracted a shipbuilder here in the 1990s. However, if Aker doesn’t get new orders soon, the sun may set again on shipbuilding in Philadelphia. Layoffs have begun to trim the workforce of more than 1,000.

Finally, one need only look at how the Delaware River Port Authority has spent $485 million in the name of economic development over the last 12 years. There was $1.75 million to attract the Army-Navy football game to Philadelphia for six years, $10 million for the soccer stadium and other development in Chester, and $500,000 committed to move the Barnes Foundation from Lower Merion to the Benjamin Franklin Parkway.

DRPA’s proclivity for backing entertainment is galling at a time when the nation may admit that it has underinvested in infrastructure for decades but hasn’t changed its ways.

So I am skeptical of a federally funded effort of what looks like too many energy cooks in the Navy Yard kitchen.

However, Brookings senior fellow Mark Muro told me that the Department of Energy-backed project on energy-efficient building design in Philadelphia has the potential to have a real effect on the region’s economy. More so, in fact, than DOE’s other recent efforts to create hubs in nuclear and solar power, he said.

In February 2009, the Brookings Institution had called on the federal government to launch a massive push to unleash energy innovation similar to a 19th-century effort that modernized agriculture.

While Brookings said more money would need to be spent than the $2 billion committed to energy R&D, it was equally important to change the top-down approach taken by the Department of Energy to incorporate the bottom-up efforts of students, researchers, and entrepreneurs.

Given that the Navy Yard is like a giant test-bed, Philadelphia’s Energy Regional Innovation Cluster could be at the “forefront of learning by doing in building science,” Muro said.

It’s not enough simply to come up with new technology. “We have a lot of technology that sits on the shelf now,” Muro said.

Rather, technology needs to be scaled up in a massive way so that it can be deployed in buildings quickly. To Muro, the Philadelphia project is an attempt to “insert an economic-development mission into DOE.”
 

Mike Armstrong Inquirer Columnist
About this blog
Mike Armstrong blogs about Philadelphia corporations and business-related topics. Contact him at 215-854-2980. Reach Mike at marmstrong@phillynews.com.

Mike Armstrong Inquirer Columnist
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