Taxpayer-funded petrochemical plants are polluting communities, report finds

Rebecca Quigley's favorite spot in her house is a wraparound deck with a sweeping view of her hometown, Vanport, Pa., along the banks of the Ohio River.

But in recent years, the view has changed. Just across the river, the oil and gas company Shell built a huge industrial plant to make plastics. Called an 'ethane cracker,' the plant turns ethane, a component of natural gas, into tiny plastic pellets used to make products from plastic packaging to medical devices. Quigley calls it "Gotham City" because of the way it lights up the night sky.

Soon after it opened, Quigley began to notice frequent flaring, when the plant intentionally burns off waste gasses, as well as black smoke coming from the plant, and strange odors.

"There was a sweet odor of antifreeze or a syrup smell," she said.

She began to worry about air pollution and long-term health effects.

Regulators also took note. The state Department of Environmental Protection found the plant violated clean air laws 19 times since beginning operations two years ago – and fined it over $10 million. The plant was found to have released harmful levels of volatile organic compounds, which contribute to asthma and other respiratory diseases, as well as benzene, a known carcinogen.

Shell's plant is not alone.

It's one of 50 plastics plants nationwide built or expanded over the last decade to take advantage of plentiful natural gas from the U.S. fracking boom. Many of those plants routinely break environmental laws, according to a new report from the nonprofit watchdog group Environmental Integrity Project – and taxpayers are often footing part of the bill.

Two-thirds of the plants received tax breaks or subsidies from state or local governments to encourage companies to locate within their borders, according to the report.

"They're major emitters of greenhouse gasses and climate-warming pollutants, as well as major emitters of pollutants that are dangerous to human health," said Alexandra Shaykevich, the report's lead author.

The report found that in 2021, the 50 plants released greenhouse gasses equivalent to emissions from 15 coal-fired power plants. Many emitted large amounts of the carcinogen benzene and nitrogen oxides, which can react to form ground level ozone, or smog.

Most of these plants are in the Gulf Coast, and are disproportionately located in majority non-white communities that are largely low-income.

"We found that 94% of the plants that we looked at reported accidents or incidents, so-called emissions events," said Shaykevich.

The Shell plant in Beaver County, Pa., is a case in point. It was built with state tax credits worth an estimated $1.65 billion, designed to incentivize the company to locate the complex in Pennsylvania.

After a series of malfunctions, spills and illegal odor events, the plant had to shut down for two months last year for repairs. It has reported 63 malfunctions during less than a year and a half in operation. Residents have complained the plant has released odors of 'gasoline' and 'burning plastic,' and videos show crews spraying a tower down with water during one intense flaring event.

"Taxpayers are paying out of their pockets for plants that manufacture pollution that harms them," said Terrie Baumgardner, a local outreach coordinator for the nonprofit Clean Air Council, who lives in the nearby town of Aliquippa. "There's something terribly wrong with that picture."

Shell didn't respond to questions about the Environmental Integrity Project's report. The American Fuel & Petrochemical Manufacturers, an industry group, did not respond to a request for comment.

Economists sometimes question whether tax incentives for industry are an effective economic strategy. But states and local governments still hand them out on a routine basis, often arguing the subsidies are necessary to bring economic development.

Some in the Pittsburgh region say the tax credits for Shell were money well spent.

"[The] Shell cracker plant was one of the best things that happened to Steamfitters Local 449," said Ken Broadbent, business manager for the local steamfitters union in Pittsburgh, which represents industrial plumbers and pipefitters.

Union members from around the country made six figures building the plant, Broadbent said. The local was able to build a $19 million training facility paid for through union dues from members working on the project.

The Pittsburgh region needed the plant and the jobs that came with it, Broadbent said, and he thinks the tax credit was instrumental in ensuring the plant was built here instead of in neighboring Ohio or West Virginia.

"We were able to beat them by attracting them with better tax credits," Broadbent said. "That's how the game's played, whether I like it or not."

He expects Shell's air violations are temporary, he said, as the plant gets up and running, and will eventually be eliminated.

Communities shouldn't have to choose between jobs and public health, Shaykevich said.

"We think if companies can't obey the law, they shouldn't be getting taxpayer money," she said. "We would advocate for in the future, that taxpayer subsidies be tied to environmental compliance."

That's not the policy right now in Pennsylvania.

The state passed a new tax credit in 2022 to attract fertilizer plants. The subsidy includes employment and investment requirements. But the state legislature included no conditions tied to complying with environmental laws.

As for Rebecca Quigley, she said the Shell plant could push her out of Beaver County entirely.

"It kind of changed the dynamics of how we feel," Quigley said. "Probably in three years, my husband and I, he's going to retire, and we're going to move."

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