Thursday, May 26, 2022
May 26, 2022

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Company cancels plans for $2.3 billion Kalama methanol plant

Friday decision by Northwest Innovation Works ends 7-year effort


Northwest Innovation Works on Friday notified the Port of Kalama it will terminate its lease, ending its seven-year effort to build a $2.3 billion methanol plant at the port.

Project supporters — including the port, Cowlitz County Commissioners, labor groups and state lawmakers — mourned the loss of the project and its potential boost for the county. Conservation groups and residents who opposed the plant applauded the announcement.

“NWIW did everything right, and their understandable decision to pull out of this project is a real loss for families trying to make ends meet, the future of economic development in our state, and our environment,” Port Commissioner Troy Stariha said in a statement. “The project also would have been a huge revenue lift for schools, police, fire, roads and other services in our area. It is yet another lost opportunity in southwest Washington.”

The state Department of Ecology denied a key permit for the project in January, the latest in a long line of setbacks for the project. Northwest Innovation Works said in a press release in light of the decision, the “regulatory environment has become unclear and unpredictable.”

The company halted work on the project to “assess the new regulatory and political landscape and determine an appropriate path forward.”

“Together with our partners, we remain committed to addressing the global climate challenge, creating jobs and economic growth, and are moving forward in developing other innovative net zero projects to produce zero carbon hydrogen and related products,” the company stated.

The plant would have converted natural gas into methanol for use in plastics manufacturing in China and would employ about 200 people, according to the company. Northwest Innovation Works volunteered to mitigate all in-state emissions, with a preference for in-state and regional projects.

The project generated considerable opposition from environmental groups, including two lawsuits.

Columbia Riverkeeper Executive Director Brett VandenHeuvel said the Department of Ecology listened to the concerns of local communities and made a decision “based on strong science and good policy.”

“We engaged in some litigation along the way, challenged permits. That was an important part of this but it really came down to local communities convincing state leaders that we need to go in a clean energy direction,” VandenHeuvel said Friday. “I applaud the amazing families in Kalama and Cowlitz County who stood up to protect their community from fossil fuels. They were truly inspirational and spent huge amount of time trying to protect the place that they love.”

Economic opportunity

First proposed in 2014, Northwest Innovation Works, the port and supporters have promoted the plant as a way to bring in jobs, revenue and local taxes to the area.

The project would have created 1,400 construction jobs, 200 permanent jobs and generated millions of dollars in local taxes, according to the company.

Conservation groups and some area residents have opposed the project for years, criticizing its proposed use of fracked gas, emissions and the potential use of the methanol as fuel.

The plant’s first major delay came in September 2017 when the state Shoreline Hearings Board reversed two shoreline permits granted Cowlitz County earlier that year. The board concluded the initial environmental review didn’t adequately assess the project’s impact on global climate change and ordered a supplemental environmental study of the project’s greenhouse gas emissions.

Cowlitz County Superior Court Judge Stephen Warning in May 2018 reinstated the permits but upheld that the port’s first environmental review failed to properly measure emissions.

The final supplemental study, published in August 2019, found the plant would displace coal-based methanol plants that produce greater volumes of carbon dioxide. Conservation groups argued the displacement effect was “speculation.”

The county in September 2019 affirmed the shoreline permits previously granted two years prior. Instead of approving or denying the permits, Ecology in November announced it would conduct its own greenhouse gas study after it determined the analysis provided by Northwest Innovation Works and the Port of Kalama was inadequate.

The final version of the study published in December 2020 concluded the plant could result in less global greenhouse gas emissions than other methanol sources but still would cause an overall increase.

The project would produce about 1 million metric tons of in-state emissions annually, making it one of Washington’s top 10 emitters, according to Ecology’s analysis.

Northwest Innovation Works maintained the project would have a net decrease of global greenhouse gas emissions.

Another setback came in November 2020, when a federal judge vacated the project’s federal Clean Water Act permits, sending the project back to the U.S. Army Corps of Engineers for a new environmental review.

Ecology denied the shoreline permit in January 2021, citing the results of its greenhouse gas study and inconsistencies with the Shoreline Management Act. The company and the port appealed the decision. The appeal was still pending as of Friday.

Millions spent

Northwest Innovation Works spent tens of millions addressing state agency permitting concerns, according to a Friday press release from the port.
Port of Kalama officials pointed to the state’s “regulatory and political environment” as the reason the effort failed.

“This was the kind of innovative, job-creating project that originally was supported by the governor’s office,” Port Director Mark Wilson said in a statement. “Jay Inslee stood on Kalama’s waterfront to tout the climate benefits of the project, then turned on us when he ran for president. All the state has accomplished is to encourage more severe greenhouse gas emissions outside the borders of Washington and declare a false climate victory.”

Inslee supported the project when it was first proposed as a way to help reduce greenhouse gas emissions and transition to cleaner energy sources, but in May 2019, he said he opposed the project.

“I am no longer convinced that locking in these multidecadal infrastructure projects are sufficient to accomplishing what’s necessary” to combat global climate change, he said in a prepared statement. “The impacts of climate change are already coming to bear, and scientists are saying that unless we reduce (carbon) emissions by half over the next decade, we will reach an irreversible tipping point.”

Inslee and Ecology said the governor’s stance didn’t change the state’s regulatory process and its objective review of projects.

The state required an “unprecedented” series of environmental studies, all of which demonstrated a significant net reduction in global greenhouse gasses, the port wrote in its statement.

“We’ve lost an opportunity to become a global showcase for innovation and environmentally conscious manufacturing in Washington,” said Port Commission President Randy Sweet in a statement. “Unfortunately, this is part of a larger pattern of the unwillingness to listen to differing opinions and find common-sense, balanced solutions.”

As the project hit roadblocks, port and other Cowlitz County officials voiced concerns about what the process may mean for future projects.“This project would have brought manufacturing jobs back to the U.S. from China and significantly lowered a host of environmental impacts,” said President of the Cowlitz Economic Development Council Ted Sprague. “The reduction in global greenhouse gases would have been greater than the (greenhouse gas emissions) of Seattle. If not a project with benefits like this, then what is good enough?”

Riverkeeper’s VandenHeuvel said the state’s economy is strong and growing because of its clean energy policies and because it’s a desirable place to live and do business.

“I’m hopeful that new, innovative projects that are consistent with our clean energy goals will … help our economy even more,” he said. “What we know is that dirty fossil fuels like coal, oil and fracked gas are in the rearview mirror. We’re moving rapidly toward a clean energy economy and Washington is leading the way.”

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