State Ecology Department Rejects Permit for Kalama Methanol Plant on Columbia River

The state Department of Ecology has denied a request for a shoreline permit required to build a $2 billion Kalama methanol plant that would export the chemical to China.

The permit rejection is a serious setback for a project that would be one of the Pacific Northwest's largest industrial users of natural gas — the feedstock for methanol — and has generated intense controversy since first proposed back in 2014.

Critics have attacked the NW Innovation Works project as a major new source of Pacific Northwest greenhouse gas emissions that would pollute for decades into a future when the imperatives of climate change call for cutting back such pollution.

And Laura Watson, the director of the Ecology Department, cited greenhouse gas emissions from the plant as a reason for rejecting the permit.

"I want to be very clear that a project that would increase greenhouse gas emissions by nearly 5 million (metric) tons annually would not benefit the environment ..." Watson said. "At most, this project would be less harmful than potential alternatives."

The plant's developers have said the project would help displace coal-based methanol in China that produces far more carbon emissions per gallon of product, and thus would be a net benefit in the global struggle to curb this pollution.

A state study released late last year — based on the work of three contractors — found a "high likelihood" that the project would slow the rise in global greenhouse gas emissions in the methanol industry. That savings could equal 5.9 million metric tons of carbon emissions — roughly the amount produced by 1.28 million gasoline-powered vehicles.

That study was cited by developers as they reacted to the permit rejection. "Given the strong scientific findings and multiple reviews over the last six years, it is difficult to understand why the original vision for both economic and environmental security has been bypassed," said Vee Godley, chief development officer for NW Innovation Works.

In interviews last year, state officials cast doubt on those findings, saying they were based on an analysis of future markets that were difficult to predict. In the study, they noted the department's determination that the project's emissions are significant, a conclusion that is required for a permit to be denied.

Watson also cited the uncertainty about how environmental and economic decisions would impact methanol markets with leaving no alternative but to turn down the permit.

She cited the certainty of what she termed "the extremely large" carbon footprint of the project. State officials said that the plant would emit nearly 1 million metric tons of carbon emissions in state and 4.8 million metric tons globally, which would include methane releases during the production of natural gas.

The state Legislature has set a 2050 target of having only 5 million metric tons of greenhouse gas emissions released from the state, which would be down from nearly 100 million metric tons of emissions in 2018.

The permit decision was celebrated by environmental groups. Brett VandenHeuvel, executive director of Columbia Riverkeeper, applauded a decision he said followed "the science and the law." Stephanie Hillman, Northwest representative for the Sierra Club, said construction of the plant made no sense amid a climate emergency.

Officials at the Port of Kalama, where the project would be built, attacked the permit denial, and will be consulting with a legal team to "evaluate next steps."

"It's disheartening that after six years of robust expert review ... unnecessary barriers should continue to be raised. ... It is difficult to see the logic of this decision or the equitable application of state law," said Mark Wilson, the port's executive director.

The project also has been dogged by questions about how the methanol will be used in China.

Developers of the project have said the methanol would be used as a feedstock in the state's chemical industry. But a slideshow presentation to potential investors obtained by Oregon Public Broadcasting — and shown as recently as Jan. 2019 — indicated the methanol could also be used as a fuel for industries and transportation.

The state study took all possible uses of methanol into account when determining the project's potential for slowing the rise in global greenhouse gas emissions.

NW Innovation Works will have up to 21 days to appeal the decision to deny the permit to the Shoreline Hearings Board, which is composed of administrative law judges. If that appeal is unsuccessful, the permit decision also could be challenged through a lawsuit.

The high-profile project was once embraced by Gov. Jay Inslee as a project that could provide a boost to the Southwest Washington economy and help reduce global emissions. Then in May 2019, the governor withdrew his on a day he signed a bill banning fracking. In a written statement, he said, "I cannot in good conscience" support the methanol plant as well as a Tacoma liquified natural gas project because they would not accomplish what is necessary to combat climate change. He said that the withdrawal of his support would not affect the regulatory decision-making process.

NW Innovation Works officials also face challenges in getting federal permits. In November, a U.S. District Court judge in Tacoma struck down two Army Corps of Engineers permits because they were not the result of a full review of the impacts of greenhouse gas emissions.

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