Methanol plant site

Northwest Innovation Works' $2 billion methanol plant would be built at the north end of the Port of Kalama. 

A judge Tuesday reinstated two key permits for a proposed methanol plant at the Port of Kalama, but he also agreed that the project’s first environmental review failed to properly measure greenhouse gas emissions.

Both opponents and supporters of the $1.8 billion gas-to-methanol refinery claimed wins in the decision by Cowlitz Superior Court Judge Stephen Warning. But the developer, Northwest Innovation Works, emerged with two major victories:

  • The company does not need to embark upon a costly new environmental review, which would add years to the project timeline.
  • Warning also suggested that state boards are “usurping” power never granted by the Legislature, echoing a growing concern among Cowlitz County economic development officials.

Meanwhile, a coalition of environmental groups said Warning’s ruling validated earlier claims that the project’s first review was insufficient.

In his Tuesday ruling, Warning overruled the state Shoreline Hearings Board’s decision last September to invalidate a pair of shoreline permits that county regulators had previously granted.

“The permits went through their entire process,” Warning said. “We’re not starting over with all the issues on the table.”

The shoreline permits are now essentially on hold while the project undergoes a supplemental environmental review. The new study will attempt to measure sources of greenhouse emissions such as hydraulic fracking and the transport of methanol to Asia that could be traced back to the project.

(About 67 percent of the nation’s natural gas now comes from wells that use fracking, according to the Energy Information Agency.)

“This would be the world’s largest fracked-gas-to-methanol refinery, and its impacts extend far past the facility itself,” Jesse Piedfort, director of the Washington State Sierra Club, said in a statement Tuesday. “Pipeline expansions, fracked gas extraction, and offsite global warming emissions all need to be be considered in the environmental impact statement.”

The so-called “life cycle” analysis will also study whether Northwest Innovation’s ultra-low emissions technology could eventually displace dirtier coal-to-methanol plants in China used to produce olefins used in plastics manufacturing.

“Northwest Innovation Works has always welcomed a robust dialogue about our project,” Kent Caputo, the company’s chief commercial officer and general counsel, said in a statement Tuesday. “And we have always been transparent and ready to show our work to back up our claims.”

County decision-makers and the state Department of Ecology could then use the review’s findings to approve, deny or grant the permits with certain strings attached. If approved, the permits could once again be challenged before the Shoreline Hearings Board. It’s unclear when the life cycle analysis will be complete, although a California-based firm has already begun work on the complex study.

“I can’t imagine a more difficult subject area to address in the context of an environmental impact statement than greenhouses gases,” Warning said.

In explaining his ruling, Warning blasted what he called an “absurd” guidance document created by Ecology in 2011.

The county and port relied on the guidance to perform the project’s first environmental review, which found the project would have no significant adverse environmental impact. County and port officials have argued it was the only guidance available at the time.

According to the guidance, any project emitting more than 25,000 metric tons of greenhouse gases per year could still be considered “not significant” if measures were taken to cut emissions by 11 percent.

“That guidance would be best described as formulaic,” Warning said.

On-site greenhouse gas emissions from the methanol plant would total roughly 1 million metric tons per year, and the project would increase the state’s overall emissions by 1.24 percent, according to its first environmental review.

The review also found that Northwest Innovation’s ultra-low emissions technology would emit 31 percent less greenhouse gases compared to traditional gas-to-methanol plants.

Ecology also capped the plant’s emissions at 1 million tons, and the agency would require the plant to reduce emissions by 1.7 percent annually until 2035.

Despite these measures, Warning said use of the old Ecology guidance ran contrary to a mandate passed by the Legislature that requires Washington to gradually reduce its overall greenhouse gas emissions to 50 percent below 1990 levels by mid-century.

Warning cited a previous court’s decision that held greenhouse gas discussions in environmental reviews need to be “based on all policy available.”

“We’ve got specific statutory policy that has to be included in that discussion,” he said.

At the same time, Warning also questioned a footnote in the Shoreline Hearings Board’s summary judgment that appears to suggest what a project’s greenhouse gas analysis should include.

The methanol plant’s first environmental review claimed measuring total greenhouse gas emissions related to oceangoing vessels was inappropriate because their precise destinations were unknown.

However, the shoreline board noted that Ecology’s environmental review for Millennium Bulk Terminals’ proposed $680 million coal terminal included a “cradle-to-grave” analysis that estimated emissions related to vessel transport. If Millennium could do it, Northwest Innovation can, too, according to the board’s reasoning.

“Lacking such analysis renders the final” review inadequate, the board wrote in its opinion.

“There can certainly be an argument made that that is a significant usurpation of policy by the Shoreline Hearings Board, but I don’t have to decide that today,” Warning said.

But he added that “they should not have gone farther than that to create what really are significant policy decisions.”

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