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World’s Largest Fracked Gas Refinery Violates Federal Funding Law, Say Environmentalists

Columbia Riverkeeper, a group committed to the enforcement of environmental protections, says Northwest Innovation Works sought billions for construction for a fracked gas-to-methanol refinery in violation of a federal law that restricts funding.

Last month, environmental and public health groups filed charges challenging federal approval for NWIW’s refinery proposed for construction in Kalama, Washington.

The complaint [PDF] challenges permits issued by the United States Army Corps of Engineers to NWIW to construct a marine terminal that the refinery will use to ship methanol overseas.

According to Columbia Riverkeeper, they intend to block billions of dollars in support that NWIW is unlawfully seeking for the refinery.

“NWIW has applied for federal and Washington State grants and other forms of financial assistance,” explained Jasmine Zimmer-Stucky, a former senior organizer with Columbia Riverkeeper.

According to documents obtained by Columbia Riverkeeper and shared with Shadowproof, NWIW applied for a $2 billion loan guarantee from the U.S. Department of Energy and an $11.5 million grant from the U.S. Department of Transportation via the Port of Kalama.

Columbia Riverkeeper argues such “double-dipping” into federal funding violates the Omnibus Appropriations Act of 2009 [PDF], which prohibits loan guarantees from being made to any project which receives financial support from other federal agencies.

The organization further notes that NWIW has a pending request for another $11.5 million grant from the Transportation Department, on top of the $12 million grant it was already awarded from the Washington State Department of Transportation. The refinery was also denied a $15 million low-interest loan from the U.S. Department of Agriculture.

The Department of Energy declined to comment, describing loan applications and the loan application process to be “business sensitive.” Both the Transportation Department and NWIW failed to respond to multiple requests for comment.

Should NWIW win its loan guarantee from the DOE, Columbia Riverkeeper believes it would put taxpayers on the hook for $2 billion of the refinery’s construction costs.

“NWIW wants US taxpayers to bear the financial risk—up to $2.1 billion—if the methanol refinery fails,” said Zimmer-Stucky. “If NWIW goes bankrupt, the federal government could be responsible for paying some or all of the $2.1 billion cost of building the methanol refinery.”

Columbia Riverkeeper’s accusations come amid a five-year battle against what the environmental group describes as the world’s largest fracked-gas-to-methanol refinery.

A joint venture between the Chinese government and U.S. investors, the refinery would process fracked gas transported via pipelines from Canada and the Rocky Mountains into liquid methanol.

“Their plan is to take advantage of Washington’s cheap natural gas, water and electricity to produce methanol for export to China,” added Zimmer-Stucky.

The refinery would sit on the bank of the Columbia River, which feeds out into the Pacific Ocean. As Columbia Riverkeeper warns, it would pose an enormous threat to the environment.

Natural gas fracking, storing millions of gallons of highly combustible methanol in one place, and transporting toxic chemicals via pipelines and waterways would carry risks.

“The methanol refinery would degrade the community of Kalama, the Columbia River estuary, and our climate,” contended Miles Johnson, a senior attorney with Columbia Riverkeeper.

The Sightline Institute released a study on the local environmental impact of NWIW after plans for the refinery were proposed in 2014.

According to Sightline, NWIW would consume 5 million gallons of water and 320 million cubic feet of gas each day, with eighty percent of the water lost as steam and diesel particulate, ammonia, carbon monoxide, and nitrogen dioxide is released into the air.

All of this would occur in a habitat which is home to endangered salmon and steelhead populations, which feed endangered killer whales, bears, bald eagles — and people.

Residents rely on the Columbia River for both recreation and fishing, especially in the cases of local tribal nations, such as the Nez Perce, Cayuse, Umatilla, Walla Walla, Wascoes, Warm Springs, Paiutes, and Yakama.

As Sightline put it, NWIW threatens this vital habitat on a scale that dwarfs other polluters in Washington State.

“For context, that’s more natural gas than is used by every gas-fired power plan in Washington, combined,” said Eric de Place, the director of Sightline’s work on energy policy. “It’s also more than is used by every industrial site in the state or every home in the state. It’s about twice as much as is used by every commercial business.”

Zimmer-Stucky warned, “NWIW’s refinery would consume more fracked gas than every gas-fired power plant in Washington State combined and rank among the state’s leading causes of greenhouse gas pollution.”

Rather than accept the reality of pollution, NWIW presents itself as a company committed to reducing greenhouse gases, a requirement for eligibility under the Energy Department’s loan guarantee guidelines.

The refinery’s website cites analysis that claims NWIW will reduce global greenhouse gas emissions by “displacing” coal-to-methanol manufacturing in China — but there are no assurances that coal-fired plants overseas would actually shut down, only that the world’s largest fracked-gas-to-methanol refinery would open up in the United States.

“There is little certainty that adding new gas-based methanol to the global methanol market would avoid the equivalent amount of methanol made from coal in China, whether from already-existing methanol plants or from new, yet-to-be-built plants,” said Pete Erickson, a senior scientist with the Stockholm Environment Institute.

Because the methanol market is global, Erickson indicated a new supply could simply expand the market, creating new demand rather than displacing production elsewhere. He also argued replacing one polluter with another will not suffice to meet the targets identified by the international Paris Climate Accord.

“Production and use of coal, oil, and gas will all need to decline, as the Production Gap Report with the U.N. Environment Program and other partners shows,” added Erickson, referring to a recent report examining the discrepancy between current energy production and the reductions necessary to meet climate goals.

Regardless of NWIW’s pitch for their new refinery, Columbia Riverkeeper hopes to keep their bait-and-switch from hooking the public.

NWIW initially hoped to construct their refinery in Tacoma. Resistance from residents forced the company out of Tacoma, and Columbia Riverkeeper is hoping Kalama can achieve a similar victory—both for the community and for the planet.

“We simply cannot keep building new fossil fuel infrastructure,” concluded Johnson. “We must transition to a truly clean energy future.”

Arvind Dilawar

Arvind Dilawar

Arvind Dilawar is a writer and editor. His articles, interviews, and essays on everything from the spacesuits of the future to love in the time of visas have appeared in Newsweek, The Guardian, Vice, and elsewhere.