US shouldn’t guarantee $2.1 billion for methanol refinery

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Northwest Innovation Works (NWIW) has applied to the U.S. Department of Energy for a $2.1 billion loan guarantee to build the Chinese-backed methanol refinery in Kalama. This high-risk guarantee is inappropriate. The Innovative Energy Loan Guarantee Program is meant for projects which “avoid, reduce or sequester air pollutants or anthropogenic emissions of greenhouse gases” or “employ new or significantly improved technologies.” 

Neither is true for NWIW. 

To decrease greenhouse gases we must decrease drilling, transport, and the burning of fossil fuels. The methanol refinery would pollute as much as 1.2 million cars and require about one-third of all gas used in Washington. A Chinese official of the parent company in China states that methanol would be used as a fuel additive which increases the greenhouse gas effect of the fuel. The refinery would encourage fracking and induce new pipeline expansions; pipelines leak methane, a potent greenhouse gas.

Some NWIW technologies are untried but are not an improvement. For example, Ultra Low Emissions is mostly taking grid electricity instead of production on site. According to Sightline Institute, “Running the plant would lap up 100 megawatts of electricity, enough to power about 100,000 homes, from the region’s overtaxed electricity grid.” That would likely raise energy costs and cause the community to use dirtier sources. 

The refinery is high risk. We have no control over the Chinese owners or alternate world methanol sources. Prices and profitability vary widely.  

NWIW isn’t planning to pay its share. According to a fiscal analysis prepared for the Washington legislature, NWIW will avoid $100 million in state taxes and $43 million in local tax breaks, would pay no fuel taxes on the over a billion gallons of methanol shipped to China and no property tax. Port tenants pay no state or corporate tax. They’d pay no personal income taxes or personal gain or inventory taxes.

The Port of Kalama asked the U.S. Department of Agriculture for a $15 million low-interest loan to fund construction of an industrial well on the shores of the Columbia. $11.5 million has been included in the Washington state budget for the dock and road. According to Sightline, NWIW gave the private investment firm Stonepeak the exclusive option to fund construction of the methanol refinery in exchange for part ownership. Much of the money Stonepeak would use to build NWIW’s methanol refinery comes from Washington public employees’ retirement investments.  

It is too easy for NWIW to walk away. $2.1 billion is a lot of money. U.S. taxpayers should not guarantee this risky Chinese-backed polluter. 

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