Cedar Grove Composting, subject of odor complaints in Maple Valley and Everett, scraps plans for electricity-generating digester on Smith Island.

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Cedar Grove, the region’s largest composter of food scraps and yard waste, said Thursday it has abandoned plans to build an electricity-generating digester in Everett.

The announcement came after Everett and the Puget Sound Clean Air Agency said they would require a full environmental study of the anaerobic digester, which would have produced enough energy for 400 homes.

Steve Banchero, Cedar Grove’s CEO, said in a statement the project was “no longer financially feasible. … We are disappointed with this decision and we know our disappointment is shared by many who were looking forward to a significant clean energy facility that would further enhance the region’s organic waste recycling efforts.”

The company said it already had spent $2.5 million to obtain permits for the $20 million digester. It will now focus on partnerships with large customers to build smaller digesters that could create electricity and heat buildings.

Neighbors who have complained about odors from the company’s Everett and Maple Valley facilities welcomed both the government agencies’ requirement for an environmental review and Cedar Grove’s response.

“We’re very pleased that Cedar Grove will not be expanding,” said Mike Davis, founder of Citizens for a Smell Free Snohomish County. “I think they knew they could not withstand a full environmental review and dropped their expansion plans.

“It’s clear that the city of Everett finally heard our concerns. We had been fighting for three years to get them to do something.” Davis said odors from the existing operation still must be reduced.

The company, which has attributed many odor complaints to other industrial sources, had portrayed the proposed digester not as an expansion but as a way to create energy from material it already handles.

But Everett and the Clean Air Agency said Cedar Grove’s application materials “present an intent” to dramatically increase the operation on Everett’s Smith Island over the next five to 10 years.

The agencies originally proposed to let the project go ahead without an environmental-impact statement, on the condition that the company offset additional paving and loss of wetlands by creating a salt marsh and making other improvements.

Marysville and the Tulalip Tribes urged Everett and the Clean Air Agency to require an environmental study, and complained in a letter to Cedar Grove’s largest customer, Seattle, that the company has a history of “regulatory evasion and failure to comply” with permits.

Cedar Grove spokesman Laird Harris said many of those claims against the company were “not completely accurate.”

Keith Ervin: 206-464-2105 or kervin@seattletimes.com