Gov. Inslee has promoted giant methanol plants as part of the region’s clean-energy future, while others question this push to produce a chemical that would be shipped to China for that nation’s plastics industry.
Last August, Gov. Jay Inslee traveled to Kalama, Cowlitz County, to praise the first of three giant chemical plants proposed to turn natural gas into methanol for China’s plastics industry.
The Northwest plants would cost more than $7 billion to construct, ranking among the largest investments that China has ever made in U.S. industry. In a statement, Inslee called the Kalama plant “one of the most innovative clean-energy projects in the nation,” and a model for the world.
To help earn that distinction, a Chinese-backed partnership — Northwest Innovation Works — would limit the carbon emissions of the Kalama plant, as well as those planned for Tacoma and Oregon, by harnessing large amounts of hydropower and other renewable energy to produce the methanol.
The three plants would use 800 megawatts of electricity among them — enough to power more than 600,000 homes, roughly twice the number of residences in Seattle.
Developers say the Northwest plants would create hundreds of family-wage jobs and reduce the need for new coal-supplied methanol projects in China, which release far more greenhouse gases.
But skeptics question whether Northwest hydropower — from 3 percent to as much as 5 percent of the region’s average annual output — should be dedicated to making liquid methanol that is shipped by tanker to China’s plastics industry.
“Hydropower is like gold. It’s affordable zero-carbon power,” said Robert Kahn, a Northwest renewable-power consultant. “Do you really want to tie up so much of it in these plants?”
The partnership also faces a fierce challenge in Tacoma, a city still dealing with the environmental legacy left behind by the shuttered Asarco smelter. Hundreds of people have jammed public hearings about the proposal to express fears about health and safety risks.
Building China ties
Inslee helped lay the groundwork for the plants during a 2013 trade mission to China, a review of state Commerce Department documents released under a public-records request shows.
The developer’s largest partner, CAS Holdings, is a commercial offshoot of the Chinese Academy of Sciences, which is owned by the government of China. Inslee has championed the projects as part of a push to expand the state’s economic ties with China.
In a January 2015 speech in Seattle, Inslee said he “personally engaged” with NW Innovation to secure a commitment for the two Washington plants.
Both Inslee and the developers have pitched the projects as one way to combat climate change. They say that making methanol from lower-carbon natural gas in plants that use renewable power would help slow development of China’s coal-based plants.
“This has a fantastic global impact on climate change,” said Murray Godley, president of NW Innovation Works. “If we build our plants, they will not build theirs.”
But Godley’s declaration masks a more-nuanced story of a plastics industry hit by shifting markets that are undermining profits in the coal-based methanol process.
First, some background.
The basic building blocks of plastics are called olefins, and they are used to produce everything from insulin pumps to fleece jackets to kayaks.
Over the past decade, China has built plants that can turn methanol — derived either from its abundant coal resources or natural gas — into olefins.
But in China, and around the world, most olefins are produced from hydrocarbons such as naphtha, propane and ethane in alternative processes that don’t involve making methanol.
When oil prices were high, the cost of these hydrocarbons escalated as well, and that helped spur investment in China’s methanol-based plants as a lower-cost option.
But as oil prices have collapsed over the past 18 months, hydrocarbon-based olefins have become much cheaper to produce. And some of the new coal-based projects in China are being canceled or shelved.
“In 2014, it (coal-to-olefins) was brilliant in China,” said Ben Gonzalez, a petrochemical analyst with Platts, an energy-information service. “Now, it’s not.”
Globally, methanol prices also have slumped. Many developers in the southern United States trying to build natural-gas-based methanol plants have run into trouble.
“Anyone trying to put together a methanol project right now is facing strong financial head winds,” said Mark Berggren, managing director of Methanol Market Services Asia.
Meanwhile, in the U.S., investment continues to flow into plants that manufacture olefins from ethane and other hydrocarbons. These processes typically consume less energy and generate fewer carbon emissions than the production of methanol-based olefins, according to a study in the journal Energy published in 2008.
A study co-author — Kornelis Blok, an energy-systems researcher based in the Netherlands — said state-of-the art ethane plants remain a more energy-efficient option for producing olefins.
But NW Innovation officials say their technology could still yield the lowest-carbon olefins in the world so long as the plants can use hydroelectricity or other renewable power.
“This is a way to put green energy into the petrochemical supply chain for the first time on a really large scale,” said Phil Leland, vice president of technology for NW Innovation.
In Washington state, Tacoma has emerged as ground zero for opposition to NW Innovation’s projects.
And as the controversy has intensified, Inslee has become more cautious in his public statements about the projects.
“I think there are questions that need to be answered,” he said in January. “What I support is going forward and getting those answers to those questions. And that’s going to happen.”
All three Northwest plants must undergo environmental reviews as well as gain a multitude of state and federal permits. The current timetable calls for the construction of the Kalama plant to begin next year, with Tacoma breaking ground in 2018. The Oregon plant at Port Westward near the Columbia River would come sometime later.
Most of the natural gas for these plants is expected to come from western Canada. The amount required at full capacity would boost the annual natural-gas consumption of Oregon, Washington and British Columbia by more than 40 percent, said Dan Kirschner, the executive director of the Northwest Natural Gas Association.
Kirschner said there is plenty of gas available, but the Northwest’s pipeline and storage capacity likely would need to be expanded to serve all three plants.
The methanol-production process also requires large amounts of water. Initial estimates indicate the plants would draw nearly 7.6 billion gallons annually, or roughly the amount consumed by 52,000 homes.
The Tacoma plant, which is proposed on a 125-acre site once occupied by an aluminum smelter, is expected to require 1,000 workers during peak construction and then generate 260 full-time jobs to operate the facility.
“This region has a very strong, extremely competent union labor force that we are looking to utilize,” said Godley, NW Innovation’s president. “These guys know how to build plants.”
The potential for family-wage jobs has helped the partnership garner support in Kalama.
But in Tacoma, a Feb. 10 hearing to help finalize the scope of the city’s environmental review drew about 1,000 people, the vast majority of whom were against the project.
In often-emotional and raucous testimony, they railed against public officials who supported the project. The concerns raised included the plant’s proposed location on tidal flats in an earthquake zone, and the risks of explosions, chemical spills and toxic emissions.
“This thing, which makes us essentially a Chinese industrial colony, robs us of our water, our electricity, our safety, our health and, as much as anything, our civic pride,” Doug Mackey, a Tacoma native, said at the hearing. “ … Tacoma is better than that.”
Tying up hydropower
Responding to critics, NW Innovation officials say they would use the same natural gas burned in the furnaces of millions of American homes. They cite a draft environmental review for the Kalama plant that found toxic emissions would comply with state standards.
“What we ask of people is that they try to become informed,” Godley said. “This has not got the contamination potential of an oil refinery.”
The developers also highlight their efforts to pioneer a greener methanol technology.
In a traditional plant, the energy used to convert natural gas to methanol is created by burning about a third of the gas that arrives at the front gate. But by using more electricity, the plants would use far less gas and create far fewer carbon emissions.
“The goal is to have as much green power as we can possibly get,” Godley said.
One option would be for utilities serving the plants to contract directly with regional hydropower producers to secure the power.
The Chelan Public Utility District, for example, operates three Eastern Washington dams that on average generate more than 1,000 megawatts of power.
“We do block sales, and it can be guaranteed to be hydro,” said Greg Carrington, Chelan’s managing director of energy resources. “There is usually a premium price for that.”
But there already are buyers for this hydropower. Currently, all of Chelan’s surplus power is sold to customers in the Pacific Northwest and other states.
So if more hydropower is claimed by the methanol plants, other utilities that use that electricity would have to turn to alternatives. At least for the next few decades, the likely options would include power generated by natural gas or even coal-fired plants that emit carbon emissions, said Tom Eckman, with the Northwest Power and Conservation Council.
“No doubt, there are going to be some trade-offs,” Eckman said.