• May 23, 2016

    A Troubling New Standard for Export Projects

    Dan Byers

To say that the state of Washington has a trade-based economy would be a gross understatement. It is the most trade dependent state in the nation, with one in three jobs tied to trade either directly or indirectly. Washington exports more than $90 billion worth of products annually—everything from airplanes and electronics to grains and apples and much, much more. The state’s Department of Commerce boasts that it offers “one of the top trade hubs in the world, with 75 public deep-water ports, 139 airports, more than 7,000 miles of highways and 3,600 miles of railways.” With trade as its economic anchor, Washington offers one of the country’s most attractive environments for business and employment opportunities.

Millennium Bulk Terminals—a port operator on the Columbia River in the Southwestern part of the state—exemplifies these trade-based opportunities. The company is looking to expand its existing operations by cleaning up the site of an abandoned nearby aluminum smelter and redeveloping it into a port facility to export coal. Millennium expects the local economic benefits of the project will be substantial, generating more than $102 million in state and local tax revenue over a 30-year period and resulting in more than 2,600 direct and indirect construction jobs, as well as 300 permanent jobs (including high-paying jobs such as longshoremen, which earn an average of $130,000 annually in wages and benefits). The port expansion project has received strong support from community leaders, organized labor, agriculture, and state and local business groups such as chambers of commerce. The project would revitalize an industrial brownfield site, expand trade capacity, provide jobs, and boost long-term economic growth. It sounds like a slam dunk, and it should be.   

We’ve been strong supporters of this project from the beginning—in fact, our CEO-Karen Harbert, teamed up with the Tacoma-Pierce County Chamber for an op-ed in the Tacoma News Tribune.

But the state of Washington has a different view. It has proposed an unusual and unprecedented condition on the project in order for it to proceed: carbon offsets. In a 4,000 page draft environmental impact statement (EIS) released last month, the state is requiring Millennium to account for cumulative lifecycle greenhouse gas emissions associated with the project, including by purchasing offset credits for up to 1.3 million tons of carbon dioxide that will be emitted annually in Asia when the exported coal is used for electricity generation.

This is a big deal. First of all, it appears to be yet another punitive attack on American energy resources, and coal in particular. According to the Department of Energy, the U.S. already exports more than 70 million tons of coal each year from more than 30 locations across the country (including more than 4 million tons from Seattle—the 5th highest of any port). Moreover, much of this exported coal contains less sulfur and ash than other coal on the global market, making it preferable from an environmental perspective.

Even more concerning, however, is the precedential nature of Washington’s position. For decades, the scope of environmental permitting has rightly focused on the site itself, not the product being sold or what happens to it thousands of miles away from the facility under review. A growing push from “keep it in the ground” advocates threatens to impose global life-cycle carbon considerations into EIS reviews of all kinds—be they export facilities, pipelines, exploration and production activities, or even just roads. These requirements will often make projects economically infeasible. For example, at a modest carbon credit price of $20 per ton, Millennium’s 1.3 million tons of additional emissions would essentially cost port owners more than $25 million per year. That amounts to what is effectively an enormous export tariff!

Worse, it is not far-fetched to envision environmental extremists working to impose similar requirements on an endless range of other exported products. The implications for oil and natural gas exports are obvious, but what about cars or airplanes? As with coal, their use also results in overseas emissions. What about heavy machinery? Medical equipment? Refrigerators? Computers and electronics? Even agriculture? The same logic applies—use of all these products requires significant amounts of energy, and that energy increases carbon emissions.

As project advocate and Alliance for Northwest Jobs and Exports spokesperson Kathryn Stenger stated, "The unprecedented demand to require Millennium to mitigate greenhouse gas emissions that occur on the other side of the globe will create a harrowing process that should terrify any Washington manufacturer or shipper looking to expand its facility." 

We agree, and for these reasons, it is important for the broader business community to call attention to the implications of the proposed EIS for Millennium, and work with state and local officials to ensure the proverbial camel’s nose stays out of the shipping container.

Get Involved: Click HERE to support Washington jobs and expanding trade of American products around the world.