Billion-dollar Mitsubishi chemical plant economically questionable, energy group says

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This article was published 22/07/2024 (806 days ago), so information in it may no longer be current.

NEW ORLEANS (AP) — A $1.3 billion chemical production facility to be built in Louisiana by Japanese conglomerate Mitsubishi is economically questionable and unnecessarily increases greenhouse gas emissions, according to an energy think tank report released Monday.

The proposed Mitsubishi plant is “the wrong project, at the wrong place and time, with the wrong financial scenario,” said the report from the Institute of Energy Economics and Financial Analysis, or IEEFA, an Ohio-based nonprofit.

Mitsubishi Chemical Group would be capable of annually producing 350,000 tons of methyl methacrylate, or MMA, a chemical component found in cement, adhesives, textiles and plastics.

The facility would also be among the state’s top 50 greenhouse gas emitters, according to data from the Environmental Protection Agency. And it is being constructed in Ascension Parish, along a stretch of the Mississippi River between Baton Rouge and New Orleans known as “ cancer alley ” for its heavy industrial pollution.

The facility would release more than 780,000 tons of carbon dioxide annually even though an alternative production process less reliant on fossil fuels exists, the IEEFA report notes.

Mitsubishi stated in 2022 that its proposed facility in Louisiana “achieves the lowest possible carbon footprint for MMA production.” The proposed facility’s natural gas-based production process is also intended to help the industry shift away from the dominant method of cyanide-based production.

But IEEFA said Mitsubishi does not need to choose between cyanide or natural gas for the chemical component’s production since there is another option: An alternative biofuel-based technology has become viable and is already being adopted elsewhere by Mitsubishi and its competitors.

The market conditions and economic viability of the facility have also worsened, IEEFA reports. Compared to when Mitsubishi began planning this facility in 2014, construction costs have increased, prices for the chemical component have flatlined and growth forecasts have reduced.

The global market for methyl methacrylate will be oversaturated by the time the plant is expected to begin operating in 2028, said Tom Sanzillo, director of financial analysis for IEEFA and former deputy comptroller for New York.

The analysis estimates that U.S.-based producers will increase the amount of methyl methacrylate they are capable of producing to more than 1.2 million tons, while only needing to produce two-thirds of that amount.

“The U.S. market is not expected to expand beyond its historical norms,” the report states.

IEEFA notes that the Mitsubishi plant would be unlikely to find an outlet for its methyl methacrylate in China, the largest consumer and producer of the chemical component. Earlier this year, Mitsubishi shut down a methyl methacrylate plant in Hiroshima, citing oversupply from China.

Both Europe and the Middle East also face market uncertainties given the ongoing wars in Ukraine and Gaza, according to the report.

Mitsubishi Chemical Group representative Eri Nishumata declined an interview request on behalf of the company, stating that “the final investment decision has not yet been made.” Mitsubishi did not respond to a request for comment on IEEFA’s analysis.

Mitsubishi received an estimated tax exemption from the state of Louisiana for $17 million for its first year of operation, but multiple delays in beginning construction have pushed the start date back. Sanzillo said he believes the company is waiting to see if the market conditions improve before proceeding.

“The company is now using the government as a speculative tool,” he said. “And you’re not supposed to do that with subsidies, you’re supposed to go forward with them.”

The Louisiana Department of Environmental Quality stated in a February public notice that the Mitsubishi plant is not expected to have “a significant adverse impact on soil, vegetation, visibility or air quality in the area of the facility.”

Environmental groups point out that the hundreds of tons of pollutants the facility would emit are linked to harmful health impacts, including respiratory infection, lung cancer and strokes. A February public hearing for the facility’s pending air permit saw vocal opposition from some community members, while others praised the expected jobs and hope of economic benefits.

The Louisiana Department of Environmental Quality and Ascension Parish authorities could not be reached for comment.

While the Mitsubishi plant plans to directly employ 125 people, Ascension Parish resident Ashley Gaignard is skeptical that the facility will help her community or the environment.

“Bringing more industries into the community is a false solution,” said Gaignard, 47, who founded the environmental justice nonprofit Rural Roots. “Industry is the wheel that keeps Louisiana burning. And that’s the real truth about it.”

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Jack Brook is a corps member for The Associated Press/Report for America Statehouse News Initiative. Report for America is a nonprofit national service program that places journalists in local newsrooms to report on undercovered issues. Follow Brook on the social platform X: @jack_brook96.