In a March 23rd article, the Institute for Energy Economics and Financial Analysis (IEEFA) said that Formosa’s new plastic plant being built in “Cancer Alley” in St. James Parish, would not be financially sustainable, writing, “IEEFA finds that the project will begin operations at a time of market oversupply, lower petrochemical prices, strong competition for market share, restrictive trade policies, environmental regulatory challenges, judicial findings of historic racial discrimination, popular opposition, rising construction costs, and a weakened bond rating. The report urges the cancellation of ‘this ill-advised project, which should be abandoned in light of its weak fundamentals.'”
Among those reasons the Formosa plant seems unviable, they write, that the plant, which was proposed as a $9.7 billion dollar project has already now ballooned to $12 billion. Along with that, they also add that with the likelihood of recycling increasing that the, “Long-term demand for virgin plastic production will likely decline as recycling and bans on single-use plastic increase.”
Another reason for the plant’s construction unsurprisingly concerns China, with the IEEFA writing, “The export outlook from the United States is not promising, with China adding significant new petrochemical cracker capacity within its borders.”
But while the Formosa plant according to the IEEFA could be a financial risk, there are environmental concerns, with some concerned that the plant could produce ethylene oxide, which causes cancer. In fact, according to ProPublica, “…analysis estimates that the air around Formosa’s site is more toxic with cancer-causing chemicals than 99.6% of industrialized areas of the country.” Adding, “If the complex emits all the chemicals it proposes in its permit application, it would rank in the top 1% nationwide of major plants in America in terms of the concentrations of cancer-causing chemicals in its vicinity.”
Formosa Plastics has been in the news in Louisiana among local activist groups since 2018 when they decided to build a new plastics plant in St. James Parish’s “Cancer Alley,” a place infamous for its poor health conditions to the local populace. Their plant would further be built along the Mississippi River possibly contributing to harm of the local water supply. It wouldn’t be a first for them, seeing as how Formosa has in the past been fined $50 million for their pollution of Lavaca Bay
Formosa has existed as a plastics company since 1978. Presently, they employ 2,900 people but they have claimed that the new plastics plant they’re building near Baton Rouge would create up to 1,200 new permanent jobs. Along with that, they would employ 8,000 workers for construction
The IEEFA, whose motto is “Accelerating the transition to a diverse, sustainable and profitable energy economy” is a 501(C)(3) non-profit created in 2018. They state their missions as, “The Institute for Energy Economics and Financial Analysis (IEEFA) examines issues related to energy markets, trends, and policies. The Institute’s mission is to accelerate the transition to a diverse, sustainable, and profitable energy economy.”
For a more detailed report of the IEEFA’s views on Formosa, an article on the subject is available here.
