Formosa Plastics petrochemical project in United States faces new scrutiny over environmental racism
By Tom Sanzillo and Suzanne Mattei
Formosa Plastics Corp.’s plan to build a multibillion petrochemical complex in a mostly Black community in St. James Parish, Louisiana, is facing public opposition and legal challenges that could prove costly for the company, its investors, and U.S.-Taiwan relations.
The issue of environmental racism has become a topic of rising concern in the U.S. It is relevant to this project because Formosa plans to build the complex in a district where the population is 91 percent Black and already suffers from unhealthy industrial pollution. A study by an air modeling expert prepared for a news consortium’s investigative report revealed the community’s air has more cancer-causing chemicals than 99.6 percent of industrialized areas of the United States, and the Formosa project would double the toxic pollution. For example, it would release large amounts of ethylene oxide, which can cause lymphocytic leukemia, breast cancer and other cancers, and may cause miscarriages in pregnant women. St. James Parish, where the facility would be located, is situated along a river corridor known as “Cancer Alley” for the high number of chemical plants in the area.
The project, announced in 2018, has been dubbed “The Sunshine Project” and has obtained air permits that will allow it to release 800 tons of toxic chemicals into the air every year. The permits, however, are being appealed. Louisiana District Judge Trudy White has ordered the state’s environmental permitting agency to investigate whether the Formosa project's toxic emissions would have an overly burdensome impact on the community. The judge made it clear that the permit would be denied if an analysis finds that the public health risk is unacceptable, and that racism is a factor. Formosa will have to cooperate with Louisiana officials in the court-ordered review, while working with the local community to address their concerns. The judge will consider the issue of racism as part of her final ruling on the community’s challenge to the environmental permit.
Formosa’s plan to build a petrochemical megacomplex at a location that presents a significant health risk to residents who already suffer from industrial pollution is ill-advised. But the problem also poses a financial risk for Formosa and its investors.
Moody’s, a leading credit-rating firm, recently published a study that found racial and income inequality are damaging to U.S. political and economic systems. It states, “The unequal position of the Black community in the U.S. is a salient and presistent feature of the inequality dynamic that exemplifies and excerbates credit-relevant social risks.” It noted a for policymakers to take effective action to address these risks in order to prevent “erosion” of America’s financial strength.
The challenge for Formosa Plastics is that this project would not only worsen the dangerous levels of pollution in the community but also add to the deeply rooted political and racial divisions that currently afflict the state of Louisiana and the United States as a whole. Even if the court allows Formosa to move forward, these problems will persist, and the organized public opposition in this community is unlikely to go away. The company is facing the determination of a community to fight an unfair, racist burden of toxic pollution. Louisiana’s Black community deserves real economic solutions, not more life-threatening pollution.
Formosa Plastics recently announced that its board is delaying making a Final investment Decision(FID), which would be a final financial commitment to the project. This is not the right time for Formosa Plastics to misjudge the political climate. It should instead abandon this unwise and unjust project, and develop better plans for its future.
Tom Sanzillo is director of financial analysis at the US-based Institute for Energy Economics and Financial Analysis (IEEFA). Sanzillo has 30 years of experience in public and private finance, including as a first deputy comptroller for New York State, where he oversaw a $156 billion pension fund and $200 billion in municipal bond programs.
Suzanne Mattei is an IEEFA policy analyst and attorney (Yale Law School) with 30 years of experience in public interest law and policy. She is a former regional director for the New York State Department of Environmental Conservation.