This is a long email full of resources for influencing the Board. Our apologies for the length.
If you want to present comments you can use the resources in the email or you can just email our Nordic coordinator Dan Chandler and he will talk with you about what you want to say or present options if you want. We are trying to coordinate our presentation so we know who is saying what, although we can’t coordinate the “when.”
Whatever route you take to formulating comments please email Dan to let him know what you will be speaking about:
Dan Chandler, [email protected]
Thanks very much for your continued support on this long fight.
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In this email you will find:
a) Information on how to attend the Nordic hearing and submit either in-person or Zoom comments. Note you can watch on Zoom, but the comment must be by phone (after turning off sound on the livestream).
b) A summary of exactly what we are asking for in the way of permit conditions. We still believe the EIR is legally deficient and should be revised and recirculated, but if the Board does not agree we want to try to limit the damage. You can either reinforce the 350 Humboldt presentation of these points or add others. These differ somewhat from the recommendations we previously submitted to the Board.
c) A list of points relevant to the Nordic application. Feel free to choose any one or more, do a little (more) research, and present the point. You can say you are a member of 350 Humboldt or not, as you choose.
d) A copy of the official comments and explanations we submitted to the Board. These comments and analysis can be used to inform your own comments.
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HOW TO ATTEND THE MEETING AND COMMENT
https://humboldt.legistar.com/View.ashx?M=A&ID=995740&GUID=CC4ED838-7301-4E72-9774-8CD68A44178F
Wednesday, September 28, 2022 Special Meeting – Hybrid
AGENDA – Final
Email Public Comment:
To submit public comment to the Board please email [email protected], provide your name and the agenda item number(s) on which you wish to comment. All public comment submitted after the agenda has been published will be included with the administrative record after the fact.
Zoom Public Comment:
When the Board of Supervisors announce the agenda item that you wish to comment on, call the conference line 720 707 2699, enter Meeting ID 816 5545 3244 and press star (*) 9 on your phone, this will raise your hand. You’ll continue to hear the Board meeting on the call.PLEASE TURN OFF YOUR TV OR LIVE STREAM TO AVOID DELAYS.
When it is time for public comment on the item you wish to speak on, you’ll hear a prompt that will indicate your phone is unmuted. Please state your name and the agenda item number you will be commenting on. You will have 3 minutes to comment.
You may access the live stream of the meeting by using the following link:
https://humboldt.legistar.com
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PERMIT CONDITIONS WE ARE ASKING FOR
Emissions from Fish Feed
Nordic will be emitting between 80,000 and 191,000 metric tons of greenhouse gases at full buildout due to their use of 36,000 metric tons of fish feed annually.These emissions cannot be eliminated by any aquafarm, but they can be mitigated by conditioning the permit to require Nordic to pay for sequestering an equal amount of carbon by funding an estuarine conservancy, like the Eel River Estuary Preserve, or any similar estuary preserve. How would this work? Nordic must certify annually to the Aquaculture Stewardship Council how much fish feed they used, what the greenhouse gas emissions embodied in that feed are, and thus the total greenhouse gases the aquafarm emitted. Use the figure Nordic reports to the ASC. They must pay into an estuary preserve one of the prices below for each metric ton of greenhouse gases they report to the ASC.
What price should be assigned. There is a range of possibilities:
· A carbon offset from the Yurok tribe costs about $14 per metric ton of carbon sequestered
· In California an “allowance” for one metric ton costs $28 right now in the cap and trade system
· In the US the “social cost” of one metric ton of carbon is $51
· In Canada it is $130 per metric ton
· In Norway, in 2030, it will be $237 per metric ton
We don’t feel it should be lower than what other large corporations, those under cap and trade, pay for emitting carbon.
Emissions from lack of 24/7 renewable energy
The mismatch between renewable energy availability and the 24/7 demand by Nordic means about 40,000 metric tons of CO2 will be released annually by the gas turbines powering the plant at times when renewables are not available. Presently there is no way to mitigate these emissions directly. This is a problem that Google, Microsoft and the UN are working on. One solution that will be available soon, certainly by the time Nordic is operating around the clock, is the time-based equivalent of Renewable Energy Credits. These are called T-EACs for “Time-based Energy Attribute Certificates.” Nordic would simply buy T-EACs for every hour in every day in the year.
Alternatively the same contribution as is made for emissions from fish feed could be made for emissions from 24/7 demand not matched by renewable supply. RCEA could supply these figures.
Emissions from transporting sludge to central valley
Nordic wants to transport large amounts of fish waste to the central valley for composting. A permitting condition should be serious attempts by Nordic to work with local forest and recycling organizations in the next three years to create a composting facility as a local option with a report back prior to the first harvest of fish and a requirement the fish waste be used locally if the Planning Department judges it feasible based on the report.
Emissions from 1.6 million miles annually of diesel trucks
In this case, mitigation is simple: a permitting condition should be that zero emission trucks (ZET) be used. ZETs with a 19 metric ton capacity are on the market and a new state program was just announced in August: “Privately owned and nonprofit trucking fleets of 20 or fewer vehicles and with an annual revenue of less than $15 million are eligible and will have access to funding that can cover costs related to the purchase and operation of zero-emission trucks (ZETs).”[1] An alternative to electric trucks is hydrogen. Because of the new Humboldt Transit Authority hydrogen buses and plans to connect all the way to the Bay Area, hydrogen fueling should be available by the time Nordic has product to sell. By 2028 green electrolytic hydrogen made from water with renewable energy will be available according to the HTA plans.
Emissions from high global warming potential refrigerants
We prefer a condition that requires Nordic to use ultra-low (<10 GWP) refrigerants. If this condition is not applied we suggest these conditions:
· The permit should specify that regulations already passed by the California Air Resources Board apply on the date they go into effect. That is, a permit in 2022 does exempt Nordic from requirements that will go into effect in 2025 or 2030.
· The permit should specify that when the refrigeration/cooling/heating system is designed Nordic must publish the design along with the refrigerants to be used, their global warming potential and the leak rates commonly agreed upon for each refrigerant in the equipment Nordic is planning.
· An annual report must list the emissions of refrigerants due to leaks or end-of-life, or repair emissions for the whole facility. If these exceed 5,000 metric tons annually, they must be mitigated as are emissions from fish feed.
Financial guardrail measures to protect the County and the Bay and Ocean
A. MITIGATE FINANCIAL RISKS
1. Hold a closed session to review Nordic’s detailed financial statements and forecast for construction capitalization with an independent investment banker before issuing any permits. Such a report is available through a Norwegian on-line firm using documents publicly available in Norway.
2. Require a bond of $20 million so the mill site clean-up can be completed even if the American subsidiary of Nordic does not survive as a company. Add an addition $10 million bond to ensure the remains of an incomplete Nordic site are properly disposed of in the same situation.
3. Require insurance to cover the many major environmental problems that could occur, such as release of fish into the Bay or contamination of our sustainable aquaculture (Bay oysters) by Nordic effluent drawn back into the Bay. If an insurance company evaluates Nordic’s plans and finds them as solid as Nordic believes them to be the policy should be reasonable but our Bay and ocean resources will be protected.
B. SCALE THE PROJECT DOWN OR USE ADAPTIVE MANAGEMENT TO PHASE IT
1. Permit only a moderate sized facility. Aquafarms in the US that produce 1,000 metric tons a year are profitable and the technology is proven. That would be a reasonable starting point. If that is too small for profitability given the clean-up required, allow up to 5,000 metric tons of production a year. After three successful cohorts, a permit for another 5,000 tons could be applied for – the new Erik Heim/Marianne Ness model.
2. OR: Segment the permit into three to five consecutive operational stages/levels and require adaptive management to ensure threats are managed if they occur. There should be contingency clauses that allow the County to rescind the permits based on occurrence of events that permanently damage the Bay or the ocean ecology or the failure of Nordic to meet permit conditions.
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Nordic talking points
350 Humboldt is one of three organizations that appealed the Planning Commission’s approval of the Nordic aquafarm project. The other groups are the Redwood Region Audubon Society Chapter, and the Humboldt Fishermen’s Marketing Association. The appeal will be held in front of the Board of Supervisors Wednesday September 28. To have any chance of stopping or modifying the project we need many people to attend the hearing and comment. The hearing is at the Courthouse in Eureka in the Board Chambers and starts at 9 am, and if you are going to comment in person you will want to be there at 9 am to sign up to speak. There will be about an hour of presentations from Nordic and the three appellants and then a chance for the public. You may also comment on Zoom. Instructions are above and can also be found on September 26 at https://humboldt.legistar.com
If you are preparing comments, here are topics to consider along with some resources.
1. Importance of mitigating climate change:
a. Sea level rise: https://www.climate.gov/news-features/understanding-climate/climate-change-global-sea-level
b. Floods: Flood in Pakistan: https://www.worldweatherattribution.org/climate-change-likely-increased-extreme-monsoon-rainfall-flooding-highly-vulnerable-communities-in-pakistan/
c. Droughts: News articles re CA also Colorado river
d. Effects of high temperatures: https://insideclimatenews.org/news/02092022/study-finds-that-mississippi-river-basin-could-be-in-an-extreme-heat-belt-in-30-years/
2. Fish feed in global context and salmon farming compared to other protein sources: https://www.organicconsumers.org/blog/farmed-salmon-unsustainable-unhealthy
3. Fish feed, GMO, food conversion ratio: https://www.organicconsumers.org/blog/farmed-salmon-unsustainable-unhealthy
4. Need for and availability of zero emission trucking: New analysis from RMI shows that 65 percent of medium-duty and 49 percent of heavy-duty trucks are electrifiable today.
https://rmi.org/press-release/electric-trucks-reach-a-tipping-point/
https://rmi.org/electric-trucks-make-sense-we-now-have-the-data-to-prove-it/
These articles mention some incentives or financial assistance available for truck operators, including from PG&E for chargers. And here is this very recent state program: A new state program was just announced in August: “Privately owned and nonprofit trucking fleets of 20 or fewer vehicles and with an annual revenue of less than $15 million are eligible and will have access to funding that can cover costs related to the purchase and operation of zero-emission trucks (ZETs).”https://content.govdelivery.com/accounts/CARB/bulletins/32a73cb
The US Department of Energy has also published information on electric trucks: https://www.energy.gov/articles/doe-projects-zero-emissions-medium-and-heavy-duty-electric-trucks-will-be-cheaper-diesel
5. Climate damage from refrigerants (Nordic refuses to say what refrigerants and how much they will use but will devote 25% of power to cooling). https://www.kqed.org/science/1973205/refrigerants-are-the-worst-greenhouse-gas-youve-never-heard-of-heres-what-you-can-do
6. Sea level rise and Nordic: What are projections for flooding on roads Nordic will have to use for shipping fish feed in and fishes out? Hopefully someone from Aldaran’s group will address this.
7. Local use of the fish byproducts from Nordic that they plan to send to the central valley. Hopefully, someone from Zero Waste Humboldt will address this.
8. Impact of Nordic’s greenhouse gas emissions: The EPA provides a calculator that shows that 3 million metric tons of CO2 (which is what we estimate Nordic will emit over 30 years at full build-out) is equivalent to burning of 6,945,634 barrels of oil, or running 7.5 gas powered powerplants for a year or consuming 294,695,481 gallons of diesel. Given the fact that the IPCC says we must reduce emissions worldwide by 50% in the next eleven years to have a hope of keeping warming to 1.5°C, approving a project with this much negative impact on the climate cannot be justified to our children, and most of all to the world that is clearly threatened with climate catastrophe.
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350 HUMBOLDT WRITTEN SUBMISSION TO THE BOARD
“We are sleepwalking to climate catastrophe.” António Guterres
Secretary-General of the United Nations
To: The Humboldt County Board of Supervisors
From: 350 Humboldt Steering Committee
Subject: Comments supporting our appeal of the approval of the final EIR and staff report for Nordic Aquafarms California, LLC, Record Number PLN-2020-16698.
HUMBOLDT COUNTY AS AN INVESTOR IN NORDIC
We all want the jobs, the aquaculture training, the pulp mill site clean-up, the tax base that Nordic promises. However, all the risks that the EIR glossed over, or didn’t study, or misrepresented are threats to the county, to fishermen and fisheries, to the Bay and ocean ecology we depend on, and to our changing climate. The first risk comes from investing in a private start-up company that is not transparent and does not have the requisite experience or financial backing for a project of this magnitude.
What are the risks of investing in Nordic?
County decision-makers are taking significant risks to, in essence, become investors in Nordic. What due diligence has the County done to protect these County from unknown but potentially large losses if the company fails, does not comply with requirements, or causes an environmental catastrophe? Will our Harbor Commission get trapped into issuing $300 million in bonds to rescue the project like a Harbor Commission in Ohio has?[1]
We understand from the Planning Director that neither the Planning Commission and Supervisors were provided with the basic sorts of company intelligence investors require. Besides not having reviewed detailed financial statements, do decision-makers know the multiple reasons[2] why industry sources say private investors are currently leery of land-based Atlantic Salmon aquafarms and banks even more so?
We have gathered information from multiple stories in aquaculture trade journals that answer some of these questions. We urge you to read the full stories. We also have obtained a financial statement from a Norwegian state-run website where even private companies are required to report. We summarize this statement but also include it in full along with information on how to get much more information about Nordic’s financial status. We request the Board consult independent experts.
What do we know about Nordic that inspires confidence or doubt?
This is how Nordic describes its corporate structure:[3]
“Nordic Aquafarms was established in 2015 with companies in Norway, Denmark and the US. Following a demerger completed in 2022 the group of companies is split in two holding companies; Nordic Aquafarms Group AS with the US projects and Nordic Aquafarms Technology in Denmark, and Nordic Aquafarms Europe AS with Fredrikstad Seafoods in Norway and Sashimi Royal and Maximus in Denmark….. US operations are organized in the 100% owned subsidiary Nordic Aquafarms Inc with US headquarters in Portland, Maine. Execution strength is being established step by step on the ground with 10 experienced employees in the US so far, and top-rated construction partners. The US operation is set to expand in line with investments.”
According to the Nordic website the overall company has 21 institutional investors. The investments are not differentiated by the five subsidiaries. The largest investor holds 35% of the shares. Since the company is private we don’t know the value of the shares. However, in the most recent article we could find about investments in Nordic, Nordic announced in April 2020 they had raised 7 million Euros, to go to the American subsidiary and to further developing the Danish plants.[4] That doesn’t seem like a newsworthy amount given the $1.3 billion investments required for the American facilities alone.
What do we know about investments in each American subsidiary other than $650 million[5] will be needed per facility? Here are two quotations that give us pause:
· Nordic CEO Bernt-Olav Rottingsnes “estimates a construction cost between 600 and 650 million dollars for each of the US facilities. The company has an ambition that 50 percent of the completed project will be financed through bank loans.” But he was quoted in July 2022 as saying: “Yes, I think it is fair to say the banks still think it is too early to lend to land-based fish farming. The banks have financed Atlantic Sapphire, and I believe the banks think they need to see some results from there before they lend.”[6]
· When asked about financing in a Lost Coast Outpost interview in July, interim CEO Brenda Chandler said: “You can never be 100 percent until the money’s in the bank, right? I mean, clearly it’s an effort. And clearly you have to have investors who can get their brain around it and get behind it. And that’s what we’re working on, is cultivating those kinds of relationships with investors. But we’ve done a lot.”[7]
The best guide to whether investment is justified is what Nordic’s pilot Atlantic Salmon facility, Fredrikstad Seafoods, has done: Here is what an aquaculture investment expert advises:
“Has your pilot facility performed according to your target bio-plan with three continuous cohorts? Is it a spreadsheet bio-plan or is it based on science or actual results? If you can’t do it at a pilot scale, how do you propose to do it at large scale?”[8]
So what is the Fredrikstad facility record?
· The facility is designed to harvest and sell 1,500 metric tons of head on gutted fish annually. It has been in operation since 2019. It is called in a press release Norway’s “First large scale land-based salmon farm.” Note that 1,500 is only 6% as large as Nordic proposes for Humboldt.
· In April 2021 the company issued this report: “Fredrikstad Seafoods has successfully harvested salmon on a weekly basis for almost a year now. We have learned a lot and gained a lot (of biomass and experience)! During the first 10 months of harvesting we have sold more than 650 tonnes (320 tonnes in Q1 2021)…. [9][Very clearly the plant cannot have produced three continuous cohorts and 16 months ago they were still not on target for annual production.]
· In a February 2022 article we are told: “Fredrikstad Seafoods is still not profitable, however, and although this is expected to change once it reaches more scale, the company sees ‘greater earnings potential for yellowtail kingfish,’ Bernt Olav Rottingsnes, CEO of Fredrikstad Seafoods parent Nordic Aquafarms, told IntraFish.”[10] [The company applied for permits to switch from salmon to yellowtail in 2022.]
The Fredrikstad plant is an early start up that is not making money, is changing the type of fish it produces, and provides virtually no assurance that the Humboldt and Belfast Nordic plants, each 17 times larger, are a good investment.
In 2020, Nordic also purchased a one-third interest in an existing “grow-out” RAS facility called Sashimi Royal that aims to produce 900 metric tons of product a year. It also owns shares in a vertically integrated hatchery called Maximus. Sashimi Royal grows yellowtail kingfish, a specialty fish for sushi. Maximus, the hatchery, was founded in 1989 so has a long history predating Nordic. Since Nordic did not develop these firms and does not own even a majority share they provide no evidence that Nordic can design, build and operate facilities that are each 28 times bigger than this one.
In a separate section we include the financial statement that Nordic Aquafarms Group AS has been required by the Norwegian government to submit to a state website over the years.[11] This statement shows profits and losses over several years, and it shows investment amounts. The statement is sufficient to see that Nordic Aquafarms Group AS has yet to make a profit and had a large loss of $26 million in 2021. Specifically, Nordic showed the following profit/loss, by year. (Note the original data were in thousands of Norwegian Kroners. Since 1000 NOK is equal to $100.72 we multiplied the NOK figures by $100.72 to convert to US dollars.)
Year | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 |
Net result/profit for the year in 1000 of Norwegian Kroners | -2,691 | -3,265 | -5,318 | -8,280 | -8,005 | -9,288 | -262,742 |
In US Dollars | -271,038 | -328,851 | -535,629 | -833,962 | -806,264 | -935,487 | -26,463,374 |
Investing in land-based aquaculture
What is happening with investments in other land-based aquaculture, especially publicly traded firms? This report is from January 2022.
“Atlantic Sapphire, which has long held the spot as the world’s most valuable salmon farmer, had a market cap of NOK 3.237 billion ($369.9 million/€325.8 million) at the close of trading Thursday, close to an all-time low. At one point in its history, Atlantic Sapphire’s market cap exceeded $1 billion (€882 million). The company has suffered a string of setbacks over the past year, sending investors fleeing.”[12]
A September 2021 article in Aquaculture North America includes a list of why investors are leery of land-based RAS Atlantic Salmon farms.[13]
- Upfront capital is too high without enough access to debt to defray equity costs
- Ongoing capital needs even for established companies are too high
- Cost of production is still too high – needs to be closer to net pen costs
- Long production cycle
- Profitability
- Long-term returns low
- Consumer acceptance not assured
- Reliance on premium pricing
- Technological failure frequency too high
- Biological challenges; disease, mortality, early maturity, slow growth
- Product quality – off-flavor
- Permitting is difficult
- Acceptance by local community has been problematic
- Regulatory – water intake and discharge waste are problematic
A very recent September 9th 2022 article is entitled Land-Based Fish Farm Boom Grinds to Halt.[14] Another recent article is entitled “For now, the ‘little guys’ of land-based aquaculture seem to be the big winners.”[15] Another company CEO proclaims, “No one is making money” and “the technology is not yet even able to grow salmon to the commercial 4-5 kilo range without facing significant challenges.”[16] An alarming headline about a 10,000 metric ton land-based facility in Ohio says “The cost to build its new commercial-scale, land-based salmon farm in Pioneer, Ohio, could run as much as 60 percent higher than its initial estimate…[T]o partially finance the higher costs, the company has begun the process to place a mix of tax-exempt and taxable bonds through the Toledo-Lucas County Port Authority, whose board has approved the issuance of up to $300 million (€260 million) in bonds to support the financing of the project.”[17]
Besides the doubts of investors, there are reasons for thinking that Atlantic Salmon aquafarming, which has been successful on smaller scales may not scale to the level that Nordic is hoping for.
Profitable RAS land-based aquafarms in the US have started small and expanded slowly. None of them produce as much as 4% of what Nordic proposes in Humboldt. The first US land-based RAS, Superior Fresh, is in Wisconsin. After several year of operation it has increased from one metric ton in 2018 to 750 metric tons in 2022.[18] It is profitable as are many smaller aquafarms.[19]
The most sustainable aquafarms are those that use a new technology which is able to continuously recycle all the water used. Thus there is no effluent and no problems with intakes capturing baby salmonids and other sea life. In fact, using the technology would moot most of the biological issues in our appeal. The most developed of these firms is Sustainable Blue, based in Nova Scotia, which started in 2009 and has been sending fish to market all over the north east since 2015. Interestingly, they had a breakdown in 2014 from a computer problem with they had not even foreseen as a possible threat – illustrating some of the risks of the field. They have recently built a new 50,000 square foot structure and can now deliver 1,000 metric tons of Atlantic Salmon a year. This is accomplished by utilizing a combination of ozone and advanced filtration methodologies. Sustainable Blue’s CEO and Chief Technology Officer has reviewed the public documents describing Nordic’s proposed facility in Maine and confirmed the Sustainable Blue’s technology can scale to accommodate Nordics proposed volumes of fish. They are prepared to license their technology to Nordic.[20] This technology is one of the alternatives that the EIR did not consider. It is worth checking out the Sustainable Blue website: https://www.sustainableblue.com/ We realize this is not the technology that Nordic is promoting, but it would be much less risky and it was not an alternative considered by the EIR.
The largest land-based RAS facility in the world is in Florida, run by Atlantic Sapphire. This firm designed its production in two phases, its current capacity is 9,500 metric tons (which is 38% as large as the Nordic factory aims for and is also Atlantic Sapphire’s ultimate goal). The company first delivered fish in 2020. But in 2021 Atlantic Sapphire had three fish die-offs, one of 500,000 fish. The Florida plant had a refrigeration failure so that they are now using rented chillers at a cost of $11 million a year and need to do a complete redesign of the cooling system. In the second quarter of 2022 they produced 400 metric tons of fish, which would be about 1,200 metric tons a year, or about 13% of their goal.[21] And there was a fire at its small Denmark plant that destroyed most of the facility and dumped toxic chemicals into the nearby bay.[22] So there is a lot that can go wrong. Atlantic Sapphire lost $121 million in 2021. It’s CEO offered this advice to a Maine RAS facility that is just starting up: “Don’t underestimate the task. It’s very complicated and takes a lot of time.”[23]
A news article from September 19, 2022 says: “Shares of land-based salmon farming leader Atlantic Sapphire continue to slide, hitting fresh lows after falling 25 percent over the past month.”[24] Recall that the CEO of Nordic said banks will not invest in other large land-based projects until they see that Atlantic Sapphire is a success.
On an aquaculture podcast, in the context of the fish die-off, Brian Vinci, director of a non-profit called The Freshwater Institute—which supports sustainable aquaculture — said the following about large Atlantic Salmon aquafarms: “It’s clear to me that scale is a huge issue and a challenge they have had to face. Johann (the Atlantic Sapphire CEO) was on the news media recently warning that there are massive challenges with growing Atlantic Salmon at scale. Although we at Freshwater Institute proved out land-based salmon from egg to grow-out back in 2008, we were only doing it at a small scale of 20 tons per year head and gutted. What’s going on at Sapphire at 10,000 tons is just another beast entirely.”[25]
Erik Heim, a founding director of Nordic, argued that Nordic is different, progressing slowly but surely. But he unexpectedly left the company after the Fredrikstad plant switched from Atlantic Salmon to yellowtail kingfish and the corporation split into independent subsidiaries. On September 16, he and his wife, Marianne Naess, announced that they are founding a new RAS company. “With Xcelerate Aqua, Heim and Naess plan to create companies that offer investors lower risk by pioneering a new type of medium scale RAS, offering a lower investment threshold and reduced time-to-market .…The proposed facility will be developed in two phases of 5,000 metric tons, with an ultimate capacity of 10,000 tons.”[26] Their press release says: “Smaller, leaner, and faster is the motto here. Small enough to significantly reduce complexity and local impacts, but with key advantages that match larger scale benefits. This is what the RAS sector needs to deliver financial proof of concept on acceptable timelines….”[27] So even the founder of Nordic has realized – as environmental groups in Humboldt told him many times – that the goal of 25,000 metric tons is unrealistic. And it seems clear that Heim and Naess, and their investors, believe a facility of 5,000 metric tons can be profitable. The Board should consider limiting the product amount to 5,000 metric tons as a permitting condition.
In summary, the substantial resources that Humboldt is being asked to contribute to the Nordic project present multiple risks because of Nordic’s limited experience, a poor investment climate for land-based RAS, and unrealistic goals. This does not necessarily mean the County should not invest, but it does mean the County must adopt measures to reduce the potential (or known) impact of Nordic failures. This is why the fairytale EIR does not do the County a service. Specific measures are needed that will reduce risks, mitigate damage, and insure against failures that might occur.
Here are our proposed mitigation measures:
A. MITIGATE FINANCIAL RISKS
1. Hold a closed session to review Nordic’s detailed financial statements and forecast for construction capitalization with an independent investment banker before issuing any permits.
2. Require a bond of $20 million[28] so the mill site clean-up can be completed even if the American subsidiary of Nordic does not survive as a company. Add an addition $10 million bond to ensure the remains of an incomplete Nordic site are properly disposed of in the same situation.
3. Require insurance to cover the many major environmental problems that could occur, such as release of fish into the Bay or contamination of our sustainable aquaculture (Bay oysters) by Nordic effluent drawn back into the Bay.[29] If an insurance company evaluates Nordic’s plans and finds them as solid as Nordic believes them to be the policy should be reasonable but our Bay and ocean resources will be protected.
B. SCALE THE PROJECT DOWN OR USE ADAPTIVE MANAGEMENT TO PHASE IT
1. Permit only a moderate sized facility. Aquafarms that produce 1,000 metric tons a year are profitable and the technology is proven. That would be a reasonable starting point. If that is too small for profitability given the clean-up required, allow up to 5,000 metric tons of production a year. After three successful cohorts, a permit for another 5,000 tons could be applied for – the new Erik Heim/Marianne Ness model.
2. OR: Segment the permit into three to five consecutive operational stages/levels and require adaptive management to ensure threats are managed if they occur. There should be contingency clauses that allow the County to rescind the permits based on occurrence of events that permanently damage the Bay or the ocean ecology or the failure of Nordic to meet permit conditions.
The next section identifies significant greenhouse gas impacts and mitigating actions that could be added as conditions to the permits.
PROTECTING THE CLIMATE: MITIGATING GREENHOUSE GAS EMISSIONS
Late in August monsoon floods, made much worse by climate warming, devastated Pakistan. A million homes were lost, 32 million persons were displaced, and 1,400 persons died. In the same week we learned that the sea level rise from the melting of the Greenland ice sheet will double past predictions, and can no longer be stopped even if all emissions ceased today. And an August 15 climate study “predicts a 125-degree ‘extreme heat belt’ will stretch across a quarter of the country by 2053.”[30] Over 100 million Americans will experience 125-degree days.
António Guterres, the Secretary General of the United Nations said last year when the most recent Intergovernmental Panel on Climate Change reports were published: “We are sleepwalking to climate destruction.” What did he mean? We have a good example with Nordic. Instead of contributing to the 50% reduction in global emissions the IPCC says we need by 2030 in order not to warm the earth more than 1.5°Celsius, Nordic will add millions of tons of greenhouse gases over the next 30 years.
Fish Feed
Fish can’t grow on air. The essential inputs for an aquafarm are electricity and fish feed. In both cases, greenhouse gases are emitted in producing the input (perhaps far from California). In both cases the greenhouse gases are attributable to the aquafarm. That is how fish biologists and the Aquacultural Stewardship Council (ASC), the sustainability certification agency for fish farming, calculate greenhouse gas emissions from aquafarms. We have all grown used to the concept of a “carbon footprint,” which is essentially how the ASC requires emissions be calculated. It is the way scientists make sure all greenhouse gas emissions are accounted for, and it is also the way the aquaculture industry accounts for carbon emissions. Given the many processes occurring in multiple countries in order to make fish feed, attributing the greenhouse gas emissions to the product (salmon) is the industry standard even if it is not explicitly called for by CEQA.[31]
Nordic has ASC certification for its European factories and aspires to have it in the US. If so, the fish feed Nordic will use will come with an ASC certification of specific amounts of greenhouse gas emissions attributable to each metric ton of feed. Right now, if Nordic bought from the Norwegian firm Skretting, that would be 2.05 to 5.28 tons of carbon per ton of feed, depending on the manufacturing factory. The ASC will require Nordic to multiply those fish feed emissions by the metric tons of fish feed they use annually and report their total greenhouse gas emissions to the Council.[32] Since the EIR says Nordic projects using 36,000 metric tons of feed a year, that means Nordic will be reporting greenhouse gas emissions between 74,000 and 191,000 metric tons of CO2 a year attributable just to their use of fish feed. Over 30 years this constitutes 2.2 million metric tons to 5.7 million metric tons of greenhouse gases. The reasoning behind the ASC requirement that Nordic report its greenhouse gases is clear: by its fish feed choice it can determine whether in a year 74,000 metric tons of CO2 will be released or 191,000. Aquafarms that want to appear sustainable therefore have an incentive to choose fish feed with lower emissions. Please see the supplement for copies of the ASC standard and Skretting sustainability reports.
These emissions cannot be eliminated by any aquafarm, but they can be mitigated by conditioning the permit to require Nordic to pay – for each metric ton of emissions they document to the ASC – an amount equivalent to California’s cap and trade allowance price. Right now that is $27 per metric ton, a bargain compared to the costs of climate damage the emissions will cause.[33] These funds should be paid either to:
a) the Northcoast Regional Land Trust and the Trinidad Coastal Land trust, which will use the funds to preserve coastal redwoods that sequester carbon; or
b) to a fund for regional sea level adaptation.
Emissions from Electricity
Nordic has agreed to buy renewable electricity from RCEA or a solar purveyor outside the county or from an offshore wind farm. The major source of emissions from power bought by Nordic, unrecognized by the EIR, is due to the intermittency of renewable power. Even if Nordic buys 195 gigawatt hours of solar or RCEA renewable energy every year, that doesn’t mean that 24/7 the Nordic facility will be powered by renewable energy.[34] “24/7 Carbon-free Energy (CFE) means that every kilowatt-hour of electricity consumption is met with carbon-free electricity sources, every hour of every day, everywhere.”[35] The United Nations has a 24/7 Energy Compact that lays out the principles of such energy systems. Microsoft and Google are two of the firms that have signed the compact and are actively pursuing 24/7 clean, renewable energy. Peninsula Clean Energy CCA (the Silicon Valley equivalent of RCEA) intends to deliver 24/7 renewable power by 2025.[36] RCEA has said they have no plans to do so.
In the graphic below Peninsula Clean Energy shows the actual carbon intensity by hour and month for 2020. On an annual basis all its power was renewable at that time, like what Nordic proposes, but on a 24/7 basis only 47% is. In the graph, green is actual renewable power, the gradations of yellow and red are the gas power that is used nights and winters when there is a mismatch of renewable demand and availability.
According to the EPA, fossil “natural” gas in power plants emits 898 pounds CO2 per megawatt-hour[37] and there are 1000 megawatt-hours in a gigawatt hour, so Nordic’s actual emissions will be approximately 97.5 (half their total gigawatt hours) x 1000 x 898 or 87,555,000 pounds of CO2 which is equivalent to 39,714 metric tons of CO2 annually.[38] Thus the emissions from supplying electricity to this one aquafarm will approximately equal all the carbon sequestered by all the wetlands around the San Francisco Bay.[39] The discrepancy between annual and 24/7 emissions accounting will decline in Humboldt over time; for example, when (and if) offshore wind produces renewable energy at night and during the winter.
This is a very large amount of emissions, completely ignored by the EIR. Presently there is no way to mitigate these emissions directly. Right now they can be offset in the same way fish feed emissions are by Nordic contributing to land trusts or sea level adaptation costs. Nordic can pay RCEA to calculate the actual emissions figure. And a condition can be added that when RCEA offers 24/7 carbon free renewable power Nordic is required to purchase it. Or “Time-Based Energy Certificates” are being developed right now[40] and within a few years will be available for Nordic to purchase, guaranteeing a 24/7 match of demand and renewables.
Emissions from Organic Waste (Sludge)
The EIR states that 30 truck loads a week of sludge (fish offal: heads, guts, etc.) will be hauled to a composting facility in Redding or Marysville. No analysis of greenhouse gas emissions (other than VMT) is included because it is assumed the material will be composted. This waste should be used locally to make compost along with woody biomass, as has been done in Argentina.[41] This would greatly reduce emissions from hauling. It uses a waste product from local sawmills with short transport distances and may also use clean wood waste from local demolitions and cannabis waste. This approach creates a useful product that can be sold with value added to replenish soil nutrients and water and carbon holding capacity. And it creates local job opportunities and possibly opportunities for local worker-owned small businesses.
A permitting condition should be serious attempts by Nordic to work with local forest and recycling organizations to create this local option with a report back within a year and a requirement recycling be done locally if the Planning Department judges it feasible based on the report.
Emissions from 1,693,068 truck miles
The EIR did not calculate greenhouse gas emissions from loaded trucks. However, because trucks will carry 19 metric tons in each load the 1.7 million truck miles in the EIR amounts to 33,861,360 ton-miles. This will produce 5,479 metric tons of CO2eq emitted by the trucks per year, or roughly 164,000 metric tons over the life of the project.[42]
In this case, mitigation is simple: a permitting condition should be that zero emission trucks (ZET) be used. ZETs with a 19 metric ton capacity are on the market and a new state program was just announced in August: “Privately owned and nonprofit trucking fleets of 20 or fewer vehicles and with an annual revenue of less than $15 million are eligible and will have access to funding that can cover costs related to the purchase and operation of zero-emission trucks (ZETs).”[43]
Emissions from HFC refrigerants
Here is why HFC refrigerants are important: Their emission warms the atmosphere from a few hundred times more than CO2 itself to thousands of times more. The EPA says one average supermarket emits 1,556 metric tons of CO2 a year.[44]
Nordic plans to use 25% of their electric power for refrigeration.[45] They will use refrigerants to make the ice that they pack the fish in for shipping, and they will use refrigerants in “chillers” that will keep the water cool enough for the fish. The DEIR also says: “Use of water to water-heat exchangers and heat pumps will be maximized to reduce energy demands.” Heat pumps also use refrigerants.
In negotiations with Marianne Naess of Nordic, we were told many times that they cannot specify the actual refrigerants and the global warming potential of them because their design team hasn’t designed the system. In short, instead of describing the potential greenhouse gas emissions from refrigerants they say they don’t know what they are. The FEIR actually concludes they are not required to specify the greenhouse gas emissions if they follow the law. Is there any other source of greenhouse gas emissions for which this would be an acceptable answer? For example, they follow the law in transporting the fish to market in legal trucks, but that doesn’t mean they don’t have to count the truck emissions.
In summary, the EIR does not meet the CEQA requirement to identify and describe the potentially significant impacts of refrigerants, and Nordic has refused to adopt the mitigation measure we proposed of using very low global warming potential refrigerants, which are readily available.
Nordic must commit to using ultra-low (<10 GWP) refrigerants. If this condition is not applied, we request “adaptive management” for the heating/cooling system wherein emissions are calculated monthly and leaks fixed within a 7 day period.
An experiment in thinking
Suppose Nordic builds its facility and then something happens so that it can’t operate it – maybe the price of salmon goes down, or it can’t attract the investors it needs – what difference would this make for the climate? Regardless of what CEQA says, if the factory is not operated it is very clear that over 100,000 metric tons of greenhouse gases a year will not be emitted. It is the operation of the plant – the fish feed, the gas power electricity, the refrigerant leaks, and the emissions from driving trucks 1.5 million miles a year – that will cause the damage to the climate. Or to put it another way, the Board could prevent at approximately 3 million metric tons of emissions over 30 years if it stops this project in its risky tracks or at least imposes use permit conditions that will offset or reduce large amounts of those emissions.
The EPA provides a calculator that shows that 3 million metric tons of CO2 is equivalent to burning of 6,945,634 barrels of oil, or running 7.5 gas powered powerplants for a year or consuming 294,695,481 gallons of diesel. In terms of impact on the climate there are far worse projects, a concrete plant, for example. But these figures are not small. And given the fact that the IPCC says we must reduce emissions worldwide by 50% in the next eleven years to have a hope of keeping warming to 1.5°C, approving a project with this much negative impact on the climate cannot be justified to your voters and constituents, to your children, and most of all to the world that is clearly threatened with climate catastrophe.
NORDIC AQUAFARMS GROUP AF FINANCIAL STATEMENT
In Norway financial statements are required of all firms, even private firms. These statements are public. A Norwegian business has made it easy to download any of these financial statements. It is at https://www.proff.noThe specific statement for Nordic Aquafarms Group AF is at this URL: https://proff.no/regnskap/nordic-aquafarms-group-as/gamle-fredrikstad/tekniske-konsulenter/IDGZRQ001OU/
We downloaded the statement and had it translated from Norwegian by the online firm DeepL: https://www.deepl.com/translator The Norwegian abbreviation for their currency, NOK, was incorrectly translated as ENOUGH.
There are a wide range of additional reports available on Nordic at: https://forvalt.no/Nettbutikk/Produkter/814603032
Specific financial statements are also available for the Nordic owned Fredrikstad Seafoods and the two Danish companies Nordic bought a share in, Royal Sashimi and Maximus. The Fredrikstad Seafoods financial statement can be accessed at https://www.proff.no The statements for the Danish firms are available at https://datacvr.virk.dk
We are not financial experts. While we can see that Nordic lost money each year we cannot judge whether on the whole the financial statement can be taken to indicate support or caution to investors. We request that the County conduct due diligence by contracting with an investment bank that can analyze the statement and explain to the County how much risk, and why, is involved in investing in Nordic.
*****Notes*****
[1] See below for details; source is in footnote 16.
[2] Please see page 4.
[3] https://www.nordicaquafarms.com/investor-relations-2/
[4] https://salmonbusiness.com/e8-8-million-share-issue-raised-nordic-aquafarms-fredrikstad-seafoods-celebrates-first-harvest-for-land-based-salmon/
[5] https://salmonbusiness.com/it-is-fair-to-say-that-the-banks-still-think-it-is-too-early-to-lend-to-land-based-farming/
[6] https://salmonbusiness.com/it-is-fair-to-say-that-the-banks-still-think-it-is-too-early-to-lend-to-land-based-farming/
[7] https://lostcoastoutpost.com/2022/jul/16/interview-nordics-new-interim-ceo-brenda-chandler/
[8] https://www.intrafish.com/finance/the-biggest-land-based-salmon-skeptics-companies-actually-producing-salmon-on-land/2-1-986934
[9] https://salmonbusiness.com/90-superior-and-no-production-accidents-for-first-generation-salmon-at-fredrikstad-seafoods/
[10] https://www.intrafish.com/salmon/norways-first-land-based-salmon-farmer-wants-to-switch-to-yellowtail-citing-greater-earnings-potential/2-1-1160243
[11] A Norwegian company makes accessing this public data (in Norwegian) relatively easy on its website: www.proff.no The overall Nordic Aquafarms Group AS data from 2014 through 2021 are available at: https://proff.no/regnskap/nordic-aquafarms-group-as/gamle-fredrikstad/tekniske-konsulenter/IDGZRQ001OU/
[12] https://www.intrafish.com/finance/atlantic-sapphire-knocked-off-its-perch-as-worlds-most-valuable-land-based-salmon-farmer/2-1-1149271
[13] https://www.aquaculturenorthamerica.com/viewpoint-fallout-from-the-fire-at-atlantic-sapphire-in-denmark/ The list in the article was edited for clarity.
[14] https://salmonbusiness.com/land-based-fish-farm-boom-grinds-to-halt/
[15] https://www.intrafish.com/technology/for-now-the-little-guys-of-land-based-aquaculture-seem-to-be-the-big-winners/2-1-1089381
[16] https://www.intrafish.com/aquaculture/no-one-is-making-money-cooke-ceo-on-why-land-based-will-never-replace-at-sea-aquaculture/2-1-1184428
[17] https://www.intrafish.com/salmon/cost-to-build-new-aquabounty-land-based-salmon-farming-operation-could-run-as-much-as-60-higher-than-initial-estimate/2-1-1092526
[18] https://salmonbusiness.com/americas-first-commercial-ras-farm-to-expand-into-two-other-states/
[19] A list of planned and actually operating land-based aquafarms is in this article: https://salmonbusiness.com/these-are-the-leading-land-based-salmon-farms-in-the-world-right-now/
[20] https://www.maine.gov/dep/ftp/projects/nordic/pre-filed-testimony/intervenor-Upstream%20Watch_Northport%20Village%20Corporation/BRYDEN_NVCUPSTREAM8.pdf Availability of licensure was confirmed via an email to Jim Clark of the Audubon Socieity from Jeremy Lee of Sustainable Blue in September 2022.
[21] August 2022 report to investors: https://vimeo.com/743488805 and https://atlanticsapphire.com/wp-content/uploads/2022/08/20220826-Atlantic-Sapphire-ASA-August-2022-Operational-Update.pdf
[22] https://www.intrafish.com/salmon/toxic-chemical-compound-found-in-water-used-to-extinguish-atlantic-sapphire-blaze/2-1-1165285
[23] https://www.intrafish.com/aquaculture/atlantic-sapphire-ceos-advice-to-land-based-rival-dont-underestimate-scale-of-the-task/2-1-1197991
[24] https://www.intrafish.com/salmon/shares-of-land-based-salmon-farmer-atlantic-sapphire-continue-losing-streak/2-1-1302411?utm_source=email_campaign&utm_medium=email&utm_campaign=2022-09-19&utm_term=intrafish_com&utm_content=americas
[25] The Freshwater Institute, a program of The Conservation Fund, focuses on the sustainability of the domestic seafood supply by providing solutions to enable the growth of environmentally-responsible aquaculture. Vinci’s statement is on a recording is available at https://www.rastechmagazine.com/ras-talk-hard-path-to-innovation-with-johan-andreassen-of-atlantic-sapphire/, starting at 1 minute 35 seconds.
[26] https://www.intrafish.com/aquaculture/former-top-executives-at-nordic-aquafarms-form-new-company-announce-new-land-based-salmon-farming-concept/2-1-1301672?utm_term=intrafish_com
[27] https://www.linkedin.com/feed/update/urn:li:activity:6976274466154680320/ Our emphasis.
[28] This is what Brenda Chandler said in a public meeting Wednesday September 14 that it will cost to clean up the site.
[29] Nordic and the EIR say escape is not possible, but the CA Fish and Wildlife disagreed in their comments on the draft EIR.
[30] https://insideclimatenews.org/news/02092022/study-finds-that-mississippi-river-basin-could-be-in-an-extreme-heat-belt-in-30-years/
[31] CEQA does not require the “carbon footprint,” or life cycle assessment, for all analyses. As the FEIR says, it is not commonly employed. But with respect to aquaculture there is really no alternative; and that is recognized by the ASC even if not by the authors of the FEIR.
[32] The ASC adopted a new Salmon Standard in 2022 that includes this provision. See our Supplement.
[33] If we use the official Norwegian figures for the social costs of one metric ton of CO2 released, Nordic would be imposing economic costs on the world of $459 million, at minimum.
[34] A very understandable explanation of this issue has been written by David Roberts at: https://www.canarymedia.com/articles/clean-energy/google-and-others-have-committed-to-24-7-carbon-free-energy-what-does-that-mean Nordic will have a constant demand, but the supply of renewable energy, including from storage, will vary across the 24 hours.
[35] UN 24/7 Carbon Free Energy Compact. https://www.un.org/en/energy-compacts/page/compact-247-carbon-free-energy
[36] https://www.peninsulacleanenergy.com/wp-content/uploads/2021/11/Whitepaper-OUR-PATH-TO-247-RENEWABLE-ENERGY-BY-2025.pdf.
[37] EPA’s Emissions and Generation Resource Integrated Database (eGRID), released in 2018 with 2016 data, shows that at the national level, natural gas units have an average emission rate of 898 pounds CO2 per megawatt-hour (MWh), while coal units have an emissions rate of 2,180 pounds CO2 per MWh.https://www.epa.gov/sites/default/files/2020-12/documents/power_plants_2017_industrial_profile_updated_2020.pdf
[38] Calculations from EPA Calculator: https://www.epa.gov/energy/greenhouse-gas-equivalencies-calculator#results
[39] https://www.pewtrusts.org/-/media/assets/2022/07/coastal-wetland-greenhouse-gas-inventory-for-the-san-francisco-bay-estuary.pdf
[40] https://www.wri.org/events/2022/8/tracking-and-verifying-247-carbon-free-energy-purchases
[41] https://www.researchgate.net/profile/Maria-Mazzarino/publication/261619985_Composting_of_Fish_Waste_with_Wood_By-Products_and_Testing_Compost_Quality_as_a_Soil_Amendment_Experiences_in_the_Patagonia_Region_of_Argentina/links/569fa99308ae2c638eb7b9aa/Composting-of-Fish-Waste-with-Wood-By-Products-and-Testing-Compost-Quality-as-a-Soil-Amendment-Experiences-in-the-Patagonia-Region-of-Argentina.pdf
[42] We used a calculator developed by scientists at the Environmental Defense Fund for both sea and truck transport: https://storage.googleapis.com/scsc/Green%20Freight/EDF-Green-Freight-Handbook.pdf
[43] https://content.govdelivery.com/accounts/CARB/bulletins/32a73cb
[44] U.S. EPA, Profile of an Average U.S. Supermarket’s Greenhouse Gas Impacts from Refrigeration Leaks
Compared to Electricity Consumption, https://www.epa.gov/sites/default/files/documents/gc_averagestoreprofile_final_june_2011_revised_1.pdf
[45] See the graph on page 3.5-4 of the DEIR