Surf City's Poseidon Project: Another "Deal" Of The Century?
Last week, a financial trade publication known as the Bond Buyer named the Poseidon Resources Water Desalination project in Carlsbad the "deal of the year" for the far west region. Specifically, the story heralded Poseidon's "innovative project financing."
Brandon Ferguson Site of the proposed Huntington Beach desalination facility at Newland and PCH
Surprisingly, the Bond Buyer wasn't referring to Poseidon's penchant for aggressive lobbying, campaign donations and political cronyism. Rather, it was the way the company secured, with the assistance of the California Pollution Control Financing Authority (CPCFA), $756 million in tax-exempt, BBB rated bonds to finance its Carlsbad project--a project similar in scope to the one the company hopes to build on the shores of Surf City. For those who don't know much about bond ratings, BBB is one step above junk.
But perhaps more interesting, at least for those who know the basics of how desalination works, is the CPCFA's involvement in this deal, which bears a hint of irony. Among the many criticisms activists have leveled at desalination (it sucks up marine life, it's costly, it's unnecessary etc.), the pollution argument is particularly glaring. Desalination uses a process known as reverse osmosis, which requires lots of electricity to force seawater through a membrane in order to separate out fresh water. Last May, after researching 19 proposed desal plants around the state, the non-profit ocean research group the Pacific Institute released a report that argued as much as one-third to more than one half of desal's cost to produce fresh water comes from its energy consumption.
"Desalination--through increased energy use--can cause an increase in greenhouse gas emissions, further contributing to the root cause of climate change and running counter to the state's greenhouse gas reduction goals," the report stated.
The Pacific Institute's findings on desalination and pollution don't stop with ghg's. Last week, the Institute released another report focused on desalination's potential to pollute water with super concentrated brine, which gets released into the ocean after fresh water is filtered out.
"Steps must be taken to ensure [brine's] safe disposal; at this stage, we know very little about the long-term impacts of brine disposal on the marine environment," the report read.
It's unclear why CPCFA, which is charged with controlling pollution, is issuing tax-exempt bonds to private projects before their potentially harmful impacts on the environment are known--add one more to a long list of questions about Poseidon and its plans.
Among the questions lingering locally is who will issue the debt for the Huntington Beach project. While the Orange County Water District (OCWD) is currently exploring the issue, one of the main concerns is that with great debt, comes great risk. If Poseidon has a repeat of its disastrous Tampa Bay desalination project, taxpayers could wind up on the hook before a drop of water is produced--and still find themselves all wet.