This volume provides the environmental assessment of the Keystone Project as the project was developed by the Keystone Project Coal-to-Methanol Feasibility Study, and establishes the environmental feasibility of the project. Environmental impacts are minimized through the use of a carefully selected site, proven control technologies for air emissions and solid waste disposal and wastewater treatment for zero discharge. Permittability of the plant was established through coordination with permitting agencies. Socioeconomic impacts from construction and operation will be beneficial because of the currently underutilized infrastructures in the area and a local labor force suffering high unemployment. Health and safety requirements can be met. Resources to support operation of the plant are available. This environmental assessment addresses the full five-module plant; and includes information about the first module, which is the basis for plant expansion. This volume and three contract-deliverable supplements comprise the seven major elements of the environmental analysis. Section 2.0, Site Selection, summarizes the selection of a suitable site on the basis of environmental and engineering-economic considerations. Details of the site selection process are given in Supplement KST-3, Keystone Project Site Selection Report. Section 3.0, Environmental Setting, provides a description of the physical, biological and socioeconomic/cultural aspects of the selected site. Air quality and meteorology in the site area were determined by monitoring.