Social Science
Jakob Skovgaard,
Jakob Skovgaard
Corresponding author at: Department of Political Science, Lund University, P.O. Box 52, SE-221 00 Lund, Sweden.
Guy Finkill,
Fredric Bauer,
Max Åhman,
Tobias Dan Nielsen
Peer Reviewed
The petrochemicals industry (mainly plastics and fertilizer production) is expanding, despite increasing attention to the environmental impact of petrochemicals. In our paper, we explore the role public finance plays in the petrochemicals industry. We do so by mapping the public and private financial flows into large-scale petrochemical projects for the decade 2010–20 and discuss the role of public financial institutions for the development of the industry globally. Secondly, we provide a detailed analysis of the roles international and national public finance has played in enabling two prominent petrochemical projects: namely the Sadara plant in Saudi Arabia and the Surgil plant in Uzbekistan. The cases are illustrative of the dynamics of state interest and involvement in fossil fuel producing countries as well as of lending and guarantees from foreign export credit agencies (ECAs) and development finance institutions, and how such public finance plays an important role in leveraging private finance. Our findings show how public finance for petrochemicals is highly globalized and to a large degree originates in developed countries. As petrochemical industrial infrastructures are designed to last decades, the public finance thus strongly contributes to the carbon lock-in of the sector and limits the possibilities for low-carbon investments needed to comply with the UN Paris Agreement.
Public financial institutions significantly contribute to the growth of the petrochemicals sector by providing loans, guarantees, and other financial instruments. This support often originates from developed countries and is crucial in leveraging private investments, thereby facilitating large-scale petrochemical projects globally.
Two prominent examples are the Sadara plant in Saudi Arabia and the Surgil plant in Uzbekistan. The Sadara project received substantial backing from various public financial institutions, including a Buyer Credit guarantee from the UK's Export Credits Guarantee Department (ECGD) for up to US$700 million. Similarly, the Surgil project secured approximately US$2.54 billion in financing, with significant contributions from South Korean state-owned entities and other international financial institutions.
Public financing plays a pivotal role in the carbon lock-in of the petrochemicals sector. By supporting infrastructure designed for long-term use, such as petrochemical plants, public finance contributes to the continued reliance on fossil fuels, thereby hindering the transition to low-carbon alternatives necessary to meet global climate goals.
The substantial public financial support for petrochemical projects underscores the need for a critical evaluation of such investments. While these projects may offer short-term economic benefits, they pose long-term environmental risks and may divert resources from sustainable development initiatives. A strategic reassessment of public finance allocations is essential to align with global sustainability objectives and the commitments of the UN Paris Agreement.
Show by month | Manuscript | Video Summary |
---|---|---|
2025 February | 34 | 34 |
2025 January | 103 | 103 |
2024 December | 46 | 46 |
2024 November | 49 | 49 |
2024 October | 45 | 45 |
2024 September | 68 | 68 |
2024 August | 45 | 45 |
2024 July | 45 | 45 |
2024 June | 29 | 29 |
2024 May | 34 | 34 |
2024 April | 22 | 22 |
2024 March | 8 | 8 |
Total | 528 | 528 |
Show by month | Manuscript | Video Summary |
---|---|---|
2025 February | 34 | 34 |
2025 January | 103 | 103 |
2024 December | 46 | 46 |
2024 November | 49 | 49 |
2024 October | 45 | 45 |
2024 September | 68 | 68 |
2024 August | 45 | 45 |
2024 July | 45 | 45 |
2024 June | 29 | 29 |
2024 May | 34 | 34 |
2024 April | 22 | 22 |
2024 March | 8 | 8 |
Total | 528 | 528 |