Ineos’ Project One given green light: Financial analysts appeal banks, activists vow legal action

09 Jun 2022 --- Belgian authorities have greenlit a massive petrochemical expansion in the port of Antwerp, where Ineos plans to build an ethane cracker for plastics production. Environmental activists and financial analysts are attempting to block authorization and encourage divestment from the project, arguing it is neither environmentally nor economically sustainable.

Ineos’ Project One would be the biggest industrial chemical investment in Europe in the past 20 years and, according to the company, make the EU competitive again with regions like Asia and the US, where development has driven ahead.

However, opponents of the project say anti-plastic legislation, national and international climate targets, public opinion, and material oversupply could end up costing local people in the EU a huge amount.

Amadeo Ghiotto, an analyst at financial analytics NGO FairFin, tells PackagingInsights Ineos is taking such a risk because it has been guaranteed bailout funding by the Belgian government in case of failure.

“Flemish investment funds of the Belgian government gave Ineos a guarantee of up to €500 million (US$538 million) in case the investment goes down the water. This is the biggest guarantee of public taxpayer money to a private corporation in many years,” he says.

“Such a big guarantee, and yet there has been no real research into policy, financial and environmental risk analysis. That is when we started getting involved.”

Project One will create several hundred jobs but risks billions for taxpayers, says FairFin.Legal action “a given”
A group of 13 environmental NGOs including ClientEarth appealed to the Environmental Ministry of Flanders to halt the project, but yesterday their appeal was dismissed. Now, the group intends to take the case to national court.

ClientEarth lawyer Tatiana Luján says: “The Flemish authorities’ decision to double down and persevere with this project is concerning. Project One will use fossil fuels to make the building blocks of plastics, which will not only intensify local plastic pollution, and exacerbate climate issues, but also carries great financial risk by adding more unnecessary plastic to an already inundated market.”

“We have repeatedly argued that the project’s astonishing array of climate, environment and financial impacts that would be felt at each stage of its life cycle continue to go unaccounted for. The consequences of getting it wrong now will have repercussions for generations to come. It’s incomprehensible why the Flemish authorities would back this project given these risks.”

“We do not plan to take this decision lying down. Challenging this decision in court is a given if we want to protect people and the planet from the irreversible damage this project would cause.”

Plastic market inundation
A global oversupply of ethylene and polypropylene amid increasingly strict international legislation against many common plastic products, such as the EU Single Use Plastic Directive, make Project One a high-risk operation, says Ghiotto.

This is why public funds have to be guaranteed to investors despite huge corporate loans from banks like JP Morgan Chase, Barclays, HSBC, Citigroup, BNP Paribas and ING Group.

“Plastic itself isn’t our target – plastics aren’t inherently bad – but we have hit the limits of our growth. We have limited amounts of fossil fuels and money,” he asserts. Fossil fuel depletion makes plastic expansion financially and environmentally unsustainable, says Ghiotto.

“To be able to save the plastics we use in essential industries like medical and transport, we need to reduce plastics where we don’t need them. A lot of the ethylene produced by Project One will go to single-use – Ineos denies it will do this but admits on its website that 26% goes to F&B products.”

New crackers built in the Middle East, Asia, and the US will mean the supply of plastics products hitting the global market will far outpace demand, argues Ghiotto.

“We don’t see the classic demand and supply rules applied to the plastics market. It is supply-driven and doesn’t take into account shifting global policy and consumer attitudes.”

Appealing financial institutions
If Project One goes ahead, it will lock Belgium into a long and unsustainable future. Ineos plans to keep producing through the site until 2060, long beyond the country’s green transition strategies.

Ghiotto says that while legal action moves forward, FairFin is now meeting with financial institutions involved in the project to present its analysis.

“We are meeting the banks now. They might be blind to pollution, but they are eager to listen, and we are explaining our market analysis and will get their reaction to the project. The goal is to stop money flowing to expand plastic production – we don’t want to stop plastics or petrochemicals altogether, but just expansion – there is enough of it.”

“It should be stressed that banks are using their customers’ money. That means you, me and everyone around us. It’s not just a risk for our planet, but our financial future and these financial institutions belong to us,” stresses Ghiotto.

“There is no Project One without the €3 billion (US$3.2 billion) they will have to lend. The loans will usually only be granted once the government gives permits, so we still have time.”

By Louis Gore-Langton

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