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petrochemicals
'Stop Funding Environmental Racism': Groups Demand Banks Divest From Petrochemicals
Petrochemicals are made from fossil fuels and are the basis for a wide array of industrial feedstocks and end products, mostly in plastics or fertilizers. The products drive climate change and harm public health throughout their life cycle, from the frontline communities—disproportionately marginalized and low-income—where fuels are extracted to the oceans and human bodies where microplastics, for example, end up.
The report calls for financial institutions—banks, investment firms, and insurance companies—to stop funding fracking, rapidly phase out all fossil fuel financing, and require petrochemical clients to publicly release transition plans. It also calls for an immediate halt on the financing of new petrochemical projects, about 120 of which are currently planned in the U.S., mostly in the Gulf and the Ohio River Valley.
"The communities most impacted by these developments, often low-income and communities of color, bear the brunt of pollution and health risks," Sharon Lavigne, executive director of RISE St. James, a campaign group in Louisiana, said in a statement.
"We must hold financial institutions accountable for their role in financing these harmful projects," Lavigne added. "It's time to stop funding environmental racism and start investing in a cleaner, safer future for everyone."
Diane Wilson, the executive director of the San Antonio Bay Estuarine Waterkeeper and a fourth-generation fisher, said the industry had already had a negative impact on her area.
"Given the terrible damage that I have seen corporations like Formosa Plastics do to communities, workers, fisheries, bays, and fishermen, the line has to be drawn: No more funding for plastics and petrochemicals!" she said.
Brandon Marks, a CIEL campaigner, summarized the problems the report seeks to address: "The petrochemical industry and its toxic products pose an urgent threat to human health and the global climate."
Source: "Exiting Petrochemicals" report (2024)
Primary plastics production accounted for 5.3% of global greenhouse gas emissions as of 2019—more than commercial aviation and international shipping combined, according to the report.
Fertilizers are also a major emissions source, especially those used in cornfields. Synthetic nitrogen fertilizers derived from fossil fuels account for an estimated 2-5% of total global emissions.
In total, the U.S. petrochemical industry alone releases roughly the emissions equivalent of 40 coal-fired power plants every year, the report says.
The climate impact, however, is only part of the problem, as the report details.
"Petrochemical production releases carcinogenic and other highly toxic substances into the air, exposing fenceline communities to higher risks of cancer, leukemia, reproductive and developmental problems, nervous system impairment, and genetic impacts," the authors wrote in the executive summary.
"Petrochemical production also pollutes waterways with contaminated wastewater," they continued. "In fact, Formosa Plastics was fined $50 million in 2019 for illegally discharging plastic pollution into Texas waterways and another $19.2 million as of June 2024 for continuing violations."
Fossil fertilizers also pose major risks, endangering farmworkers, polluting drinking water, and causing dead zones in marine environments like the Gulf of Mexico, the report says.
Two-thirds of the people living on the fenceline of petrochemical projects are from marginalized racial backgrounds, making these groups disproportionately represented—they make up only 39% of the U.S. population, according to the report.
The authors also put forth the business case against financing the petrochemical industry, arguing that new regulations and decreased demand will make petrochemical plants stranded assets.
"Choosing to finance and insure these projects is not just irresponsible; it's a poor investment," Marks of CIEL said. "Banks, insurers, and investors must stop financing petrochemicals now."
The US Must Rethink Its Planned Petrochemical Buildout
In a time when decisive climate action is needed more than ever, building more petrochemical plants is a monumental mistake the U.S. cannot afford to make.
Already responsible for 5.2% of the U.S.’ 6.3 billion metric tonnes of annual CO₂e emissions, the petrochemical industry is poised for massive growth. A total of 118 petrochemical projects—ranging from the expansion of existing plants to the construction of entirely new plants—are either planned or already underway and could add the equivalent of 2.4% of all U.S. greenhouse gas emissions. If this buildout proceeds, more than 7% of U.S. GHG emissions could come from the petrochemical sector.
A Growing Climate Threat
Petrochemical plants manufacture products like plastics, ammonia, and other chemicals, and have a typical lifespan of about 30 years. This means that the fossil-fueled emissions from these facilities will persist for decades, hindering the U.S.’ ability to meet its climate targets. Globally, the petrochemical sector is already a major climate problem, responsible for around 10% of total GHG emissions. Plastic production alone contributes 5.3% of global emissions, while synthetic nitrogen fertilizers add another 2.1% of global emissions.
In a recent analysis, the International Energy Agency projected that 85% of the growth in oil demand will come from petrochemical production by 2030. In the U.S., the planned petrochemical buildout will only make this worse. Our analysis not only reaffirms what we already know about the petrochemical industry’s impact but also highlights new and concerning developments.
Environmental Injustice Amplified
The environmental impact of the petrochemical buildout extends far beyond its contribution to climate change. The petrochemical buildout will deepen environmental injustices in communities that already bear the brunt of industrial pollution. The vast majority of planned petrochemical projects are sited in communities that already experience detrimental environmental and health impacts of living on the fence line of the fossil fuel industry, particularly in the Gulf South and Ohio River Valley.
In Louisiana’s “Cancer Alley,” a region between New Orleans and Baton Rouge, 26 new petrochemical projects are planned. This area is already home to more than 200 fossil fuel and chemical facilities where residents face some of the highest cancer rates in the country. In St. John the Baptist Parish, around halfway between the two cities, lifetime cancer rates are 800 times the U.S. average, according to an estimate from the Environmental Protection Agency. The expansion of petrochemical plants in these communities will only deepen the public health crisis.
Surprising Findings
Megaprojects Make Up Most of the Emissions
One of the most alarming revelations from our analysis is that just 10 megaprojects account for half of the potential emissions from the petrochemical buildout. The fate of just a handful of projects will have a massive impact on the U.S.’ ability to meet its climate targets.
Plastic Production Is Facing Serious Roadblocks
Nearly 60% of planned plastic production projects, calculated based on potential emissions, are on hold. This suggests that investors are already assessing significant risks around the future of plastic production. The growing awareness of the environmental damage caused by plastics, community opposition to these plants, and a global overcapacity of plastic production may be giving investors pause.
Ammonia, A Huge Growth Sector
Ammonia, primarily used in fertilizers, is emerging as a concerning climate problem. More than a third of the projected new emissions come from planned ammonia production. Companies behind projected projects are pitching ammonia not just for fertilizers but as a clean “fuel of the future.” findings reveal that these projects are anything but “clean,” with 95% of proposed U.S. ammonia production being derived from methane gas, which undercuts its supposed climate benefit.
Taxpayers are Footing the Bill
Adding insult to injury, many of these projects are being subsidized by U.S. taxpayers. Planned ammonia and methanol plants stand to benefit from U.S. government incentives like 45Q tax credits, which provide generous handouts to companies using carbon capture systems (CCS) despite carbon capture’s long record of failure.
A Look at the Math
To work out emissions from these planned petrochemical projects we dug through companies’ websites, press releases, and investor communications as well as consulted the Environmental Integrity Project’s comprehensive Oil and Gas Watch database to find the potential production capacity of new petrochemical projects. We used “emissions factors” published by academics at the Universities of Cambridge, Bath, and Sheffield to turn those production numbers into an estimate of emissions, and incorporated the expected emissions from fertilizer decomposition and plastic incineration.
Despite our careful math, we know our calculations underestimate the true climate harm these projects could bring. A few factors contribute to our conservative figures. First, we were only able to estimate emissions from two-thirds of the potential projects. Second, the models we use rely on the U.S. Department of Energy’s estimate of methane leakage, but recent studies suggest that methane leaks are three times higher than this figure. Finally, we cannot quantify some of the potential impacts that plastic pollution or overuse of fertilizers might be having, but there are worrying studies suggesting that both could have deep climate impacts.
The Bigger Picture
Having just experienced the warmest summer on record, the need to phase out fossil fuels has never been more clear. The US petrochemical buildout is a leap in the wrong direction—one that will lock in fossil fuel demand at a time when we should be transitioning away from them.
The decisions made about these projects will have far-reaching consequences. Our analysis reveals the high stakes and urgent need to question whether these projects should be allowed to move forward.
The U.S. is at a crossroads. Policymakers, investors, and communities must confront the reality that the continued expansion of petrochemical infrastructure is incompatible with a sustainable future. The fate of these projects will not only shape the U.S.’ climate trajectory but also have global repercussions in the fight to curb fossil fuel emissions and protect communities vulnerable to the compounding impacts of the petrochemical buildout.
In a time when decisive climate action is needed more than ever, building more petrochemical plants is a monumental mistake the U.S. cannot afford to make. The time to act is now.
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