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Jakob Skovgaard

Jakob Skovgaard

Associate professor | Senior lecturer | Principal investigator BECC

Jakob Skovgaard

Finance for fossils – The role of public financing in expanding petrochemicals

Author

  • Jakob Skovgaard
  • Guy David Finkill
  • Fredric Bauer
  • Max Åhman
  • Tobias Nielsen

Summary, in English

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 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 these 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.

Department/s

  • Department of Political Science
  • Environmental and Energy Systems Studies

Publishing year

2023-05

Language

English

Publication/Series

Global Environmental Change

Volume

80

Document type

Journal article

Publisher

Elsevier

Topic

  • Social Sciences Interdisciplinary
  • Political Science
  • Energy Systems

Keywords

  • petrochemicals
  • finance
  • plastics
  • fertilizer
  • climate change
  • lock-in

Status

Published

Project

  • Petrochemicals and Climate Change: Mapping Power Structures

ISBN/ISSN/Other

  • ISSN: 0959-3780