Shell’s Smith wrote, “The benefits of hosting one of the largest construction sites in North America have been clear from day one.” He said that in addition to the “billions” of dollars Shell has invested in the area during site preparation, it has also contributed to community organizations and worked with Beaver County to expand its recycling program. It also expects to hire contractors from the region. Shell sponsored a technical program at Community College in Beaver County, from which it has hired about a dozen graduates, Smith said.
One economic impact analysis Commissioned by Shell estimates that the firecracker could generate $3.3 billion in economic activity across the region each year, as well as $23 million in state income tax.
But the analyst, Hippel, said that expectations of broader prosperity based on plastics projects are “based on predictions that may not necessarily materialize.”
‘A sunk cost illusion’
More than 400 million metric tons of virgin plastic are produced every year.
Of this, about half is for single use. Recycling techniques haven’t caught the problem: A recent study estimated that only 9 percent of the plastic waste ever created has been recycled, meaning that what’s left — hundreds of millions of metric tons — was thrown away. have been burned, buried in landfills or dumped at sea.
The problem isn’t just waste. Plastic production, a carbon-intensive process, also underpins global efforts to reduce carbon emissions. According to Beyond Plastics, the US plastics industry’s greenhouse gas emissions will exceed those of coal-fired power plants over the next decade.
However, there are signs the world is realizing that plastics are “a crisis in their own right,” said Carol Muffett, president and CEO of the Center for International Environmental Law, an environmental advocacy group. “We have seen a proliferation of measures to reduce plastic use and reduce the use of virgin plastics in countries around the world.”
This includes a growing number of restrictions on plastic-based products, including single-use plastics such as bags and straws. Some countries have even moved to limit the import of plastic waste, prompting the US to look for other places to dispose of its plastics. Recent annual reports from several petrochemical companies noted the change and warned that moving away from plastics would damage bottom lines.
Meanwhile, the industry is set to produce a staggering amount of plastics.
At least 120 ethylene construction projects are under construction or in the early stages of development around the world, said Dayanand Kharade, oil and gas analyst at data analysis and consulting firm GlobalData. These include ethylene production complexes in Russia and Canada and 36 projects in China, set to lead the world in plastics production.
In its effort to increase domestic manufacturing capacity of plastics and reduce dependence on the US, China has exploded new petrochemical projects since it began operating its first purely ethane cracker in 2019. ExxonMobil is building a firecracker plant in Guangdong, which is expected to be in production. 1.6 million metric tons of polyethylene annually after coming online in 2023.
The manufacturing boom has led somewhat to be less than optimistic about the long-term viability of the industry. According to some analyses, the global buildup has given rise to glut. Data collected by data analysis firm Statista found that capacity has exceeded global demand every year since 2015.
Ashish Chitalia of Wood McKenzie, an energy research and consulting firm, said that while the world is demanding millions of tonnes of plastic annually, the capacity is growing faster than the demand. ,
Over the past five years, according to Wood Mackenzie, US polyethylene production has far exceeded domestic demand, with capacity increasing by about 27 percent and demand by only 10 percent.
Global production is also expected to expand faster than demand, with a 23 percent increase in polyethylene capacity and an 18 percent increase in global demand from 2021 to 2025. Margins for US producers are expected to be 25 percent over the next decade, due to expected global overcapacity. According to Wood Mackenzie, less than in the last decade.
“It comes down to whether people don’t want plastics as much as the industry wants plastics,” Muffett said.
In the US, major petrochemical companies have put on hold some projects – including some in Appalachia.
Since 2015, Ohio’s Economic Development Group, a non-profit organization called JobsOhio, has spent approximately $67.65 million to help Thailand’s largest petrochemical producer develop a multi-billion dollar ethane cracker Not implemented yet. PTT Global Chemical Americas, or PTTGCA, announced last year that a major investor had pulled out and it delayed announcing its final investment decision, citing volatility in oil prices and the economic uncertainty resulting from the pandemic. Will do It’s unclear whether the cracker will go ahead, although a spokesman for Jobs Ohio said the project remains viable.
The money disbursed includes a $20 million loan that was paid back. A Jobsohio spokesperson said the balance, approximately $47.65 million, was spent on site treatment and does not need to be paid back.
“PTTGCA remains committed to the project, and Jobsohio and its partners continue to work closely with PTTGCA to drive the project into a positive final investment decision,” the spokesperson said in a statement.
Hippel said projects like the PTTGCA — and Shales Cracker — are examples of the “sunk cost fallacy.”
The decision to invest in plastic manufacturing was “when the world looked very different than it does today,” she said. “They have so many years, so many billions. Today, will it be built? No.”
‘Why would we go that route again?’
Industrial pollution is nothing new for southwest Pennsylvania.
In the Beaver County town of Ambridge in the 1940s, soot falling from steel mills and coal-fired power plants was so widespread that residents called it “black sugar.” In 1948, the worst air pollution disaster in US history occurred in Donora, when a meteorological phenomenon known as temperature inversion, which is common to the area, trapped toxic haze in the valley, killing at least 20 residents. . Last year, a state investigation determined that state regulatory agencies failed to protect residents in the area from the effects of fracking – which include serious health consequences and water pollution.
According to the American Lung Association, while the city has made progress in reducing air pollution, Pittsburgh is consistently ranked among the most polluted cities in the country. organization’s latest “State of the Air” report found that Pittsburgh and the surrounding metro area ranked ninth among nearly 200 cities for annual levels of fine particulate pollution. Allegheny County, where Pittsburgh is located, received an F grade for average ozone levels.
For Matthew Mehlick, executive director of the Breathe Project, Shell’s cracker is another iteration of an economic model that Appalachia has struggled to cross.
“What’s most disappointing about this is that the region will go back to an economic model that has left such a toxic social and environmental legacy that it has taken 30 to 35 years to clean up,” he said. “Why would we go that route again?”