
Episode 23
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On (almost) everything you need to know about the dangerous global boom taking place in the petrochemicals industry, the plastic myths and cons it peddles and (some of) what we should do about it. Hero of the Week: Ban ki-Moon for acting on climate in South Korea. Villain of the Week: Liv Lønnum, Deputy Minister in the Norwegian Ministry of Petroleum and Energy, for being a pretend conservationist and a hard-core apologist for Big Oil, aiding and abetting the destruction of the Arctic

Photo by Assaad W Razzouk
This is an actual conversation between the CEO of Shell, the oil company, and his 10 year old daughter as told in a story in the Financial Times.
So the daughter whose age at the time was 10 comes back from school in tears and says to the Shell CEO:
“Daddy oil and gas, the oil and gas industry and you Shell are destroying the world.”
The CEO looks at his daughter in tears and says, “you have to trust me, darling”.
His next move was to allocate an extra $50 billion to new oil and gas and petrochemical production.
And so I want to tell you more today about the petrochemicals industry. I know it’s a bit of a boring subject, but bear with me. What happens to that industry is critically important to what happens to our fight against climate change.
Welcome to Episode 23 of The Angry Clean Energy Guy with me, Assaad Razzouk. I am so happy you’re here. Forgive my voice by the way. It’s weaker than usual today, but I promise I will take it to the limits.
PETROCHEMICALS
There are a few things everybody should know about plastic and don’t worry, I’m going to get you to the boring industry of petrochemicals very soon.
Each one of us used two kilos of plastic in 1973. Fast forward to today, each one of us is using 46 kilos of plastic per year. That’s 23 times more and you can think about these 46 kilos of plastic that we’re using each year in a slightly different way.
The amount of plastic produced in one year is roughly the same as the entire weight of all 7 billion people on earth. I mean, if that is not crazy, I don’t know what is.
Why are we producing so much plastic?
Now, what is plastic? Let’s take a step back. Plastic is made from two ingredients, both of which come from oil and gas because over 99% of plastics are produced from chemicals sourced from fossil fuels.
It’s either ethane, which you derive from natural gas or it’s naphta, which you distill from crude oil. In many countries, naphta is the main feedstock to create plastic, but in the U S where natural gas has become stupidly cheap over the past decade, ethane is what they use.
So you take all that stuff into petrochemical plants (emphasis on the word “Petro”, that’s chemicals derived from petroleum or natural gas).
Petrochemical plants are typically multibillion dollar investments by very large corporations with access to cheap money. I’d like to ask all of you to think of petrochemicals as a bad word. You can, for example, say, “stop trying to petrochem me” as a good substitute for stop trying to kill me. Or you can say to one of your friends pissing you off, “you’re behaving like a petrochemical plant” as a substitute for you are reckless and irresponsible.
Suggestions by the way of how you can use petrochemicals as a bad word are enormously welcome on my website, https://theangrycleanenergyguy.com/.
Now who produces all this stuff?
Petrochemicals are produced by the same cast of characters responsible for 70% of all global emissions since industrialization began, and these are led by people like Exxon, British petroleum, Saudi Aramco, Chevron, Shell, a couple of Chinese companies like CNPC and Sinopec, ConocoPhillips, you get the picture. And do you know what that cast of characters is planning for us? They are planning a plastic deluge. The data behind that is crystal clear. If you think that each of us using 46 kilograms of plastic each year today up from 2 kilograms of plastic in 1973 is a lot, you would be right, but the good people of Exxon and Shell and BP and Saudi Aramco and Chevron are actually trying to multiply that number by 40% over the next five years.
Big Oil, natural gas and chemical companies have poured some $200 billion into 300 petrochemical plants across just the United States over the past eight years. There’s another 108 petrochemical plants scheduled to come online in Asia and the Middle East by 2023. All of these plants, all of these billions are there for only one thing: It’s to sell you more plastic and so as far as the production of plastic is concerned, these people think that they can produce an extra 40% over the next few years in order to sell you more milk jugs, more shampoo bottles, more supermarket bags, more straws, more food packaging, and don’t get me wrong, there’s some good plastic out there and it’s going to take us a while to replace the fossil fuels that we use to produce it. That’s for example, plastic that we use in medical equipment, but single use plastic growth, the delusion of single use plastic must really stop because as you know, all of us are these days drinking plastic through our water, breathing plastic through the air and eating plastic through the food chain.
Now the boom in petrochemicals and therefore plastics is driven by two factors.
First, natural gas has become incredibly cheap because of fracking. Fracking, which is mostly popular in the United States, involves pumping an enormous amount of chemicals and sand and water into the ground in order to provoke gas to come out of the ground and then grab it. This unnatural activity resulted in a lot of natural gas turning up, which collapsed natural gas prices. This then gave U.S. petrochemical companies a huge advantage over foreign producers, but only if they could build new plants and only if they could expand market share. And that’s exactly what they’re doing.
Low natural gas prices also made it economical to liquefy that gas and ship it around the world. So that’s the first factor driving the boom in petrochemicals and therefore plastic.
The second factor is that these people are essentially getting free money. The fracking industry loses billions each year, yet petrochemical companies have no problem financing $300 billion of new kit over the past few years. And that’s even though there is a push back against plastic worldwide, and even though all the banks and all the capital markets know this is incredibly destructive.
So the U S shale fracking formula is to borrow billions of dollars at low interest rates, lose an enormous amount of money, force oil and gas from marginal fields, and then leave us the public stuck with the financial losses and wanton environmental destruction. These companies have a cashflow deficit of $20 billion per year, which means the money they’re making is $20 billion per year less each year than their operating costs and capital expenditures. And this has been going on for a long while.
Underlying these two factors behind the boom in petrochemicals, so fracking and free money, is the fact that we let them get away with environmental destruction without paying any price for it. So if you produce an environmentally destructive product and you don’t pay for any of the environmental externalities, what you get is cheap petrochemicals and cheap plastic, and eventually the supermarket plastic bag that you put your groceries in, which probably shouldn’t exist to begin with if the environmental externalities were properly priced.
Now, why does the fracking industry and therefore the petrochemicals industry continue to receive more investments from Wall Street despite never ever making money? Wells Fargo, JP Morgan, Citi, Barclay’s, Bank of America, Goldman Sachs, they’re all in on it. And the reason they’re on it is because petrochemicals is a big numbers business and that’s how they make money. Whether the fracking companies are profitable or not doesn’t really matter to these guys, they’re just getting rich, making the huge loans that the fracking industry cannot and will not pay. They even know that I suspect.
Now the reason Exxon and Shell and BP and Chevron and Saudi Aramco are going all in on petrochemicals is because they know demand for oil is going to go down in the transportation sector and they’ve promised their shareholders that they are going to keep their demand at the level where it’s at today and indeed increase it by producing more plastic and flooding us with it.
But they know, and we know, that people around the world want to reduce their hydrocarbon usage, whether it’s gasoline from cars and buses or plastic. Single use plastic in particular is under attack in over 40 countries, either through surcharges or outright bans. So will they succeed? I don’t think so, but we have to be vigilant in order to make sure that this deluge of plastic fails and that therefore the petrochemical companies fail and that therefore their emissions don’t add up to the incredibly severe climate change problem that we already have.
Number one, don’t fall for the recycling con! Oil and gas companies and petrochemical companies have been trying to convince the public that plastic is not a problem because you can recycle it. In fact, the data is crystal clear. They aren’t even recycling 9% of their plastic in the U.S. What they’ve been doing is shipping it to China, shipping it to the Philippines, shipping it to Thailand.
Thankfully all these countries have said, please stop dumping your trash here. So they’ve been shipping it to China, but telling the consumer that they were recycling it, which could not be further from the truth. We simply do not have the recycling infrastructure to manage all this plastic trash. We just don’t have it. We need to invest a lot in recycling technologies and infrastructure and obviously that should be paid for by the petrochemical companies that are flooding us with plastic but there could be nothing further from their mind. So the pretend recycling that you see around you and I just want to explain it briefly, is only recycling stuff that the recycling factory can make money off of. So most high value plastics like soda bottles, which comes stamped with a number one on them if you look closely, are probably recycled. Stuff stamped with a number two like a milk carton or a shampoo bottle maybe get recycled. But everything else, everything stamped from number three to number seven is, trust me, unsorted and used to get shipped as mixed plastics to China and the Philippines and Thailand – except it’s no longer shipped and now it’s being buried and it finds its way into our oceans. Potato chip bags, candy bar wrappers are practically worthless and aren’t even considered recyclable.
Remember that today, everywhere you go around the world, including the most pristine mountain, the most beautiful countryside, you are breathing plastic, you are eating plastic and you are also drinking it.
And there’s another problem as well on top. Consumer goods companies don’t necessarily want to use recycled plastic to begin with because freshly made plastic is a lot cheaper. And why is it cheaper? It’s cheaper because natural gas is cheap. And why is natural gas is cheap? It’s cheap because the natural gas producers are not paying for the climate and pollution and environmental damage that they’re causing.
And just to compound that problem, companies that are building new plastic manufacturing plants, so petrochemical plants, get enormous help from government to flood us with plastic and destroy the environment. Shell Oil for example is building a massive complex in Pennsylvania that will open next year. It will bury us with plastic and to compensate it for having it in Pennsylvania, the government gave it $1.6 billion in tax breaks. Without these tax breaks, the company would not have done the project and they said as much.
So recycling is a small part of the solution. But do not fall for the recycling con, we need to tax plastic, we need to have a surcharge on it to cover the fact that it’s being dumped. And we need to ban single use plastic. We also need to ensure petrochemical companies invest in recycling infrastructure.
So recycle by all means. But when you recycle, remember if the plastics industry can recycle just half as much as the aluminium industry, we would never need any new plastic. Never. And so they’re burying us with more plastic because they know we can’t recycle it. They know we don’t have the infrastructure.
So number one, don’t fall for the recycling con.
Number two, reduce. Reduce the use of plastic.
And number three, reuse your plastic and try not to buy non recycled plastic. Check the bottles that you’re buying. Check the bags, check the packaging and talk about it. If we limit plastic demand growth because we’re watching and because we ban single use plastic, we will achieve two critical things.
First we would devastate the oil and gas industry’s plans to bury us with plastic and make sure that we continue to drink it, to breathe it, to eat it, and that it’s in our blood. Slackening demand for plastics, less plastics will slash demand for oil and natural gas in the future and that will in turn spread to the petrochemical industry and that will spread to drillers and that will spread to pipeline companies. And if you weaken the sector enough, its cost of capital goes up and if it’s cost of capital goes up, it can do a lot less damage than it’s doing now.
The second thing we would achieve is we would make a huge dent in emissions of greenhouse gases because these continue to rise to this day. Despite all the talk about climate, despite climate change conferences going back 30 years, emissions continue to rise and we have not yet turned the corner, but we must, we’ve got until 2025 at the most for emissions to start declining. Otherwise we’ve condemned the world and our kids and our grandkids to a very different planet than the one that we lived in and it’s a much more dangerous, much worse planet.
People around the world want to reduce their hydrocarbon usage, whether it’s gasoline or plastic. And if you look carefully, what you’ll find is that entirely new industries are growing that offer us consumers an alternative. Support them with your spending. Find these new industries and invest in them. They are the future.
Villain of the Week
Now, petrochemicals is a boring topic, but it’s critically important that we see through what Big Oil and Big Gas and Big Petrochemicals are up to.
My Villain of the Week is a deputy minister in the Norwegian ministry of petroleum and energy. And let me tell you why Liv Lønnum is my Villain of the Week. I was at a beautiful exhibition in Singapore the other day about the Arctic, and it was bringing the story of the melting Arctic and its profound consequences on the planet to Singapore, which is very far from the Arctic, but as one of the world’s major ports is directly affected by both sea level rise and a potential change in shipping routes because of a melting Arctic.
So one of the guest speakers was Liv Lønnum, the deputy minister in the Norwegian ministry of petroleum and energy. She comes from Norway’s Progress Party, which is a kind of a milder version of Nigel Farrage’s Brexit party or Maxine Bernier’s party in Canada. So you get the picture, anti-immigration and libertarian, and just generally not too friendly or loving or caring.
Now she stood up and at an Arctic exhibition that highlights through every picture in every frame, the drama that is taking place in the Arctic through the eyes of Singaporeans that went there, she stood up as an apologist for Big Oil. She claimed that the world will need fossil fuels for a long time, and that the Arctic cannot be only a place for conservation because it needs to provide jobs for Norwegians who therefore should be extracting the resources in it, allegedly in a very sustainable way, whatever that means, because that’s impossible. And so Madame Liv Lønnum, you can do much better than that. You know the Arctic, you know we’ve destroyed it and we know we do not need fossil fuels for a long time, so don’t paddle that piffle please. And it’s not because Norway made its fortune from oil and gas that you should stand up and pretend that you are a conservationist, that you believe in sustainability in public, while acting as an apologist for Big Oil.
Hero of the Week
My Hero of the Week is one of the nicest and most capable men I have met, Mr. Ban ki Moon, the former secretary general of the United nations. He’s today the chairman of Korea’s national council on climate and air quality, which is a council under the president of Korea with 130 experts and 500 citizens that are worrying about pollution in Korea. Why is Ban ki Moon my Hero of the Week? He’s my Hero of the Week because he’s behind the fact that Korea will pass a bill in December in all likelihood to shut down up to 27 coal power plants in spring to curb pollution. They will also cap other coal fired power plants during those months and they will take 1 million diesel vehicles off the roads over the same period. Finally, they plan to introduce incentives to encourage ships entering the country’s ports to use low sulfur fuel oil. Because as some of you know, if you’ve heard some of my previous podcasts on this topic, shipping is one of the dirtiest and least regulated industries on the planet.
Now, what Ban ki Moon is doing is what I call climate action. By the time you hear this podcast, Greta Thunberg may have won the Nobel Peace Prize for her raising awareness globally about climate change in a way that no one succeeded to do before her. And as you know, I am a big fan of Greta, but we’ve got to combine awareness with action and what Ban ki Moon is doing is he’s acting.
And this, the way he’s acting, tells us fascinating things: Climate change continues to be a conceptual issue to the public. So you hear about climate change, you worry about climate change, then you go off to the supermarket and you forget about it. But pollution is not conceptual. The Koreans know that they are blanketed by pollution. The Koreans know that their air quality is the lowest among all 36 rich countries that are members of the OECD. They know that. And so Ban ki Moon is acting on climate on the back of public opinion, which cares about its lungs being polluted and its air being polluted, pollution which you can see with your own eyes.
That’s it from me today. Remember, transcripts for all my podcasts are on my website, https://theangrycleanenergyguy.com/. I’ve got transcripts all the way up to episode 22 there and transcripts for this episode will be there by the time the next one is up.
Thanks again everybody and have a great couple of weeks.
About Me
There is so much to be angry about, if you are a clean energy guy.
Every day, so many things that happen around the world make me angry when I look at them with lenses colored by the climate change chaos unfolding everywhere around us. And I am especially angry because I know we can solve the climate change crisis if we were only trying.
Each week, I will share with you a few topics that struck me and that I was very angry about – and this will generally have to do with climate change, solar or wind power, plastic pollution, environmental degradation, wildlife, the oceans and other related topics.