“Ill-informed?”: UK government backs Ineos with €700M as Project One struggles, sparking EU backlash

05 Mar 2024 --- Environmental law organization Client Earth has criticized the UK government for providing €700 million (US$760 million) in backing to Ineos for a gas-fed plastics facility in Belgium, highlighting a clash between economic interests and climate commitments in the UK and EU.

The investment in the Antwerp plant, which is expected to significantly increase plastic production in Europe, is being challenged on legal grounds that focus on flaws in the environmental assessment and non-compliance with EU and Belgian laws.

The challenge also raises concerns over human and environmental health, regardless of the project’s other legal requirements.

Lawyers at Client Earth have reacted to the UK’s investment in the facility in the Port of Antwerp — as Ineos faces legal action over its failures to put in place plans to meet its own climate targets.

Client Earth is currently engaged in a court case to block the “unjustifiable” project in Antwerp, and another to force the UK government to put the country on track to meeting its legally-binding carbon budgets.

The UK investment is an ill-informed government decisions based on false promises, claims Luján.Law compliant?
Tatiana Luján, lawyer at Client Earth, asserts there are “clear parallels” between the permit decision and the financial guarantee provided by UK Export Finance to the company. “Both are ill-informed government decisions, based on promises from Ineos that are simply not true.”

Luján tells Packaging Insights that from a legal perspective, the implications of UK’s financing of the Ineos plant and Client Earth’s case against Ineos are distinct issues. “Our case addresses the permitting side of the plastics project. It addresses flaws in the environmental impact assessment that Ineos submitted and the Flemish authorities then approved.”

“The case is strictly based on EU and Belgian laws we believe were breached by the permitting decision. The UK’s co-financing of Project One does not affect our legal action. Challenging the public financing of the plastics project, such as the financial guarantee provided by UK Export Finance, would need to be done separately.”

The Ineos petrochemical plant has been described as a “carbon bomb” by campaigners. Being constructed in the Belgian city of Antwerp, it will bring plastic production to Europe “on a scale not seen before,” while politicians and the industry are negotiating a binding global treaty to tackle plastic pollution.

Securing national interests
Luján stresses that the UK Export Finance’s agenda is “clear” but “unfortunate.”

“In the case of the UK and Project One, the reason for providing financial support is clear: it contributes to the economic development and competitiveness of Ineos, a UK company. This indirectly also strengthens the UK economy. Unfortunately, this is happening at the expense of the environment and the health of the people surrounding the plastics project.”

“Regarding Ineos’ Project One, private banks provided financing for the project amounting to (at least) €3.5 billion (US$3.8 billion). These banks would not have provided this financing at the same costs (interest rates) or would not have provided this finance altogether, without reassurances from governments in the form of financial guarantees.”

In addition to the support from the UK, Project One also benefited from financial support from Spain, Italy and Belgium. “Governments provide financial guarantees for various reasons. However, generally, in the field of government trade and export financing, reasons to provide this kind of support also serve the economic interests of the financing country, for example by boosting exports or securing strategic imports (such as chemicals and fossil fuels),” explains Luján.

“What we would expect is that if such a significant investment is made by a government, it should be clear and easily accessible to taxpayers how much, why and how an investment is being done.”

By Natalie Schwertheim

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