Gulf Coast Petrochemical Buildout Draws Billions in Tax Breaks For Polluters

A new report by the Environmental Integrity Project compiled data on every U.S. plastics plant built, expanded or proposed since 2012, revealing massive growth in Texas.

The report identified 50 plastics complexes built or expanded in the last 12 years, 33 in Texas. Together they have drawn a total of $1.65 billion in property tax breaks through the state’s Chapter 313 program for energy and manufacturing companies, which the state legislature replaced last year with a new but similar program.

That’s a tiny dent in Texas’ $250 billion annual tax revenue, but it’s just one visible slice of the total concessions corporations receive to do business in Texas, and it represents lost income that would have gone primarily to the state’s public schools, which are struggling with shortfalls in teachers and funding.

While Texas hosts the most new plastics production, the most generous tax breaks come from neighboring Louisiana, among the nation’s poorest states, where three projects alone drew $6.5 billion in local discounts since 2013. All operating projects considered in the EIP report claimed a total of $9 billion in exchange for commitments to economic development and job growth.

That money would have otherwise funded local schools and public services, said Alexandra Shaykevich, research manager at the Environmental Integrity Project. Instead, it’s given to highly profitable corporations that are often foreign-owned and likely would have located near the nation’s major oil and gas resources with or without local tax incentives, according to her group’s report.

The recent growth in Gulf Coast petrochemicals, which include plastics, are a result of the ongoing boom in hydraulic fracturing upstream in the Eagle Ford Shale and Permian Basin of Texas. Pipelines carry oil and gas hundreds of miles to the coast, where refineries and chemical plants produce commercial products and load them onto ships for sale overseas.

Within plastics, he said, most recent growth has come from ethane crackers, facilities that turn natural gas into ethylene, which, according to the American Chemistry Council, can be made into polymers that are “used to manufacture fibers, bins, pails, crates, bottles, piping, food packaging films, trash liners, bags, wire and cable sheathing, insulation, surface coatings for paper and cardboard, and a wide variety of other products.”

High demand for plastics and other petrochemicals will support a growing share of fossil fuel production, said Tom Sanzillo, a director of financial analysis at the Institute for Energy Economics and Financial Analysis, as major sectors like transportation fuels and power generation shift to more sustainable forms of energy.

For its report, the EIP drew on public records, including permit applications and company announcements, to compile a list of currently proposed plastics projects. Their data shows a wave of new development is still planned for the Texas coast, including seven new complexes and 20 expansions at existing complexes.

In Corpus Christi, a joint Singaporean-Taiwanese-Mexican venture plans to build a new manufacturing complex for polyethylene terephthalate, a common plastic in disposable packaging, named “Project Jumbo.” The complex, proposed by the companies Indorama, Far Eastern New Century and Alpek, will also include a desalination plant to pull seawater from Nueces Bay.

The highest concentration of proposed new plastics complexes surrounds Port Arthur, a small city ringed in heavy industry that boasts some of the last available ship channel waterfront on the Gulf. There, Motiva Enterprises, owned by the government of Saudi Arabia, has proposed a new ethylene unit consisting of eight furnaces next to its existing Port Arthur refinery. Ethylene is produced by heating natural gas or petroleum to above 800 degrees Celsius, which produces a mixture of gases from which ethylene is separated.

“Our local government and our state government welcomes this activity, but the people who live in the shadows of the industry are the ones who continue to suffer,” said Hilton Kelley, 63, a community organizer from Port Arthur. “In most of these situations around the nation, you will find that it’s people of color.”

“Even if the community speaks out, permits are almost never denied,” she said. “We’re constantly showing them the problems, we just get ignored and they get the permits.”

Of the top four recipients, three were in Louisiana, drawing a combined $4.6 billion from the state’s Industrial Tax Exemption Program since 2013, and one was in Pennsylvania, a massive Shell ethylene plant in Beaver County outside Pittsburgh, which drew $1.65 billion from Pennsylvania’s Resource Manufacturing Tax Credit. All were owned, in part or in full, by corporations from Asia, Africa or Europe.

“It sounds like a lot of money. But in this game that some people would call interstate competition for growth and others would call corporate welfare, it’s not an overwhelming amount,” said Mike Kraten, director of accounting program initiatives at the University of Houston’s Bauer College of Business. “I think anyone would agree that this has become par for the course.”

Chapter 313, one of many tax abatement programs in Texas, represents a small slice of the total incentives that companies may receive to invest here. The biggest concessions are typically custom-negotiated in private between company lobbyists and state or local governmental development offices, Kraten said.

Chapter 313 drew criticism from both Republicans and Democrats in Texas. The conservative think tank Texas Public Policy Foundation called it“unnecessary and wasteful.”Texas doesn’t need to offer tax incentives, critics argued, because its oil and gas fields mean companies will locate here anyway.

Then, between 2021 and 2022, the facility reported 10 unpermitted pollution releases totaling 560,802 pounds due to equipment failure, emergency flaring or unplanned shutdowns. During one incident in 2022, the glow of burning ground flares was visible from 20 miles away for days, according to the Corpus Christi Caller Times.

Before Air Alliance Houston, she worked at commercial laboratories in Louisiana and Texas that analyzed air samples from industrial operators for their reports to regulators. That’s where she realized what sorts of vapors wafted from refineries and chemical plants—things like benzene, butadiene and all manner of volatile organic compounds.