Alberta set to offer oil investment grants
The Alberta government will offer grants to attract investment in the petrochemical sector that could draw $10 billion in government revenue in 10 years, it announced Thursday.
The Alberta Petrochemicals Incentive Program (APIP) has no cap, and unlike the existing $1.1-billion Petrochemical Diversification Project introduced by the previous NDP government, would hand out direct grants to operators instead of royalty credits.
Industry representatives praised the move, but because the government offered no estimated costs or limits to individual grants, critics worried it would do little and cost too much.
Associate minister of Natural Gas and Electricity Dale Nally said the incentive program would help attract petrochemical manufacturing to take advantage of the province’s 300-year supply of natural gas.
“Alberta is uniquely qualified to capitalize on the tremendous opportunity in front of us to help meet the growing global demand for petrochemical products,” said Nally.
Those include the building blocks that make a variety of consumer products, including computers, car seats and tires, medical equipment and fertilizer.
The government is not scrapping the previous $1.1-billion diversification project. The new grant program won’t have an annual or total cap as of yet, but the government will be consulting with industry to finalize the program, Nally said, adding, “Under the current economic climate, grants are the most effective way to encourage investment.”
After opening for applications in the fall, every eligible project that applies will receive funding once it is built and operational, he said.
While NDP Opposition Leader Rachel Notley said she understands the value of the petrochemical industry, she called the UCP plan “half-baked” and “designed to fail.” Under the NDP’S program, projects would receive credits against royalties they generated, but with the UCP’S program, taxpayers would be at risk regardless of what royalties are created, she said.
“Their proposal would attract less than half the investment of the program that we created while in government. Instead of these half-measures by the government, Albertans need to hear a bold vision and a real plan that diversifies our economy and gets people back to work,” Notley said.
Bob Masterson, president and CEO of the Chemistry Industry Association of Canada, said the new grant program would provide a more “transparent and predictable,” framework and send a message to the industry.
“Alberta is open for business and ready to compete for more global-scale investments in the province’s chemistry and plastics manufacturing sector,” he said.
Alberta’s Industrial Heartland Association estimates there could be a further $30 billion of private-sector investment in the sector by 2030 and a potential to create 90,000 direct and indirect jobs in construction and operation.
“If Alberta wants to capture more of the value for its natural resources for future generations, we need to process our energy products into higher-priced goods right here in the province,” said Mark Plamondon, executive director of the association.
However, the Canadian Taxpayers Federation shared some of the NDP’S concerns, saying Alberta taxpayers should be extremely concerned about the program.
Franco Terrazzano, the federation’s Alberta director, said “as it is right now, it’s looking to me like a blank cheque.”
While Premier Jason Kenney’s corporate tax cut to eight per cent helps all businesses, the government should stay focused on tax relief rather than adding another “corporate welfare” program, Terrazzano said.