Before Alberta Premier Rachel Notley sinks public funds into a new, multi-billion-dollar private oil refinery, she’d best read up on a cement megaproject on Quebec’s Gaspé Peninsula that went 40% over budget and has now become the province’s single biggest source of greenhouse gas emissions, veteran public affairs specialist Alan Freeman writes for iPolitics.
“The premier said she’s convinced that private sector companies are interested in stepping up to the plate,” Freeman writes. “Sure they are, provided that taxpayers take all the risk and end up holding the bag when the project goes way over budget or fails entirely.”
But “we’ve seen this movie before. Canadian governments have a real knack for it. The formula is always the same: An industry or a region in crisis. A wonky industrial project that’s been around for ages but could never be justified by normal business economics. And finally, a desperate politician anxious to do something, anything, to get elected.”
In the Gaspé, the McInnis Cement project went from daydream to reality after a local newsprint mill closed in the late 1990s, then failed again after a group of companies partnered with the venture capital arm of a provincial trade union to take over the plant with government support. In 2014, Freeman writes, then-premier Pauline Marois travelled to the region to announce the project and congratulate locals for electing a Parti Québécois member to the National Assembly. “In the end, the Quebec government has sunk C$100 million in the project and provided a $250-million loan. More embarrassing still, the Caisse de dépôt et placement du Québec has sunk a total of $265 million, and is now the controlling shareholder.”
That stake increased, Freeman adds, “when the plant ended up costing $400 million, or 36%, more than budgeted. The pension fund is clearly anxious to get out of the cement business, but there seem to be few takers. Existing cement producers have been opposed to the project from the start, and there’s still a threat that the new plant will simply lead to plant closures elsewhere.”
And after all that, McInnis “will soon have the notorious distinction of being Quebec’s single largest industrial source of greenhouse gas emissions,” he writes. “That’s because its furnaces are powered by petroleum coke, a refinery byproduct that Greenpeace Canada says is more polluting than coal. Nor was the project ever subject to a full environmental assessment or public hearings, because the provincial government decided to give it a pass and allow construction to go ahead; the province argued it had been already approved, back in the 1990s, when the rules were much laxer. And Greenpeace also suspects the company won’t end up paying much for carbon credits under Quebec’s climate change policy.”
At this point, the plant is delivering fewer than 200 jobs, far below the 400 its proponents originally promised, in what Freeman sees as a cautionary tale for any provincial politician contemplating a similar bad investment.
“I suggest that before Premier Notley plunges into a taxpayer-backed refinery with sketchy economics, she makes a call to her Quebec colleague, François Legault,” he writes. “He’s got a spanking new cement plant to sell to her—or at least a bit of sage advice.”