The Jason Kenney government has made a flurry of funding announcements aimed at “diversifying” Alberta into its next wave of dependence on fossil fuels, with a continuing push to get the Keystone XL pipeline built, a new agency to woo foreign investors, and C$1 billion over 10 years earmarked to bring new petrochemical capacity to the economically beleaguered province.
The Alberta Petrochemicals Incentive Program was the biggest block of new funds, since Kenney had already announced $8 billion in financial aid for the increasingly tenuous Keystone project. Dale Nally, Alberta’s Associate Minister of Natural Gas and Electricity, told the Globe and Mail the offer of lavish petrochemical grants was “based on industry needs, not government desires”, about a week after colossal fossil BP announced it was selling off its petrochemical assets.
“Companies will always make business decisions that are made in the best interest of their shareholders, so BP made the decision they did,” Nally said. “But don’t forget, it was picked up by another large-scale global chemical company that continues to expand its operations, so petrochemical is still an attractive industry to be in.”
Nally said every applicant to the new program that meets eligibility requirements will receive funding, to get the province out of the business of picking winners and losers. “Projects will only receive cash once they’re up and running, which Mr. Nally said will protect taxpayers from the ‘inherent risks’ that come with grants,” the Globe writes. But “petrochemicals play a crucial role in strengthening and diversifying Alberta’s economy, Mr. Nally said, and the current global health crisis underscores the sector’s importance as it pumps out essential personal protective equipment such as rubber gloves and masks.”
Nally told CBC the program could expand Alberta’s already large petrochemical sector by more than $30 billion by 2030, while acknowledging that too many new projects could risk “overheating” the sector. “That’s always the risk, so that’s why we committed to monitoring it throughout the 10 years,” he said. “We don’t have any hard caps in place. But if we have to look at an annual cap, that’s something that we’ll do.”
Provincial opposition leader Rachel Notley called the plan half-baked and risky. “They can’t even tell Albertans how much it will cost, and yet somehow they can claim to know how much investment their program will bring into the province and how many jobs it will create,” she said. “Their inability to provide us with information is jaw-dropping.”
The province also unveiled $18 million over three years for Invest Alberta Corporation, a new agency with a mandate to attract foreign investment to the province. “There will be fierce competition as economies begin to reopen to attract this investment,” said Economic Development, Trade and Tourism Minister Tanya Fir. “We know many other jurisdictions across the world, across Canada, already have these arms-length agencies in place that focus on investment attraction.”
Earlier in the month, the government made it clear that Premier Jason Kenney’s photo op at a TC Energy pipe yard in Oyen, Alberta was just part of a concerted push to get Keystone XL built. Kenney pledged to step up the province’s presence in Washington, DC in the weeks ahead and ask the federal government to do the same.
After taking “a conscious risk” with its over-the-top subsidy to get construction started, the province “will not flag. We will not relent. We will get this job done,” he said. In addition to hiring former Conservative MP James Rajotte as Washington trade representative and opening an office in Houston, “we’re also looking at further expanding our network of permanent offices in the United States and other key markets to engage more decision-makers and more business leaders,” he said.
“It would be a terrible blow to this important strategic friendship, this trading relationship, and this alliance for any U.S. administration to cancel the project in which billions of dollars have already been invested.”
That line of thinking had Carbon Tracker financial analyst Kingsmill Bond second-guessing the “idiotic waste” of pouring billions of provincial dollars into Keystone. “We’re finance people more than green people,” Bond told The Tyee, in an interview that explained the vulnerabilities that make the entire fossil sector ripe for disruption.
“We’re trying to understand the impact on financial markets of the changing energy mix away from fossil fuels. People should listen to us or at least hear us out, because investors across the world for the last 10 years have been losing a lot of money by failing to understand what’s going on.”
Get The Tyee’s full interview with Carbon Tracker financial analyst Kingsmill Bond here.