Revamped petrochemical grant program will have no funding cap

By Catherine Griwkowsky July 10, 2020

The UCP government is switching Alberta’s petrochemical diversification program (PDP) from a royalty credit deferral to a grant program.
 
Associate Minister for Natural Gas and Electricity Dale Nally announced the new 10-year initiative called the Alberta Petrochemicals Incentive Program Thursday. 
 
The size of the program will depend on enrollment and no company that applies and meets the government’s criteria will be turned away.
 
“We don’t have any hard caps in place,” Nally told reporters.
 
In order to receive a grant, a project must be fully built and operational.
 
“It’s not picking winners and losers,” Nally said, adding that further criteria will be released in the fall. 
 
This is the third iteration of PDP funding in Alberta. It will work in tandem with the second phase, which was started by the previous NDP government, and offered up $1.1 billion in royalty credits for petrochemical companies. That was a move away from the PC’s 2014 grant program.
 
The UCP hopes the program will spur investment into petrochemical centres in Alberta’s Industrial Heartland east of Edmonton, Grande Prairie, Joffre and Medicine Hat, where facilities convert natural gases into products such as plastic, fertilizer and fabric.
 
NDP MLA Deron Bilous congratulated the UCP government for recognizing the need for economic diversification but said he expects the grant program will be less popular than the NDP’s royalty deferrals. 
 
“The government’s plan will attract less than half of the private-sector investments and create thousands fewer jobs than our plan,” Bilous said in question period.
 
Alberta’s Industrial Heartland Association said this iteration of the PDP program will help increase the sector’s growth by $30 billion in growth by 2030, creating 90,000 direct and indirect jobs and $10 billion in tax revenues for the province. 
 
But the Canadian Taxpayers Federation had harsh words for the program.
 
“We need to get the economy going again, but the answer is not to make struggling taxpayers sign a blank-cheque for another petrochemical corporate welfare program,” said Franco Terrazzano, the CTF’s Alberta director, in a news release. “Premier Jason Kenney should stay focused on tax relief instead of risking tax dollars trying to play investment banker.”
 
The CTF has also criticized the NDP’s royalty credit program, citing an internal briefing note to then-minister of finance Joe Ceci warning about the risks of subsidizing the industry.
 
On Twitter, University of Calgary economist Trevor Tombe said it was disappointing to see another government subsidy program.
 
“Absent a market failure, such subsidies are counterproductive and costly,” he wrote.

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