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Alberta signals to back oil lobbyists through billion dollar grant for the plastics industry
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While COVID-19 has largely pushed Canada’s environmental agenda to the sidelines, it has also exposed the oil sector as a fragile and unstable foundation for the economy.
After years of fighting for approval, Teck Resources Ltd withdrew its application to build a $20 billion dollar tar sands mining project – one of the largest – thanks to a combination of resistance by environmental activists and falling oil prices. Coronavirus also caused an historic plummet in oil prices, with futures dropping below $0 in April.
Yet despite the boom-bust nature of the oil and gas industry, and with mounting pressure to address the climate crisis, Alberta just introduced a grant for the petrochemical industry to be rolled out over the next decade, as part of its Covid-19 economic recovery plan. Currently there isn’t a hard cap on investment costs, but they could reach $30 billion, according to Alberta’s Industrial Heartland Association.
The petrochemical industry is more or less regarded as oil’s little sibling. Some of the largest oil companies such as ExxonMobil and Saudi Aramco have huge stakes in chemical industries. Since petrochemicals are essential components drawn from oil, they are going to account for more than a third of growth in demand of oil till 2030.
Over the past few years, with environmentalists calling for a ban on plastics, the industry saw a downturn in profits. Earlier this year, the government even committed to phasing out single-use plastics by 2021.
But while Covid-19 decimated oil prices, the plastics industry boomed. According to the CEO of the Chemical Industry Association of Canada (CIAC) (with a new plastics division created as recently as of July 1), the “demand for plastic packaging has never been stronger”.
At the height of the pandemic, the government saw the need to manufacture Protective Personal Equipment (PPE) domestically rather than depending on imports, and as the pandemic continues we’re using plastic for protection more than before.
So even though the oil and gas industry may have seen better days, its close kin – the petrochemical industry – is using the health crisis as a smokescreen to amp up production of ethylene that ultimately ends up in tangible plastic form that we use as consumers.
In Alberta’s economic recovery plan, Premier Jason Kenney calls the province’s energy sector, “the bedrock sector of our economy”, while “[accelerating] the future of the natural gas industry” along with a “retooled program to incentivize potentially billions of dollars of investment in the petrochemical sector”.
Hand picking to support the petrochemical industry in the name of diversification is not diversification at all since the same oil players have a stake in petrochemicals. Instead, funds could have been diverted to support renewable energy companies and making Alberta a leader in clean energy production.
In comparison, there is no concrete plan mentioned in the economic recovery document on how much money the government is earmarking to support the renewable energy sector, and create jobs in that industry – a sector that was flourishing and attracting investments before the pandemic.
Provincial support for the sector has actually lagged behind the private sector: In October 2019, a Danish investment group gave $500 million in funding to Greengate with plans to build Canada’s largest solar energy project.
Pre-Covid-19, according to Clean Energy Canada, jobs in the clean energy sector are going to grow at 3.4% every year till 2030, employing 559,400 Canadians, versus job losses in the oil and gas industry at 0.5% every year. In 2018, it accounted for 3% of Canada’s GDP. But now, as a result of the government selecting who to back, the clean energy sector is potentially experiencing an extinction level of revenue and job losses.
According to a recent report on energy investments by G20 countries during Covid-19, Canada has spent $300 million to support the clean energy sector, compared to $16 billion for the oil and gas sector, and this includes Alberta’s $1.5 billion equity investment and $6 billion loan guarantee for the Keystone XL pipeline.
By putting money towards fossil fuel and the petrochemical industry, Alberta is signalling that they will protect oil corporations in lieu of protecting the environment and Albertans. Plastic has been a kind of visible enemy for the environment and animal rights movement, and governments have almost used the policy of banning as a tactic to pacify environmentalists while soaring ahead with subsidies for the fossil fuel industry.
But now, through billion dollar grants for the petrochemical industry, the Albertan government is not even trying to put its money where its mouth is, and going ahead to “ensure a future” for harmful industries, during a climate crisis, and even in the face of an established fact that Canada is the second-fastest warming country on the planet.
In Other News From Alberta:
Alberta Teachers Association reports mixed feelings about province’s back-to-school plan
Schools are due to resume in the fall but there is anxiety among teachers and parents whether there’s enough of a safety plan to return. Alberta has committed about $120 million to schools across the province to ensure all safety precautions are in place. Currently health measures include cleaning of frequently-touched surfaces, grouping students, social distancing, and making hand sanitizer available at all entrances.
AUPE preparing members for strike action against Bill 32 in wake of Alberta’s Bill 32
The Conservative government’s Bill 32 “Restoring Balance in Alberta’s Workplaces Act” weakens unions and clamps down on workers’ rights. The Alberta Union of Provincial Employees (AUPE)is gathering its members to strike against the bill. They’ve already held a number of rallies and information drives to inform workers and the public how this new bill challenges labour rights. Here’s an interview with AUPE President, Guy Smith.
Alberta’s Covid-19 response is fragmenting as 2nd wave looms
Alberta is seeing a surge in cases again after opening its economy in phases, and now has the highest per capita cases in the country. In the past few months, the province’s message has shifted between staying indoors to reassuring confidence in going out again. Now, with schools about to resume and little planning for safety of teachers and students, Alberta is at risk of COVID-19 getting out of control.
Is Jason Kenney ready to bet on Albertan pensions on failing fossil fuel firms?
Last year, Sweden’s central bank sold off its government bonds in Alberta because of the province’s carbon emissions, noting that Alberta’s per capita carbon emissions are worse than even Saudi Arabia. So as international investments dry up, is Premier Jason Kenney looking to use Albertan pensions to finance the oil and gas sector? After all, he signalled his willingness to keep the oil sector going in his recent economic recovery plan.
Opinion and Analysis
The author argues how the Conservative party in Alberta is dismantling the progress of workers’ rights under NDP rule through Bill 32. The bill will weaken unions by forcing them to provide financial statements and placing restrictions on strike actions.
Across Canada, there have been growing calls to defund the police to protect Black and Indigenous lives, who are more likely to be shot and killed in a police interaction, than white people. In Alberta, however, UCP MLA Todd Loewen’s motion would go in the opposite direction by establishing a voluntary civilian corps to assist law enforcement in Alberta. The author argues this could be a dangerous slippery slope in giving Alberta’s various militia organizations more power to police their communities.
McKinsey and the UCP’s incoming evisceration of Alberta’s post secondary system
In June, Jason Kenney gave management consultant firm McKinsey a $3.7 million contract to analyse Alberta’s post-secondary education system. This is worrying on two fronts: firstly, it signals the possible privatization of a public education system; and secondly that McKinsey might have played a role in Canada’s bread price fixing scandal. If the education system is privatized, chances are it will erode education as a right for every child, instead allowing wealthy players to deliver costly education.