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Plastics ban hits Alberta’s gas strategy

Federal measures to limit plastics pollution could frustrate the province’s petchems plans

Ottawa has rained on Alberta’s parade again. The federal government announced a series of measures in early October intended to counter plastics pollution, including a national ban on six single-use plastic items. The news came only a day after Alberta released its much-anticipated Natural Gas Vision and Strategy, two of the five pillars of which are a massive expansion of petrochemical manufacturing in the province and the establishment of Alberta as the “centre of excellence for plastics recycling” in western North America by 2030.

Alberta’s vision and strategy

Alberta’s gas industry has fallen on hard times since the US shale gas revolution took off in the mid-2000s. Gas production in the province has declined by more than a fifth to 11.1bn ft3/d (314.3mn m3/d), while gas-related royalties paid to the Albertan government have plummeted from a high of C$8.4bn (US$6.36bn) in fiscal year 2005-06 to a mere C$371mn in 2019-20—a decline of almost 96pc.

Gas prices across North America have collapsed over the period as US production has surged higher, but prices for Alberta-produced gas have been hit even harder due to delays in constructing new pipeline capacity to get volumes to market.

The goal is for Alberta to become a “global top ten producer” of petrochemicals, while diversifying the portfolio of products it manufactures

Premier Jason Kenney and his United Conservative Party were elected in April 2019 partly on a promise to revitalise the province’s gas industry, and the administration has spent the past 18 months developing its strategy. Besides the two previously mentioned pillars, the Kenney government is hoping to promote development of two or three additional LNG mega-projects by 2030 to export Albertan gas to Asia and Europe, encourage greater industrial demand in the province and support development of a blue hydrogen industry.

Hydrogen is the longest-term play among the five elements of the plan, as the industry is in its infancy both domestically and internationally. The province is planning to develop a hydrogen roadmap by 2023 and to align its policies with those of neighbouring provinces British Columbia and Saskatchewan to accelerate growth of a Western Canadian hydrogen market. It also has a goal of exporting hydrogen and hydrogen-derived products across North America and around the world by 2040.

In contrast, plastics recycling and, in particular, petchems manufacturing appear to be the two pillars from which the Kenney government is hoping to get the biggest economic bang in the shorter term. The goal is for Alberta to become a “global top ten producer” of petrochemicals, while diversifying the portfolio of products it manufactures. In the strategy document, the province suggested it could attract more than C$30bn of investment into Alberta’s petchems industry by 2030.

Trudeau’s plastics ban

The Trudeau government made headlines with its proposal to ban six single-use plastic items—straws, cutlery, grocery bags, stir sticks, six-pack rings and certain types of takeout containers—potentially by the end of 2021. But two other measures are more significant for achieving Ottawa’s broader goal of zero plastic waste by 2030. These are recycled-content standards and a national approach requiring companies to manage, collect and recycle plastic waste they manufacture or sell.

What drew the greatest ire from Alberta and representatives of the Canadian chemicals industry was not the plastics ban itself but the proposal to designate “plastic manufactured items” as “toxic” under Schedule 1 of the Canadian Environmental Protection Act as a politically expedient way to regulate plastics without having to table new legislation.

C$371mn – Alberta’s gas-related royalties 2019-20

Kenney and Bob Masterson, president and CEO of business group the Chemistry Industry Association of Canada, have both warned that designating plastics as toxic—as well as the ban itself—could severely retard future investment by global companies in Alberta’s petchems industry.

In response, federal environment minister Jonathan Wilkinson said the six items subject to the ban are a tiny fraction of total plastics production, indicated Alberta’s plan to become a recycling hub fits in well with Ottawa’s plastics plan and suggested he would be willing to reconsider the language around the ban should it pose an issue.

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