COVID-19 Updates: Taking steps to return to normal.
The Alberta Petrochemicals Incentive Program (APIP), part of Alberta’s Recovery Plan, will help attract billions in petrochemical project investments and continue to diversify the province’s economy while drawing directly on our abundant reserves of natural gas. The goal is to aggressively compete with several jurisdictions across Asia, the Middle East, and those in the Gulf of Mexico in the United States, many of which also offer similar incentives for petrochemical manufacturers, to become a global destination for petrochemical investment.
“Today we’re adding another incentive to Alberta’s already world-class opportunities for petrochemical development. On top of our existing petrochemical producers and all the companies that feed in and support them, we have a multi-generational supply of natural gas, an experienced workforce, and one of the lowest tax rates in North America. By launching this program, Alberta moves towards achieving the goal of becoming one of the most attractive investment opportunities for petrochemicals in the world.”
The program is one of the key pillars of the Natural Gas Vision and Strategy, which outlined the province’s goal of becoming a top global producer of petrochemicals. According to Alberta’s Industrial Heartland Association, there is an opportunity to grow Alberta’s petrochemical sector by more than $30 billion by 2030, resulting in more than 90,000 direct and indirect jobs over the construction and operations of new facilities, and more than $10 billion in revenue for the Government of Alberta from corporate and personal income taxes.
To encourage additional investment in the sector, Invest Alberta and Alberta international offices will be courting petrochemical companies and investors by highlighting the many benefits of investing in Alberta’s growing petrochemical industry. Alberta’s industrial associations are also doing their part, working with current members and leveraging contacts within the petrochemical industries to share the opportunities available. Hydrogen-producing facilities will also be eligible for APIP, ensuring continued interest from investors in the province’s nascent hydrogen economy.
“Diversifying our energy industry is key to ensuring Albertans will have good-paying jobs and careers to get excited about in the future. Alberta has the potential to become a major player in low-carbon hydrogen and sustainable plastics production, but we’ll only get there if we have a competitive edge over other jurisdictions. Petrochemical companies have dozens of factors to consider when choosing where to invest, and we’re putting together a winning formula to ensure Alberta is at the top of their lists.”
APIP offers a direct financial incentive on new petrochemical or fertilizer facilities, or on expansions to existing ones. High-level details include:
- Once a project is up and running, companies that have successfully applied will receive grants worth 12 per cent of their eligible capital costs.
- The grant will be issued in the final step in the process, ensuring that only projects already built and employing Albertans receive funds.
- Prior to the grant, companies will need to show their project meets the program requirements by detailing the scope and expected cost of the project.
- The application window for small projects (between $50 million and $150 million in capital costs) will be open for five years. Applications for larger projects will be open for 10 years.
“The Alberta Petrochemicals Incentive Program is a meaningful incentive program that will strengthen Alberta’s value proposition for large-scale petrochemical investments. As Canada’s largest hydrocarbon processing region and a critical partner in Canada’s energy future, Alberta’s Industrial Heartland is focused on capturing a potential $30 billion in new, diversified, value-add investments by 2030. As an investment attraction tool, APIP will increase our region’s competitiveness and enhance our ability to attract petrochemical investment projects that diversify Alberta’s economy.”
“Low-cost, low-carbon and abundant – Alberta’s natural gas and natural gas liquids make it a global player in industrial chemicals manufacturing. The Alberta government recognizes this potential and the Petrochemicals Incentive Program goes a long way to level the playing field with other jurisdictions competing for new investment. The opportunity for growth in this sector exists in the province and that is good news for jobs, new global-scale investment, and Alberta’s economy.”
“We have heard directly from companies that they have been looking at Alberta for greater chemistry investments, but that we are also competing with the best locations around the world. The Alberta Petrochemicals Incentive Program helps to provide the necessary incentives to grow Alberta’s burgeoning petrochemical sector, which in turn will provide thousands of good jobs and sustainable economic growth while continuing to diversify our resource and energy sectors. I'm particularly excited that this program will incentivize hydrogen and fertilizer production. These are key growth and diversification opportunities for our province in a lower-carbon future.”
“Alberta’s petrochemical industry competes globally with many other jurisdictions that are determined to bring new investment to their part of the world. This program will attract new value-added investments which will bring much-needed jobs and prosperity to the province. The Resource Diversification Council is confident that APIP will garner international attention and thanks the Government of Alberta for its collaborative approach in developing a meaningful and world-class investment attraction program.”
“The Alberta Petrochemicals Incentive Program will help bring much-needed investment to the Edmonton Metropolitan Region, diversify our petrochemical sector, create jobs, and boost our economic recovery. This program is great news for our many energy producers, processors, fertilizer producers, and the construction and service companies who work closely alongside them.”
Projects eligible for the program must have:
- A minimum $50 million in capital investment
- Consume natural gas, natural gas liquids or petrochemical intermediaries
- Create new and permanent jobs in Alberta
- Meet the federally set definition of a manufacturing and processing facility
There is no cap to the program, but the government will report on expected costs each fiscal year, based on applications received and projects approved.
Full details on the eligibility and requirements for projects are available on alberta.ca, where companies can also register to begin the application process.
Alberta is already among Canada’s largest hubs for petrochemicals manufacturing, and global demand for petrochemical derived products is expected to continue increasing. The COVID-19 pandemic has also shown the continued need for petrochemicals to support the development of personal protective equipment, plastic food packaging and cleansing agents. A growing petrochemical industry will continue to feed into these integral products.
Alberta’s Recovery Plan is a bold, ambitious long-term strategy to build, diversify, and create tens of thousands of jobs now. By building schools, roads and other core infrastructure we are benefiting our communities. By diversifying our economy and attracting investment with Canada’s most competitive tax environment, we are putting Alberta on a path for a generation of growth.
- The program was developed based on best practices in competing jurisdictions, including several American states with large petrochemical industries. The program was also refined with the input of stakeholders and interested companies.
- Alberta has the lowest corporate tax rate in Canada at eight per cent, and compares favourably with the lowest tax rates in the United States.
- Alberta has one of the most established petrochemical industries in Canada, with potential growth in existing centres like Alberta’s Industrial Heartland, Grande Prairie, Joffre and Medicine Hat.
- Every day, people around the world use dozens of products that are made with petrochemicals, including:
- Medical supplies, such as computers for X-rays and MRIs and personal protective equipment, including disposable masks and gloves
- Polyester fabric couches, HD televisions, phones, bicycle helmets, coffee makers and computers
- Car tires, engine hoses, gasoline, radio components and AUX cords, and car seats
- Desks, chairs, computers, carpets, cellphones and other office supplies
- Food packaging that keeps food fresh and safe during transport and storage
- According to the Chemistry Industry Association of Canada, Alberta’s chemicals sector, comprised predominantly of petrochemicals, was valued at $12.1 billion and employed about 58,400 people directly and indirectly in 2019.