Varcoe: Kenney in no hurry to scrap NDP’s petrochemical incentives

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With the downturn in the province’s energy sector and problems getting Alberta’s oil and natural gas to market, expanding the petrochemical sector has taken on increased importance.

The development of the Montney and Duvernay formations, with large supplies of liquids-rich gas, has created additional opportunities to grow Alberta’s petrochemical sector, adding value to its raw resources.

However, investments in building massive petrochemical complexes often hinge on governments offering subsidies or tax breaks.

In 2016, the former Notley government introduced the first round of its Petrochemical Diversification Program (PDP), providing $500 million in royalty tax credits to attract an estimated $8 billion of investment into two new plants in Sturgeon County.

Both facilities are now under construction and will eventually turn propane into higher-value polypropylene used in making plastic products.

The NDP launched the program’s second round last year, offering up to $1.1 billion in future royalty credits. The province received 23 applications, although only two announcements were made before the spring election.

The Notley government also expanded its energy diversification efforts, looking to provide $3.6 billion in grants, loan guarantees, royalty credits and other subsidies for new natural gas infrastructure, partial upgrading plants and other petrochemical facilities.

The UCP, previously cool to the idea of doling out subsidies to select companies, has softened its tone on offering incentives to the industry in recent months.

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