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Irina Slav

Irina Slav

Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.

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Alberta Unimpressed By Canadian Plastics Ban

Earlier this month, Canada’s federal government confirmed plans to ban several single-use plastic items by the end of next year as part of its efforts to cut the country’s carbon footprint in line with the Paris Agreement on Climate Change. In an ironic twist, the news came about the same time as Alberta, Canada’s oil and gas heartland, released a Natural Gas Vision and Strategy that leans heavily on petrochemicals. Some took the news about Ottawa’s plastics ambitions as a fresh blow to an industry already suffering more than its fair share amid the continuing pandemic and depressed demand for oil. It wasn’t even the plastic ban itself that angered some in the industry. It was another stipulation—that “plastic manufactured items” were to be designated as “toxic”, according to a report by Petroleum Economist’s Vincent Lauerman. Such a designation, critics said, could have a severely negative impact on future investments in plastics production.

Alberta has its own ambitions in this respect. Earlier this year, the provincial government released a Petrochemicals Incentive Program as part of its recovery plan for the pandemic. Slated to start this fall, the program focused on exactly what Ottawa’s plastics policies are threatening now: investments in more plastics production.

“While Alberta is already a Canadian leader in petrochemicals manufacturing, the sky is the limit for this sector’s benefits to our province,” Dale Nally, associate minister of natural gas and electricity, said in July. “Over the last 10 years, petrochemical investment in the United States reached $250 billion, more than 10 times what was invested in Canada. With our affordable 300-year supply of natural gas, technically skilled and educated workforce, and respected innovation and research sectors, Alberta is ready to seize the opportunity to become a global destination for petrochemical manufacturing, benefiting all Albertans.”

Related: Three Energy Stocks To Watch On Election Day

Canada is one of the five biggest natural gas producers in the world, and more than 66 percent of its natural gas output comes from Alberta. The Petrochemicals Inventive Program was one way to make better use of this abundance of natural gas, and the reaction of the provincial government to the federal ban was understandable. However, as federal environment minister Jonathan Wilkinson noted in response to the backlash, the six items to be banned are only a small portion of total plastics production in Canada.

Grocery bags, stir sticks, six-pack rings, single-use cutlery, and food containers are the items to be banned starting next year, as they tend to be difficult to recycle. This is indeed a small portion of the variety of plastic products used every day—not just in Canada but in the world. According to BP, all single-use plastics constitute 15 percent of overall plastics demand. Yet they are widely and frequently used items, and their removal from everyday life would affect the overall demand for plastics. 

The designation of toxicity does indeed seem like the bigger problem. Alberta hoped to attract billions in investments in its petrochemical industry over the next ten years thanks to its Petrochemical Incentive Plan. But few investors would be willing to invest in the production of something designated as toxic by the government. It just doesn’t have that nice ring that “clean energy”, for instance, has.

Luckly, the plan does not rely entirely on petrochemicals. It also involves the development of LNG projects, the very trendy hydrogen, and plastics recycling. It is still too early to say how much the plastics ban will affect the Alberta gas industry and its incentive plan over the long term. The drive to reduce the popularity of single-use plastics is a global one, and it may accelerate with time. This means that Alberta’s gas industry is not protected from other plastics bans in the future.

By Irina Slav for Oilprice.com

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