November 8, 2019

10 Ideas to Ignite Alberta’s Economy

A strong economy is a common indicator of prosperity. Alberta’s economy has been struggling since the oil price crash in 2014. Since 2013, Alberta’s per capita GDP has fallen 3.8%, which is by far the worst performance of all the Canadian provinces.

There are no overnight solutions to these challenges. Long-term challenges require long-term policy. Much work is required to turn around the economy to enable both economic and social prosperity, both now and for generations to come.

So, what can we do in the short-term to kickstart and infuse some desperately needed energy and life into the Alberta economy?

Recently the Business Council of Alberta (BCA) met with the Provincial Government to present a list of 10 ideas that could help re-energize the economy in a relatively short period of time—months, not years. Here’s the list:

Economic Climate

1. Fast-track the business regulatory approval and permitting process by adopting the Nexus-style pass program

The report of the Blue Ribbon Panel on Alberta’s Finance (the MacKinnon Report), released in September, recommended and outlined a program that would accelerate the approval of regulatory compliance and permitting for trusted businesses. Many of Alberta’s long-standing and high-performing companies applauded this idea. Adopting it as quickly as possible would reduce the regulatory compliance burden without actually softening the regulations themselves, helping to rapidly accelerate investment, create meaningful jobs and increase economic activity in the province.

Read More: The Big Idea Most People Missed in the McKinnon Report


2. Support development on transporting bitumen in a solid state

CN Rail is collaborating with InnoTech Alberta to create CanaPux, an innovative technology that creates a safe way to transport bitumen in a solid state. This technology could mean that Alberta crude can reach new markets without additional investments in pipeline capacity, while at the same time alleviating concerns about environmentally damaging oil spills. We recommend further support in the development and trade of this technology.

3. Permit crude-by-rail shipments above curtailment volumes for exported oil

In December 2018, the Provincial Government announced curtailment rules for oil production to reduce the price gap between Alberta crude and Western Texas Intermediate caused in part by limited market access. While this program has helped to narrow the price differential, many producers have struggled as a result and are looking for an opportunity to expand production. Allowing companies to produce above curtailment caps as long as they can ship those additional barrels by rail will spur investment in the energy sector and ensure oil price gaps remain stable.

Read More: Alberta will let producers hike oil output if companies add rail shipments

4. Support continued investment in natural gas infrastructure

Alberta can spark economic growth and make a significant contribution to lowering global greenhouse gas emissions by accelerating developing of its natural gas resources. Natural gas is cost-effective, a reliable backstop for renewable energy and is significantly cleaner than coal which powers a significant share of electricity generation in Asia. The provincial government could provide credit support and infrastructure backstopping for non-investment grade gas and natural gas liquids (NGL) producers. This would mitigate credit-related risks associated with smaller gas producers and encourage expansion into rural, Indigenous, and remote communities.

5. Accept the Canadian Association of Petroleum Producers (CAPP) recommendation to change the royalty calculations for bitumen, specifically the Bitumen Valuation Methodology, to enable greater investment in partial upgrading in Alberta

Changes to royalty calculations for bitumen in 2007 and 2015 have stalled the development of partial upgrading in Alberta. Through CAPP, the industry has proposed changes to the non-market-based calculation of the Bitumen Valuation Methodology (BVM). These changes could result in significant new oil sands investment over the next decade, and result in additional upgrading capacity, reduce transportation bottlenecks lower GHG emissions (through decreased diluent use) and create thousands of new jobs in Alberta.   

Technology and Innovation

6. Ensure appropriate investment incentives exist to attract and retain technology and innovation activity in the province

The provincial government should provide a suitable replacement for the Alberta Investor Tax Credit (AITC) to address and improve the competitiveness and attractiveness of the technology and innovation sector. The replacement should be more broadly applied and administratively streamlined.

Read More: Five business tax credits scrapped; UCP abandons targeted programs in favour of lower corporate taxes

As a potential replacement to the AITC, the government should explore implementing a Flow Through Share (FTS) financing option for Alberta’s technology companies. This will help tech companies access and raise the capital needed to grow while mitigating some of the risk to private sector investors.

7. Preserve Alberta’s global competitive advantage in artificial intelligence

Currently, Edmonton is one of the top locations in the world for artificial intelligence expertise, research, and activity. We recommend supporting this emerging advantage and competitive edge for Alberta by continuing to invest in areas such as Alberta Machine Intelligence Institute (AMII), business-driven AI collaboration, and additional research activity.


8. Implement a program to support plant protein processing capacity within Alberta

Global demand for plant proteins is rapidly increasing. As home to one of the world’s finest environments to produce high-quality plant proteins (lentils, chickpeas, soybeans, etc.), Alberta should develop an incentive program to build plant processing facilities to take advantage of this growing opportunity and enhance the province’s competitiveness and marketability of the agriculture sector.

9. Introduce a progressive tax structure for Alberta-produced ciders and ready-to-drink products, like the structure recently introduced for beer production

Until recently, Alberta beer producers were disincentivized from growing because once their production reached certain output thresholds, the entire volume of beer produced was subject to a higher tax rate. However, with recent changes in the tax structure, the higher tax rate only applies on the incremental volumes of production above the threshold. This change, however, was not applied to cider or other ready-to-drink products. Extending the change to these products would increase Alberta-based production, leading to increased investment and job creation.


10. Rehabilitate Alberta’s forests, creating jobs and carbon sinks

Much of Alberta’s forests have been lost to the Mountain Pine Beetle infestation. Starting with provincial and national parks, rehabilitating forests affected by this infestation creates opportunities for new jobs, particularly in harvest and plantation. A rehab program will also deliver a major environmental gain as it will result in new growth forests which create carbon sinks, absorbing more carbon from the air than older (or infested) forests. This program could then be expanded beyond protected park boundaries.

The work on this list has already begun. In November 2019, the Provincial Government announced that Alberta energy producers could increase oil output if there were guarantees the increased production could be shipped by rail. This allowance has the potential to remove the barriers and limits to investment and growth in Alberta’s energy industry. This is a strong policy that we have advocated for and are very encouraged by the news. This is a positive step towards getting more Albertans working.

Active work is also underway on several of these other policy ideas, with results coming soon.

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