Dow Chemical announces $11.5-billion project in Alberta

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Dow Chemical Inc. DOW-N is set to begin an $11.5-billion facelift and expansion of its Edmonton-area chemicals plant next year, with the company claiming the facility will be the world’s first ethylene cracker that produces net-zero greenhouse emissions.

An ethylene cracker is an industrial facility that converts fossil fuels into usable products. The project will vastly grow Dow’s ability to produce polyethylene, typically used for plastic bags and food containers. The company will take advantage of billions of dollars in government support, through incentives and subsidies, to fund construction on the site in Fort Saskatchewan, Alta., even as Ottawa continues its fight to ban some single-use plastics.

Dow itself was one of several companies that jointly brought a court challenge against the ban, and eventually won a Federal Court ruling that struck down a cabinet order underlying the measure. The government has vowed to appeal.

Even so, Deputy Prime Minister and Finance Minister Chrystia Freeland was in Alberta, her home province, on Wednesday to mark the announcement alongside Alberta Premier Danielle Smith and Dow chair and chief executive Jim Fitterling.

Ms. Freeland lauded the project as a job-creation boon, and proof that Ottawa’s economic plan is helping Canada lead the way as the global economy moves toward net zero.

“Today is a great day for the whole world,” she said.

The federal government will contribute up to $400-million to the project through tax credits for carbon capture and clean hydrogen investments, she added.

“We all want to reduce pollution,” she said when asked why the federal government is subsidizing Dow’s operation while still pursuing a ban on some single-use plastics.

“The path forward for Canada is a path where we have economic growth and reduction in emissions,” she continued. “This project is the embodiment of the future of Canada – which is, we have a growing economy, we have more great-paying jobs and at the same time we’re reducing pollution and we’re reducing emissions.”

Alberta’s financial contribution, through its own tax credit programs, could be as high as $1.8-billion, Ms. Smith said.

The province has been an important manufacturing hub for Dow for more than 60 years, Mr. Fitterling, the Dow CEO, told reporters. He noted that local, provincial and federal government support was a major factor in the company’s decision to make the investment in Fort Saskatchewan.

Dow will spend $8.9-billion on the project, Mr. Fitterling said. He added that other companies are expected to contribute another $2.7-billion toward building infrastructure critical to the project.

Plastics from the site are already recognized for their “environmental and social advantages,” he said, adding that their greenhouse-gas footprint is typically less than half that of alternative materials. Dow intends to “take that to zero,” he said.

Johan Foster, a professor at the University of British Columbia’s department of chemical and biological engineering, said greening production of plastics is a positive step. But he added that Canada should still invest more in developing alternatives to fossil-fuel-based materials.

He said he does not think Ottawa’s support for Dow’s project is hypocritical. He noted facilities such as the one in Fort Saskatchewan enable the production of plastic items that aren’t single use, including rope and body armour.

“It is not so black and white,” Mr. Foster said. “There’s a lot of uses that we haven’t found a better solution for.”

Construction is scheduled to begin next year. The first phase of the project would come online in 2027 and the second in 2029. The company expects the project to create up to 500 permanent jobs, and up to 8,000 more at the peak of construction.

Dow said in a news release that the new complex will be one of the company’s most cost-competitive sites in the world, because of the availability of low-cost natural gas and ethane, key production feedstocks.

The region also has access to existing carbon dioxide transportation and storage infrastructure, which would help the company decarbonize the project using carbon capture, utilization and sequestration technology. The company plans to use clean hydrogen produced at the complex as a fuel supply for the site’s furnaces.

Combined, those measures would reduce Dow’s emissions in Fort Saskatchewan by about one million metric tonnes of carbon dioxide per year, according to the company. Dow says this would effectively decarbonize about 20 per cent of its global ethylene capacity.

Dow says the project will enable it to satisfy growing customer demand in high-value markets such as packaging, infrastructure and hygiene. The company also hopes to make money by commercializing low- and zero-emissions products.