Dow to begin construction of $11.5-billion carbon neutral project at Fort Saskatchewan site in 2024

Petrochemical giant Dow Chemical is going big in its decarbonization efforts at its site in Fort Saskatchewan, Alta., with help from the provincial and federal governments.

Dow's board on Tuesday approved an investment in the $8.9-billion Path2Zero project as the chemical maker aims to become carbon neutral by 2050.

"The fact that we are here and that we do have a solid path forward is a testament of the ability for all involved to adapt in the face of shifting circumstances and to adjust as the economic conditions have changed," Jim Fitterling, Dow's chair and chief executive officer, said Wednesday morning in Fort Saskatchewan during a media conference. "That support along with the support from our Indigenous neighbours, the local community and an entire host of long-term strategic partners was crucial to our decision to invest here."

Alberta Premier Danielle Smith and Deputy Prime Minister Chrystia Freeland, among others, joined Fitterling in Fort Saskatchewan for the project's announcement.

Dow, which first revealed plans to make the site carbon neutral two years ago, plans to begin construction next year. Ottawa says the project will add 8,000 jobs during construction and between 400 and 500 full-time jobs when complete. Capacity additions are expected to come online in phases, with the first starting up in 2027 and would add around 1,285 kilotonnes per annum (KTA) of ethylene and polyethylene capacity.

The second phase, starting up in 2029, would add an additional 600 KTA of capacity.

Fitterling said Dow chose the Fort Saskatchewan production and manufacturing facility — the company has maintained the site since 1961 — because of "highly cost competitive natural gas as well as cost advantage ethane, a key feedstock for ethylene production" in western Canada as well as its capacity to support the project, and the region's access to existing carbon-dioxide transportation and storage infrastructure.

In all, the federal government says Dow and partner companies are slated to invest more than $11.5 billion to expand and retrofit the Dow facility in the bedroom community a few kilometres northeast of Edmonton.

The project includes building a new ethylene cracker and increasing polyethylene capacity by two million metric tonnes per annum.

Dow said the investment in the net-zero emissions facility is expected to deliver growth of $1 billion of core profit per year at full run rates.

The provincial government said in a news release it is providing about $1.8 billion in grants to the Dow project through its Alberta Petrochemicals Incentive Program. Ottawa said in a release it will provide up to $400 million toward the implementation of the clean technologies.

"This investment is a vote of confidence in Alberta," Smith said. "It reinforces the work that we have done to ensure our province is the best place in the country to invest and to do business. We have what the world needs, and I'm pleased to say that Dow has recognized that."

Freeland said the project is "the first of its kind in the whole world."

"It's the very first announced major project in Canada that is getting off the ground thanks to support from our investment tax credit for carbon capture, utilization and storage as well as our investment tax credit for clean hydrogen," she said.

Dow had said it aims to reduce its net annual carbon emissions by 15% by 2030 compared with its 2020 baseline and expects to be carbon neutral by 2050.

The company had signed a long-term supply agreement earlier this year with bio-conversion company New Energy Blue for plastic materials made from corn residue, as part of a move towards renewable energy sources for production.

With files from Reuters