Sometimes all it takes is being the right place at the right time. With $100 billion in potential petrochemical investment, Edmonton is that place – and the time is now.
The biggest economic news to hit the region in years was last year’s Dow Chemicals announcement to build a net-zero ethylene derivatives facility near Fort Saskatchewan. Rumoured to be in the range of $10 billion, the Dow facility is the first of its kind built in Canada in more than 20 years. This follows Inter Pipeline’s $4 billion investment, which will soon be fully operational.
This could be just the beginning. The Alberta government says it’s committed to increasing Alberta’s petrochemical sector by $30 billion by 2030.
Alberta, and the Edmonton region in particular, is uniquely positioned for petrochemical investment. First off, we have vast reserves of oil and natural gas that are cheaper than those in competing jurisdictions like the United States Gulf Coast. We have a skilled work force with experience in building major projects.
For companies pursuing projects with net-zero emissions, Alberta is the answer. We have the world’s largest CO2 pipeline and already boast one of the world’s first carbon capture fertilizer facilities. Shell’s Quest project has stored seven million tonnes of CO2 two kilometers under ground since 2015. Shell’s proposed Atlas Hub could store 10 times as much carbon as Quest.
Much of the optimism in petrochemicals can be attributed to good government policy. Alberta’s Petrochemical Incentive Program provides grants up 12 per cent of projects capital costs, paid out once the project becomes operational. This levels the playing field with places like the Gulf Coast – which is famous for offering generous incentives. The reality is, if we want to attract investment, we must compete. Alberta’s low corporate tax rate doesn’t quite get us there, unfortunately.
Also helpful is the federal government’s recently announced carbon capture, utilization and storage tax credit. The refundable CCUS investment tax credit will cover half the cost of equipment to capture carbon dioxide, and 37.5 per cent of the capital costs for transportation, storage and use of CO2 emissions. The federal budget also included a 60 per cent credit for investment in direct-air capture technologies to remove carbon from the atmosphere.
There’s a lot of work to be done but the future looks bright in Alberta’s petrochemicals sector. When demand for hydrogen inevitably picks up, we are poised to become a global exporter.
For so long Alberta has been maligned for the success of our energy industry. Now, we are part of the solution as the world pushes for decarbonization. That’s quite a turnaround.
The growth of Alberta’s petrochemicals industry will be the gift that keeps on giving for Alberta’s manufacturers. Billions in new investment will drive demand for pumps, gauges, pipes and electronics – all of which is manufactured locally.
We’ve experienced a lot of adversity in recent years. Growth in Edmonton’s petrochemicals sector provides a much-needed boost.
Canadian Manufacturers & Exporters (CME) is the voice of Canadian manufacturing. CME represents more than 2,500 companies who account for an estimated 82 per cent of manufacturing output and 90 per cent of Canada’s exports.