Dow Chemical has paused construction on its $11.6-billion net-zero petrochemical project northeast of Edmonton due to the uncertain economic state of the world.
The company said Thursday it is delaying construction of its Path2Zero project in the Industrial Heartland to match market conditions, which Dow said should save the company about $1 billion.
The Dow project involves an expansion and retrofit of Dow’s existing manufacturing site along the North Saskatchewan River north of Fort Saskatchewan.
The project was to include the building of a new hydrogen-fuelled ethylene cracker, as well as carbon capture and off-site sequestration.
“Dow is reprofiling the spending and pace of significant portions of the project as low GDP growth continues to impact our industry. The increased macroeconomic and geopolitical volatility are expected to persist in the near-term,” the company said in a statement to Global News.
“As a result, we are slowing down field mobilization to match market timing and preserve cash until we see demand conditions improve.”
A rendering of the Dow Chemical Path2Zero net-zero petrochemical project in the Industrial Heartland.
Credit: Dow Chemical
It’s not surprising amid the ongoing tariff moves being made by U.S. President Donald Trump and how the world markets have responded, according to economic experts.
“The Trump tariffs have thrown a wrench into a lot Canadian business plans where you have to make decisions that will have consequences for decades to come,” said Concordia University economist and Alberta resident Moshe Lander.
“When you’re seeing the market go up and down, when you don’t know where the tariffs are coming or going, you can imagine, then, a business is going to say, ‘Wait, I want to sit this one out and make sure that what I think is a profitable investment is going to be a profitable investment’ — and when you have the White House doing 180s on a day-to-day basis and then sometimes that 180 is doubling down on something they said previously, his is not at all surprising.
“These are some of the consequences of tariff wars beyond just what it might mean for consumers.”
The project was first announced in 2021, given the go-ahead after being fully financed in 2023, and construction began in 2024. The first phase was set to start up in 2027 and the second in 2029.
Dow said it will complete home office (engineering and procurement) work to enhance construction readiness and in the coming weeks, the project’s leadership will take time to look at the impact of the decision to pause further work.
“The long-term strategic rationale of the Path2Zero project remains strong and we are committed to completing this project,” Dow said in its statement Thursday.
Lander said that statement should be taken with a grain of salt.
“What are they going to say? ‘We’re only committed if things work out well, otherwise thanks but no thanks?’ Of course they have to say, because in the event that they do proceed, they need to have the goodwill of the provincial government, of the local population, and of workers that would want to come work for a company that has to sunshine and happiness. Not negativity and pessimism,” he said.
When announced two years ago, Dow’s Path2Zero facility was billed as the world’s first net-zero Scope 1 and 2 greenhouse gas emissions-integrated ethylene cracker and derivatives site.
The project aimed to convert cracker off-gas into hydrogen as a clean fuel to be used in ethylene production. Carbon dioxide was to be captured on-site and then transported to be stored by adjacent partners.
The project was expected to increase the U.S. chemical company’s polyethylene capacity by two million tonnes per year and decarbonize its global ethylene capacity by 20 per cent.
Lander said with all the oil and gas knowledge and expertise accumulated in Alberta over the past century, a project of this nature would have been a great step in advancing the industry in the net-zero direction the world is moving.
“This is the type of thing that would be great for Alberta, great for the capital region, but it’s also one of those things that its circumstances beyond our control, and there’s only so much politicking that the premier can do,” Lander said.
“There’s only so many trips she can make on taxpayer money down to the U.S. to try and elicit some sort of exemption, and there’s so much threatening she can do of the federal government, whichever party it is.”
Lander said Dow’s move may prompt companies involved in less profitable or riskier endeavours to follow suite in pausing plans.
“Projects could get cancelled, that might have been in the offing, or existing projects might get suspended on the grounds that there was an assumption maybe something was going to happen in the marketplace that is no longer happening,” Lander said.
“It has consequences that reverberate beyond just this one project.”
The Alberta government said the Dow facility would produce 3.2 million metric tonnes of polyethylene and ethylene derivatives.
It was to provide up to 8,000 jobs during construction and 500 full-time jobs one it opened. Lander predicts the project will only resume if the global economy becomes more stable.
“The reality is at the end of the day, it’s a for-profit firm. What speaks louder to me than anything else is not some press release, but the bottom line is the financials,” Lander said.
“If there’s no profits to be had, I can guarantee you they are no more committed to Edmonton than to any other place in North America.”
Two federal tax credits — the carbon capture, utilization and storage investment tax credit as well as the clean hydrogen investment tax credit — were to provide up to $400 million in support of the project and were delivered upfront “to get shovels in the ground,” MP Chrystia Freeland said at the time in 2023.
The province also provided a 12 per cent grant worth $1.8 billion to the project through the Alberta Petrochemicals Incentive Program.
The energy minister’s office said the pause is a business decision and all related questions should be directed to Dow.
“We are encouraged to hear that Dow continues to see this as a key corporate priority and that construction work remains ongoing, even if they are slowing down construction at the Path2Zero growth project in 2025,” the province said, adding the the project is very important for Alberta and the economy.
Last May, Canadian Utilities Ltd., a subsidiary of Calgary-based holding company ATCO Ltd., announced plans to build a new, $2-billion pipeline to supply natural gas to the Path2Zero facility.
The project was to be the largest-ever energy infrastructure project by an ATCO Energy Systems company.
The new pipeline, called Yellowhead Mainline, will be around 200 km long and will run from the hamlet of Peers in west-central Alberta to the northeast Edmonton area.
It was expected to have the capacity to deliver one billion cubic feet per day of natural gas.
Construction on the new pipeline was expected to begin in 2026, Canadian Utilities said, with the aim to be operational in the fourth quarter of 2027.
Global News has reached out to ATCO to find out if Dow’s decision to halt construction will also affect the Yellowhead Mainline. This story will be updated if a response is received.
— with files from Amanda Stephenson and Bill Graveland, The Canadian Press