The planned construction of a multi-billion dollar, net-zero petrochemical project near Edmonton will be delayed as chemical firm Dow Inc. looks to conserve cash amid unfavourable market conditions, the company said Thursday.
Dow’s Path2Zero facility — to be built in Fort Saskatchewan in Alberta’s Industrial Heartland — was first announced in 2021 and garnered financial backing from the federal and provincial governments in 2023.
The $8.9 billion carbon-neutral project was touted as the world’s first net-zero emissions integrated ethylene cracker and derivatives site. Its plans to boost production of ethylene involved constructing a new facility and retrofitting an existing plant.
Dow Inc. said on Thursday that it expects extended pressure on earnings as uncertainty from U.S. President Donald Trump’s erratic trade policies adds to macroeconomic volatility.
Construction will be delayed until market conditions improve, CEO Jim Fitterling said in a post-earnings call.
“This decision supports our near-term cash flow and adjusts the project timing to align with the market recovery,” Fitterling said. “We remain committed to the long-term strategic rationale of the project and the growth upside that it will enable in targeted applications like pressure pipe, wire and cable and food packaging.”
The company said it was focused on ensuring the project’s returns are higher than its capital cost. “And because of that, now is the time to delay construction before spending ramps up.”
With the project stalled, Dow expects its total enterprise capital expenditure for 2025 to be $2.5 billion, compared to its original plan of $3.5 billion.
Dow, along with other chemicals firms, has been struggling with higher feedstock and energy costs alongside weak demand and prices for its products, especially in markets such as Europe.
The company said it expects to see delays in purchase and investment decisions — from both consumers and corporations — until negotiations on tariffs are finalized.
Construction was to begin in 2024, with phase one expected to be completed by 2027 and phase two in 2029.
Dow committed to project
According to Dow spokesperson Sarah Young, site preparation work, including utilities, power and infrastructure has been underway since last year. Construction on administrative buildings is nearly done.
Young said the company intends to continue engineering and procurement work so the site is ready when construction gears up again.
“We will continue site preparation and foundations as cash flow allows, while working over the coming months to reprofile the project accordingly,” she wrote.
“We are committed to completing this project and working constructively with all our partners.”
The U.S.-based company said it chose Alberta for the project because it offers cost-competitive natural gas as well as cost advantage ethane, a key feedstock for ethylene production.
“Our industry is in one of the most protracted down cycles in decades,” Fitterling said.
“Now — with the uncertainty around where tariffs are going to land, with the impact that’s having on demand — that’s driving our lower for longer [earnings] outlook.”
The expansion project would have produced and supplied about three million tonnes of low to zero-carbon emissions polyethylene and ethylene derivatives for customers around the globe, according to Dow.
The Alberta Petrochemicals Incentive Program has committed approximately $1.8 billion to the project. The federal government will be contributing up to $400 million from Canada’s carbon capture, utilization and storage investment tax credit as well as the clean hydrogen investment tax credit.
A spokesperson for Energy and Minerals Minister Brian Jean said in a statement the government was encouraged to see Dow still considers the Path2Zero a “key corporate priority.”
“This project is very important for Alberta and our economy, and for proving that Alberta is the best place in the world to build low-emissions energy and petrochemical projects.”
‘Take a deep breath’
Officials in Fort Saskatchewan were taking a measured approach in reaction to the news.
Fort Saskatchewan Mayor Gale Katchur said that the project isn’t stopping, it’s just moving at a slower pace at the moment. She said she is worried that some people are incorrectly assuming the project is shut down for good.
“We have to give people assurances that the words that I am hearing from their site manager is that it is purely a slowdown in the construction,” Katchur said.
Katchur said adding extra months or a year onto the schedule for such a massive project isn’t significant.
Katchur’s assurances were echoed by Colin Fagnan, executive director of the Fort Saskatchewan and Lamont County Regional Chamber of Commerce.
“I don’t think that this is a project that can just be stopped,” he said. “This is something that involves many partners, including government.
“Even though there might be a slowdown, there’s just so much happening in our region that it’s really a proof of concept that yes, in Alberta, we can produce hydrogen, we can produce it at scale … I think that there’s a real appetite for this hydrogen abroad.”
One Alberta economist said he expects the delay will be short-lived as Dow waits to see how the project’s costs will be affected by the current economic uncertainty
However, it shouldn’t jeopardize the project in the long term, said Charles St.-Arnaud, chief economist with Alberta Central, a central banking facility and trade association for Alberta’s credit unions.
“Businesses are postponing investment, cancelling investment and that is what will be the biggest hit to the economy nationally,” he said.
“But when we see it here in Alberta … businesses are a lot more cautious than they were and they would rather be prudent than forging ahead and having bigger losses later.”
According to Young, there are 250 Dow employees and 1,200 contractors working at the site. No layoffs are currently being considered, she added.
