Chemistry industry needs federal engagement to win investment projects

April 26, 2017

As the Liberal government looks to attract considerably higher rates of foreign investment into innovative sectors with high growth prospects, more attention needs to be paid to Canada’s chemistry sector. Currently, there are more than $12 billion in investments representing four global scale chemistry projects awaiting decision by year’s end that would create hundreds of jobs, drive economic growth, and help the government reach its environmental targets. But, without the direct involvement of the federal government, Canada risks losing out on these, and future, foreign investment opportunities.

Globally, chemistry is a large, fast growing industry. In Canada, it is the fourth largest manufacturing sector with over $55 billion in annual shipments. Structured in highly efficient and consolidated clusters in areas like Sarnia, Ontario and Fort Saskatchewan, Alberta, the sector adds significant value to Canada’s energy and agricultural resources

Contrary to misconception, the industry is also highly supportive of climate action. Since 1992, Responsible Care® — the industry’s sustainability initiative — has driven significant improvements in the environmental performance of the sector, including the reduction of absolute greenhouse gas (GHG) emissions by 68 per cent and a decrease in the release of toxic substances by 86 per cent. In turn, the industry is also the central solutions provider for innovative emissions reductions activities in other sectors, including transportation, buildings and agriculture.

Unfortunately, despite the industry’s proven track record in providing jobs and improving environmental performance, Canada has struggled to win new investment opportunities. Over the past five years, more than 300 global scale projects worth over $US 250 billion have been completed, are underway, or have been announced in North America, with 70 per cent of those representing foreign direct investment. Nearly all those investments, have occurred in the United States. Canada is lagging far behind its historical 40-year performance which traditionally saw our country capture a 10 per cent share of all North American chemistry sector investments. Canada should have had at least 30 global scale investments worth over $30 billion, unfortunately we’ve seen less than a two per cent share.

Despite limited success to date, Canada does have many of the key ingredients for investment success in place – established and integrated clusters, a talented workforce, access to low-carbon, cost-advantaged feedstock, and proximity to key markets. The Governments of Ontario and Alberta have identified this economic potential and have taken the lead in attracting billions in investments through Ontario’s $2.7 billion Jobs and Prosperity Fund which identified chemistry as a priority sector and Alberta’s Petrochemicals Diversification Program which attracted 16 proposals worth over $20 billion. Currently, there are two projects in Sarnia and two in Fort Saskatchewan with a total value of over $12 billion that are targeted for provincial investment support. Without sustained federal engagement, these projects face steep odds.

The potential for Canada’s chemistry industry is well aligned with the government’s economic growth objectives. If the Government of Canada engages today to help win existing investment opportunities, it could open the door for $10 to $20 billion in new investments in the years ahead.