On January 19, Bob Masterson, President and CEO of the Chemistry Industry Association of Canada, participated in the annual stakeholder luncheon held by the Alberta Industrial Heartland Association. The purpose of the luncheon was to take stock of 2016, discuss future opportunities for investment in Alberta, and provide attendees with updates on industrial development. Masterson spoke about the state of Canada’s chemistry industry as well as the global petrochemical sector in his presentation, Navigating Choppy Waters.
Masterson noted that global chemical production continues to grow, outpacing global GDP. In 2015 chemical sales totaled more than US$4 trillion, and analysts expect the figure to exceed $5 trillion by 2020.
“This should come as no surprise,” said Masterson. “Chemical demand is closely linked with population growth, societal development, and the needs and aspirations of a modern, growing middle class.”
But it is the U.S. that is benefitting from much of this growth, added Masterson. In the past five years, the U.S. has initiated more than 250 projects in the chemistry industry with a book value of almost CA$250 billion. Unfortunately, Canada has seen only 1 percent of this project value. This has been due to overly complex carbon pricing initiatives, indecision on energy infrastructure projects, and more.
But there is hope. A report published by the Canadian Energy Research Institute last year found that Canada can compete with the U.S. on a level playing field. This is where Alberta has been leading the way.
“Alberta is the one jurisdiction that gets it and is being creative to attract a greater share of value-added chemistry sector investment,” said Masterson. Late last year Alberta announced the two projects selected under the $500 million petrochemical diversification program, which should translate into more than $6 billion in private sector capital expenditures in the next few years. That’s a tremendous return on investment.
This initiative complements the more than $800 million provided under the previous provincial enhanced ethane extraction program, which realized significant increases to existing capacity utilization and investments in the province.
Alberta also seems intent on developing a greenhouse gas management approach that is capable of recognizing, rather than punishing, those firms that have invested in high-performing assets in recent years.
Masterson ended his presentation with a call to action. “If Canada is to survive and thrive during the next U.S. administration, we cannot continue to be indifferent to the deterioration of our investment competitiveness… If we are to safely navigate the increasingly choppy waters of the global economy during this period of change and uncertainty, we will need to be bullish.”
Masterson’s full speech is available here.