How natural gas supports one of Canada’s largest manufacturing sectors

From the Canadian Energy Centre

‘When you think about the demand for more sustainable outcomes: clean air, clean water, clean energy, safe, nutritious, abundant food and electric vehicles, that’s more and more and more chemistry’

Canada’s chemical industry sold a record $72.7 billion of product last year amid recovery from COVID-19 and strong consumer demand, according to the Chemistry Industry Association of Canada (CIAC).

Natural gas is a key input to the chemistry sector, the broad term that refers to manufacturing a myriad of products used in everyday items from plastics to agriculture and pharmaceuticals.

“Chemistry products go into 95 per cent of finished goods. It’s an important sector,” says CIAC president Bob Masterson.

“It’s a sector that can grow as long as we fancy improving our lives and building a better world for tomorrow.”

Chemicals in Canada

Canada’s chemistry industry is the country’s fourth largest manufacturing sector by value of sales after food ($147 billion), transportation equipment ($119 billion), and petroleum/coal products ($118 billion).

It is primarily centered in Ontario, Alberta and Quebec.

The CIAC publishes an annual report on the sector’s activity using Statistics Canada data, separated into two categories: chemicals overall, and industrial chemicals.

Chemicals overall includes manufacturing of soaps, cleaning compounds, paints, coatings and adhesives, pesticides and fertilizers, pharmaceuticals, rubbers and synthetic fibres, and basic chemicals.

Industrial chemicals refers to the manufacturing of intermediate products used as inputs by industries including plastic and rubber products, forest products, transportation equipment, clothing, perfume and cosmetics, construction and pharmaceuticals.

Global Growth

According to Vantage Market Research, the global chemical market was valued at US$584 billion in 2022. It’s expected to grow by more than 55 per cent in the coming years to reach US$917 billion by 2030.

This isn’t just driven population growth, Masterson says.

“When you think about the demand for more sustainable outcomes: clean air, clean water, clean energy, safe, nutritious, abundant food and electric vehicles, that’s more and more and more chemistry,” he says.

“Some of the predictions are that the volumes of chemistry will double in the next 20 years. Canada and Alberta in particular are exceptionally well positioned to help meet future market demand for these products. The demand is not going away. There’s no question about that.”

Jobs

In 2022, Canada’s chemicals sector directly employed 90,800 people, or approximately the population size of Sudbury, Ontario. The industry paid about $7 billion in salary and wages.

That’s the direct impact of employment in the chemistry sector, but the CIAC estimates the full benefit to Canadians to be much higher as a result of indirect economic activity it supports.

CIAC estimates that every job in Canada’s chemistry sector creates another five indirect jobs in other parts of the economy. This means the sector supported 454,000 jobs across Canada in 2022.

Industrial chemicals alone directly employed 17,100 people and indirectly supported 85,600 jobs in the broader Canadian economy last year, the CIAC says.

Rising Trade

At a value of $72.7 billion, Canada’s overall chemical industry sales were their highest ever in 2022 – a 30 per cent increase compared to 2019, prior to the COVID-19 pandemic.

Industrial chemicals sales reached a record $34.2 billion, a 32 per cent increase compared to 2019.

Exports also increased last year, rising to a value of $52.8 billion compared to $45.9 billion in 2021. Of that, the sector exported $24.8 billion of industrial chemicals, up from $22.5 billion the previous year.

The United States is Canada’s main customer for chemical exports, representing 76 per cent of exports or $40.1 billion in 2022. The next largest export markets are China ($1.86 billion), the Netherlands ($1.7 billion), and the United Kingdom ($1.1 billion).

The Canada Advantage

Canada has distinct advantages as a chemical manufacturer and exporter including growing access to global markets, CIAC says.

In Alberta, the main advantage is access to low-cost natural gas resources – specifically valuable natural gas liquids like ethane, propane and butane.

“The rich abundance of natural gas liquids that come out of the ground when we drill for natural gas let Alberta be a low-cost chemistry producer despite being pretty much the only large chemistry industry worldwide that’s not on tidewater,” Masterson says.

Responsible Care

Since 1985, Canada’s chemistry industry has operated under an initiative called Responsible Care that encourages companies to innovate for safer and greener products.

CIAC reports that Responsible Care is now practiced in 73 countries and by 96 of the 100 largest chemical producers in the world.

Since 2005, CIAC members have reduced CO2 equivalent emissions by 13 per cent; reduced sulphur dioxide emissions by 94 per cent, and virtually eliminated large scale safety incidents. Since 2012, CIAC members have also reduced net water consumption by 13 per cent.

“We’re not standing in place,” Masterson says.

Related Topics:#Canada'sBestWashroom #Canada'sChemicalIndustry #CanadianEnergyCentre #CIAC #DeborahJaremko #NaturalGas

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Alberta

Low oil prices could have big consequences for Alberta’s finances

Published on April 26, 2025

Todayville

From the Fraser Institute

By Tegan Hill

Amid the tariff war, the price of West Texas Intermediate oil—a common benchmark—recently dropped below US$60 per barrel. Given every $1 drop in oil prices is an estimated $750 million hit to provincial revenues, if oil prices remain low for long, there could be big implications for Alberta’s budget.

The Smith government already projects a $5.2 billion budget deficit in 2025/26 with continued deficits over the following two years. This year’s deficit is based on oil prices averaging US$68.00 per barrel. While the budget does include a $4 billion “contingency” for unforeseen events, given the economic and fiscal impact of Trump’s tariffs, it could quickly be eaten up.

Budget deficits come with costs for Albertans, who will already pay a projected $600 each in provincial government debt interest in 2025/26. That’s money that could have gone towards health care and education, or even tax relief.

Unfortunately, this is all part of the resource revenue rollercoaster that’s are all too familiar to Albertans.

Resource revenue (including oil and gas royalties) is inherently volatile. In the last 10 years alone, it has been as high as $25.2 billion in 2022/23 and as low as $2.8 billion in 2015/16. The provincial government typically enjoys budget surpluses—and increases government spending—when oil prices and resource revenue is relatively high, but is thrown into deficits when resource revenues inevitably fall.

Fortunately, the Smith government can mitigate this volatility.

The key is limiting the level of resource revenue included in the budget to a set stable amount. Any resource revenue above that stable amount is automatically saved in a rainy-day fund to be withdrawn to maintain that stable amount in the budget during years of relatively low resource revenue. The logic is simple: save during the good times so you can weather the storm during bad times.

Indeed, if the Smith government had created a rainy-day account in 2023, for example, it could have already built up a sizeable fund to help stabilize the budget when resource revenue declines. While the Smith government has deposited some money in the Heritage Fund in recent years, it has not created a dedicated rainy-day account or introduced a similar mechanism to help stabilize provincial finances.

Limiting the amount of resource revenue in the budget, particularly during times of relatively high resource revenue, also tempers demand for higher spending, which is only fiscally sustainable with permanently high resource revenues. In other words, if the government creates a rainy-day account, spending would become more closely align with stable ongoing levels of revenue.

And it’s not too late. To end the boom-bust cycle and finally help stabilize provincial finances, the Smith government should create a rainy-day account.

Alberta

Governments in Alberta should spur homebuilding amid population explosion

Published on April 26, 2025

Todayville

From the Fraser Institute

By Tegan Hill and Austin Thompson

In 2024, construction started on 47,827 housing units—the most since 48,336 units in 2007 when population growth was less than half of what it was in 2024.

Alberta has long been viewed as an oasis in Canada’s overheated housing market—a refuge for Canadians priced out of high-cost centres such as Vancouver and Toronto. But the oasis is starting to dry up. House prices and rents in the province have spiked by about one-third since the start of the pandemic. According to a recent Maru poll, more than 70 per cent of Calgarians and Edmontonians doubt they will ever be able to afford a home in their city. Which raises the question: how much longer can this go on?

Alberta’s housing affordability problem reflects a simple reality—not enough homes have been built to accommodate the province’s growing population. The result? More Albertans competing for the same homes and rental units, pushing prices higher.

Population growth has always been volatile in Alberta, but the recent surge, fuelled by record levels of immigration, is unprecedented. Alberta has set new population growth records every year since 2022, culminating in the largest-ever increase of 186,704 new residents in 2024—nearly 70 per cent more than the largest pre-pandemic increase in 2013.

Homebuilding has increased, but not enough to keep pace with the rise in population. In 2024, construction started on 47,827 housing units—the most since 48,336 units in 2007 when population growth was less than half of what it was in 2024.

Moreover, from 1972 to 2019, Alberta added 2.1 new residents (on average) for every housing unit started compared to 3.9 new residents for every housing unit started in 2024. Put differently, today nearly twice as many new residents are potentially competing for each new home compared to historical norms.

While Alberta attracts more Canadians from other provinces than any other province, federal immigration and residency policies drive Alberta’s population growth. So while the provincial government has little control over its population growth, provincial and municipal governments can affect the pace of homebuilding.

For example, recent provincial amendments to the city charters in Calgary and Edmonton have helped standardize building codes, which should minimize cost and complexity for builders who operate across different jurisdictions. Municipal zoning reforms in Calgary, Edmonton and Red Deer have made it easier to build higher-density housing, and Lethbridge and Medicine Hat may soon follow suit. These changes should make it easier and faster to build homes, helping Alberta maintain some of the least restrictive building rules and quickest approval timelines in Canada.

There is, however, room for improvement. Policymakers at both the provincial and municipal level should streamline rules for building, reduce regulatory uncertainty and development costs, and shorten timelines for permit approvals. Calgary, for instance, imposes fees on developers to fund a wide array of public infrastructure—including roads, sewers, libraries, even buses—while Edmonton currently only imposes fees to fund the construction of new firehalls.

It’s difficult to say how long Alberta’s housing affordability woes will endure, but the situation is unlikely to improve unless homebuilding increases, spurred by government policies that facilitate more development.