Alberta
How natural gas supports one of Canada’s largest manufacturing sectors
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Worker inspecting parts from plastic injection moulding machine in plastics factory. Getty Images photo
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.
Alberta
Open letter to Ottawa from Alberta strongly urging National Economic Corridor
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Canada’s wealth is based on its success as a trading nation. Canada is blessed with immense resources spread across a vast country. It has succeeded as a small, open economy with an enviable standard of living that has been able to provide what the world needs.
Canada has been stuck in a situation where it cannot complete nation‑building projects like the Canadian Pacific Railway that was completed in 1885, or the Trans Canada Highway that was completed in the 1960s. With the uncertainty of U.S. tariffs looming over our country and province, Canada needs to take bold action to revitalize the productivity and competitiveness of its economy – going east to west and not always relying on north-south trade. There’s no better time than right now to politically de-risk these projects.
A lack of leadership from the federal government has led to the following:
- Inadequate federal funding for trade infrastructure.
- A lack of investment is stifling the infrastructure capacity we need to diversify our exports. This is despite federally commissioned reports like the 2022 report by the National Supply Chain Task Force indicating the investment need will be trillions over the next 50 years.
- Federal red tape, like the Impact Assessment Act.
- Burdensome regulation has added major costs and significant delays to projects, like the Roberts Bank Terminal 2 project, a proposed container facility at Vancouver, which spent more than a decade under federal review.
- Opaque funding programs, like the National Trade Corridors Fund (NTCF).
- Which offers a pattern of unclear criteria for decisions and lack of response. This program has not funded any provincial highway projects in Alberta, despite the many applications put forward by the Government of Alberta. In fact, we’ve gone nearly 3 years without decisions on some project applications.
- Ineffective policies that limit economic activity.
- Measures that pit environmental and economic objectives in stark opposition to one another instead of seeking innovative win-win solutions hinder Canada’s overall productivity and investment climate. One example is the moratorium on shipping crude through northern B.C. waters, which effectively ended Enbridge’s Northern Gateway proposal and has limited Alberta’s ability to ship its oil to Asian markets.
In a federal leadership vacuum, Alberta has worked to advance economic corridors across Canada. In April 2023, Alberta, Saskatchewan and Manitoba signed an agreement to collaborate on joint infrastructure networks meant to boost trade and economic growth across the Prairies. Alberta also signed a similar economic corridor agreement with the Northwest Territories in July 2024. Additionally, Alberta would like to see an agreement among all 7 western provinces and territories, and eventually the entire country, to collaborate on economic corridors.
Through our collaboration with neighbouring jurisdictions, we will spur the development of economic corridors by reducing regulatory delays and attracting investment. We recognize the importance of working with Indigenous communities on the development of major infrastructure projects, which will be key to our success in these endeavours.
However, provinces and territories cannot do this alone. The federal government must play its part to advance our country’s economic corridors that we need from coast to coast to coast to support our economic future. It is time for immediate action.
Alberta recommends the federal government take the following steps to strengthen Canada’s economic corridors and supply chains by:
- Creating an Economic Corridor Agency to identify and maintain economic corridors across provincial boundaries, with meaningful consultation with both Indigenous groups and industry.
- Increasing federal funding for trade-enabling infrastructure, such as roads, rail, ports, in-land ports, airports and more.
- Streamlining regulations regarding trade-related infrastructure and interprovincial trade, especially within economic corridors. This would include repealing or amending the Impact Assessment Act and other legislation to remove the uncertainty and ensure regulatory provisions are proportionate to the specific risk of the project.
- Adjusting the policy levers that that support productivity and competitiveness. This would include revisiting how the federal government supports airports, especially in the less-populated regions of Canada.
To move forward expeditiously on the items above, I propose the establishment of a federal/provincial/territorial working group. This working group would be tasked with creating a common position on addressing the economic threats facing Canada, and the need for mitigating trade and trade-enabling infrastructure. The group should identify appropriate governance to ensure these items are presented in a timely fashion by relative priority and urgency.
Alberta will continue to be proactive and tackle trade issues within its own jurisdiction. From collaborative memorandums of understanding with the Prairies and the North, to reducing interprovincial trade barriers, to fostering innovative partnerships with Indigenous groups, Alberta is working within its jurisdiction, much like its provincial and territorial colleagues.
We ask the federal government to join us in a new approach to infrastructure development that ensures Canada is productive and competitive for generations to come and generates the wealth that ensures our quality of life is second to none.
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Devin Dreeshen
Devin Dreeshen was sworn in as Minister of Transportation and Economic Corridors on October 24, 2022.
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