Dow pauses plans to build 8.9B net-zero project in Alberta

Key Takeaways:

• Dow has postponed construction of its $8.9 billion Path2Zero project in Fort Saskatchewan, Alberta, citing current macroeconomic challenges and a focus on financial discipline. As a result, its 2025 capital expenditures are being reduced from $3.5 billion to $2.5 billion.
• Despite the delay, Dow remains committed to completing the world’s first net-zero Scope 1 and 2 emissions ethylene cracker and derivatives facility. The project will use technologies like hydrogen fuel, carbon capture, and cogeneration to decarbonize 20% of Dow’s global ethylene capacity and increase polyethylene production by 15%.
• When completed, the project is expected to generate 7,000–8,000 construction jobs and 400–500 permanent positions. It is also backed by substantial government support, including $1.8 billion from Alberta’s Petrochemicals Incentive Program and up to $400 million in federal tax credits for clean technologies.

The Whole Story:

Following a comprehensive review, Dow has decided to delay construction of its Path2Zero project in Fort Saskatchewan, Alberta, Canada until market conditions improve. The Company now expects Dow’s total enterprise 2025 CapEx to be $2.5 billion compared to its original plan of $3.5 billion.

In its first quarter results report, Dow stated remains committed to the project and the growth upside it will enable in targeted applications like pressure pipe, wire and cable, and food packaging. The project is being built at an existing Dow site in a significantly cost-advantaged region. It is expected to be a first quartile asset with attractive returns and the added benefit of being the world’s first net-zero Scope 1 and 2 emissions integrated ethylene cracker and derivatives facility.

“We remain focused on disciplined execution and increased actions to improve profitability and support cash flow,” said Jim Fitterling, Dow chair and CEO. “Despite ongoing macroeconomic challenges, Team Dow delivered a sixth consecutive quarter of year-over-year volume growth while taking actions to reduce costs and right-size capacity. The significant impact of slower GDP growth and volatile market conditions on our industry underscores the importance of our proactive management and best-owner mindset. Today’s announcements build on Dow’s cost actions that are already underway, aiming to further strengthen our financial flexibility and support a balanced capital allocation approach.”

In the results report, company officials noted net sales were $10.4 billion, down 3% year-over-year, reflecting declines in all operating segments. 

Edmonton builders react with disappointment

The local construction industry was quick to react, noting the impact it will have on workers and businesses.

“The Edmonton Construction Association is disappointed by Dow’s recent decision to delay construction of the Path2Zero project in Fort Saskatchewan,” said David Johnson, President, Edmonton Construction Association. “Our industry, and the skilled trades workers our members employ, had been hoping for different news. This has been billed as a world-leading, net-zero petrochemical facility, and at nearly $9B, it would be one of the most significant industrial investments in Alberta’s history.”

Johnson noted that the project had strong support from the Government of Alberta, industry, and, most importantly, from the skilled tradespeople of Alberta. This decision delays economic growth and employment in the Edmonton region. However he was encouraged by Dow’s reaffirmed commitment to the project.

“Projects of this scale require time, planning and perseverance. Final investment decisions aren’t made lightly and require the right market conditions, which are uncertain right now,” said Johnson. “There’s no question this decision will have an immediate impact on local contractors, skilled tradespeople, suppliers, and construction professionals who have been preparing to support the project.”

Path2Zero would be a world-first

The Path2Zero project is a pioneering industrial initiative located in Fort Saskatchewan, Alberta, within the province’s Industrial Heartland near Edmonton. Its central objective is to establish the world’s first net-zero emissions integrated ethylene cracker and derivatives site. This means the facility is designed to eliminate direct greenhouse gas emissions from its operations (Scope 1) as well as emissions from purchased energy (Scope 2), setting a new global standard for the petrochemical industry.

To achieve these ambitious environmental goals, the project will employ a combination of advanced technologies, including hydrogen-fueled processes, carbon capture and sequestration, and power and steam cogeneration. Once operational, the expanded site will be capable of producing approximately 3.2 million metric tonnes of low- to zero-emissions polyethylene and ethylene derivatives each year, effectively tripling Dow’s current production capacity at this location. This expansion is significant not only for its scale but also because it will decarbonize about 20% of Dow’s global ethylene capacity and increase its polyethylene supply by 15%.

The Path2Zero project is being developed in two phases, with the first phase originally scheduled to begin operations in 2027 and the second phase in 2029. Prior to the delay, the full project was anticipated to be completed by 2031.

Economically, the project represents a major investment of approximately $8.9 billion, supported by significant incentives from both the provincial and federal governments. The Alberta Petrochemicals Incentive Program is contributing around $1.8 billion, and federal tax credits for carbon capture and clean hydrogen could add up to $400 million. At its peak, the construction phase is expected to create between 7,000 and 8,000 jobs, with 400 to 500 permanent full-time positions once the facility is operational.