Dow is delaying construction of its $11.6-billion net-zero ethylene cracker facility at its etrochemical manufacturing facility in Fort Saskatchewan, Alta., citing global economic uncertainty and weak demand in the sector.

The Michigan-based chemical giant announced Thursday it will scale back capital spending to US$2.5 billion in 2024 — a reduction of up to US$1 billion — as part of a broader cost-cutting strategy in response to what it called a prolonged industry downturn.

“The reality is our industry is in one of the most protracted downcycles in decades,” Dow CEO Jim Fitterling said during a call with analysts.

Dow’s Path2Zero facility, located northeast of Edmonton, was expected to be the world’s first net-zero carbon emissions integrated ethylene cracker and derivatives site. The project is the largest of its kind currently planned in Alberta.

“We remain committed to the long-term strategic rationale of the project.”

Technip is provide proprietary technology, engineering and procurement services for the ethylene plant

Ottawa has agreed to provide up to $400 million from Canada’s carbon capture, utilization, and storage investment tax credit and clean hydrogen investment tax credit, Chrytia Freeland, then the deputy prime and finance minister, announced previously.

Alberta Premier Danielle Smith has said her government will provide a 12% grant, or approximately $1.8 billion, through the province’s petrochemicals incentive program.

The new cracker will increase the site’s polyethylene production capacity by two million metric tonnes per annum, according to Dow.

Polyethylene, refined from oil, is a liquid used to produce plastics. Dow has said the new capacity will enable the company to capture growing demand in high-value markets, such as packaging, infrastructure and hygiene.

The project’s first phase was slated to start up in 2027 and the second phase was scheduled to launch in 2029.

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