Clean Energy Canada | Future-proofing Canadian chemicals for a net-zero world: report
July 23, 2024

TORONTO — Canada could be a key producer and exporter of the chemicals needed to power the energy transition, including those used in EVs, solar panels, and heat pumps. But seizing the opportunity will require the sector and governments to invest in cleaner products and cleaner production today. 

Indeed, some of Canada’s key export markets, including the U.S. (where 90% of Canada’s chemical exports currently end up) and the EU, are already investing heavily in the transition to low-emission products, while Canada has fallen behind.

Informed by interviews with some of the country’s largest chemicals producers, Clean Energy Canada’s new report, Catalyzing Change: Why Canada needs a roadmap to net-zero chemistry, outlines the opportunity and challenges ahead.

The report finds that emissions reductions are not only necessary for our climate (the global chemical sector’s emissions must peak in the next few years and decline by about 15% by 2030 to reach net zero by 2050) but desired by companies. But barriers, including regulatory uncertainty, costs, and impractical funding programs, are slowing change. 

Failing to decarbonize could mean losing important market share to countries that are better embracing the opportunity, putting Canada’s chemicals industry, and the 90,000 jobs it supports, at risk. As such, Canadian governments and industry must work together to develop a net-zero roadmap and shift the focus to lower-volume but higher-value products.

Catalyzing Change lays the groundwork for such a roadmap with five key action areas and early priorities to help ensure the competitiveness of Canada’s chemistry sector for years to come.

KEY FACTS

• Canada’s chemicals sector is the third largest GDP contributor among the country’s manufacturing industries, employing over 90,000 people and generating annual revenues of $68.5 billion. 
• The chemical and fertilizer sector in Canada is directly responsible for 23 megatonnes of annual greenhouse gas emissions, with petrochemical manufacturing responsible for the largest share (39%), followed by fertilizer chemicals (38%).
• The Canadian Climate Institute estimates that indirect emissions from Canada’s chemicals sector account for an additional 14 megatonnes of annual emissions.
• A Deloitte analysis found that the chemical sector supports over 75% of all emissions reduction technologies needed to meet net-zero goals by 2050. 
• The EU’s new Carbon Border Adjustment Mechanism applies carbon tariffs to a range of industrial products including fertilizers and hydrogen, making low-emissions products increasingly competitive in that market.
• There are over 3,300 chemical manufacturers operating in Canada, but emissions from the sector are largely concentrated in a small number of facilities and companies, with the five highest emitting facilities collectively making up more than half (52%) of the sector’s total emissions.