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Dow (DOW) to Build Net-Zero Carbon Emissions Ethylene Cracker

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Dow Inc. DOW recently said that it intends to construct the world's first net-zero carbon emissions integrated ethylene cracker and derivatives site, which will advance its commitments to reduce carbon emissions.

The organic, brownfield investment is expected to more than triple Dow's ethylene and polyethylene capacity from its Fort Saskatchewan, Alberta site, while retrofitting the site's existing assets to net-zero carbon emissions. The company selected the Fort Saskatchewan site as the region offers a highly competitive energy and feedstocks position. The project is also expected to boost the company’s capacity of advantaged ethylene, polyethylene and derivatives manufactured across Alberta.
Dow, which is among the prominent players in the chemical space along with Eastman Chemical Company EMN, Celanese Corporation CE and PPG Industries, Inc. PPG, plans to allocate roughly $1 billion of capital expenditure annually to decarbonize its global asset base in a phased, site-by-site approach. It anticipates the new cracker to add roughly 1.8 million metric tons of capacity in a phased manner through 2030. This, along with derivatives capacity and site retrofit investments, will allow Dow to make and supply roughly 3.2 million metric tons of certified low to zero-carbon emissions polyethylene and ethylene derivatives for customers and joint venture partners globally.

The Fort Saskatchewan site will convert cracker off-gas into hydrogen as a clean fuel to be utilized in the production process and carbon dioxide (CO2) that will be captured onsite to be transported and stored by adjacent third-party CO2 infrastructure. The products produced at the Fort Saskatchewan site will be used worldwide to facilitate the delivery of low to zero-carbon emissions solutions to address the sustainability needs of the customers.

The project is expected to decarbonize around 20% of Dow's global ethylene capacity while growing polyethylene supply by about 15%. It will support around $1 billion of EBITDA growth across the value chain by 2030. The company expects the project to be completed with around 15% lower capital intensity than its industry-leading Texas-9 cracker in Freeport and derivative units.

Dow noted that the investment builds on its strong leadership position and enables it to meet the rising needs of customers and brand owners looking to lower the carbon footprint of their products. It is also in sync with its broader goals to achieve carbon neutrality by 2050 and eliminate plastic waste in the environment. The investment also aligns with the company’s commitment to cut its net annual carbon emissions by an additional 15%, lowering net annual emissions by around 30% by 2030.

Dow, in its second-quarter call, said that it expects earnings momentum from additional improvements in consumer spending, industrial production and international travel. With the ongoing global economic recovery, it is well placed to continue to capture value with its differentiated materials science portfolio and participation in fast-growing markets.

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