11 August 2010 15:52 [Source: ICIS news]
In a strategy paper, the Chemistry Industry Association of Canada (CIAC) cited a number of “serious concerns” over regulatory framework, feedstock availability, infrastructure and logistics, electricity prices, and finance issues that had hampered growth of domestic chemical production.
Layers of duplicative and sometimes conflicting federal-provincial environmental regulations discouraged potential investors, at a time when manufacturing in central Canada and large parts of the US was eroding, the Ottawa-based group said.
“North America and central
“In some cases, entire co-dependent integrated complexes are at risk as key flagship industries are not retained or upgraded due to loss of feedstock supply and/or key customers,” the group said.
The recession had exacerbated this loss of customer base. Facilities were closing, and to reverse this,
At the same time, Canadian chemical producers had been hit by rapid price fluctuations and supply uncertainties for energy. Producers were concerned about adequate supply of competitively-priced raw materials, the group said.
CIAC suggested a number of steps and initiatives for government and industry to meet those challenges.
One important measure to help rebuilding manufacturing would be a two-year accelerated capital cost allowance (ACCA) for machinery and equipment used to upgrade its material resources and add value, the group said.
“Put the ACCA in place for machinery and equipment for five years and extend it as it succeeds in growing new investments,” the group said.
“Federal/provincial coherence on issues such as climate change, air pollution and chemicals management […] is missing. This creates uncertainty and manufacturing is suffering as investors turn elsewhere.”
“Make it more profitable to achieve sustainable energy solution here than anywhere else in the world,” the group said with reference to a growing trend to export raw bitumen and tar sands from Alberta's oil sands industry to US refineries, instead of upgrading them for value-added production in Canada. Olefins-rich off-gases from oil sands upgrading are seen as an important feedstock for the chemical industry in Alberta.
If nothing was being done to boost ethane availability,
“Unfortunately, the size of the [IEEP] fund and its design is not adequate for large projects, and in particular for off-gas extraction and delivery to be economical to pursue.”
Further, the decline in proportion of oil sands upgrading in
“It is important to note that upgrader projects in
Another key concern for the chemical sector was electricity and electricity pricing, especially in
The chemical industry was concerned that rail service be maintained for all chemical products and that carriers worked to manage risk more effectively, it said.
“Raising rates, creating ancillary charges and asking shippers to bear risks for activities beyond their control is not an acceptable way of meeting carrier obligations,” the group said.
CIAC also said
Furthermore, the group said it had noted an “unprecedented tightening of access to credit” that had made it harder for key suppliers and customers in the chemical value chain to conduct everyday business transactions and refinance operations.
Major chemical firms with production in
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