The federal government made cleantech a priority in its 2017 budget and outlined $2.4 billion in investments to help Canadian companies. Before the Bell discussed the pressures that are influencing the growth of the cleantech sector in Canada and spoke with the stakeholders who are betting on it being the industry of the future.
Cleantech includes any technology, process, product, or service that reduces negative environmental impacts through significant energy efficiency improvements, the sustainable use of resources or environmental protection activities. It includes a broad range of technology related to recycling, renewable energy (wind power, solar power, biomass, hydropower, biofuels, etc.), information technology, green transportation, electric motors, green chemistry, lighting and more.
The Paris Climate Accord was seen as one of the biggest drivers of cleantech in Canada because it establishes a global framework that enacts increasingly stringent targets.
“That sends great signals to the marketplace, and it sends great signals to technology developers,” said Velma McColl, managing principal of Earnscliffe Strategy Group. “It’s the most important thing for the long-term growth of cleantech in the world.”
Denis Leclerc, president and CEO of Écotech Québec, noted that the Accord is a work in progress.
“It’s going to take time, it’s going to take effort,” said Leclerc. “We will need collaboration between the financial sector, business and government.”
Scott Thurlow, lawyer and past president of the Renewable Fuels Association, said that there needs to be a mix of regulation and incentives from government in order to spur investment in the cleantech sector.
“I would warn against regulation unless it is exceptionally well-designed,” said Thurlow, citing the example where the previous government’s rules around renewable diesel actually drove emissions up because product was being shipped from Singapore to fill the mandated targets.
McColl said that the cleantech sector is far more mature and sophisticated than it was 10 or 15 years ago.
“We wasted a lot of political time saying you need to make a choice between incentives and regulations,” said McColl, noting that the issues are not about meeting minimum standards or compliance mandates. “If Canada is going to win at cleantech in the world, we need to be far more sophisticated. The core objective is getting to market and scaling up.”
Thurlow added that companies like Walmart have the ability to make decisions at a high level that can influence consumer choice, which is what will help adoption of the sector.
“You can create all of the best cleantech in the world, but if nobody wants to take it upon themselves to adopt it, you’re just going to go out of business,” said Thurlow.
Some of that drive toward adoption is being seen in the chemistry sector, said Shannon Watt, director of environment and health policy with the Chemistry Industry Association.
“We have a company in Sarnia that makes succinic acid – succinic acid is used in pharmaceuticals, cosmetics, plastics, paint coatings, everything. What’s so unique about this company is they’re using plant-based feed stocks, so it’s a bio-succinic acid that’s identical to the original succinic acid,” said Watt. “We have another member who recently opened a plant – if you think of polystyrene foam, we use it once, we can’t recycle that. A new plant opened up with the goal of recycling polystyrene foam. There are real opportunities for innovation in the chemistry industry.”
To help cleantech companies grow, the Business Development Bank of Canada (BDC) hired a dedicated team to disburse the money allocated to cleantech in Budget 2017.
“It takes a different skill set than what the bank already had, and we needed dedicated people who had cleantech experience — experience in doing financial modelling for more complex companies, and we’ve got a really good team in place now,” said Susan Rohac, vice president of growth and transition capital at BDC.
Rohac said that the bank has the infrastructure and systems in place to help cleantech companies ramp up quickly, as well as the partnerships with like-minded organizations that also want to support cleantech companies.
“It takes a lot of different players to raise a cleantech company,” said Rohac. “Government plays a role, and we’ve got to see the private sector, chartered banks and venture capitalists step up as well. We’ve got to see corporations step in and support these companies and we’re starting to see that in the deals we’re doing.”
Once companies are up and running and have sufficient capital to get them past the “valley of death” phase most start-ups hit, Export Development Canada says that they are committed to deploying $2 billion in export credits for cleantech by 2020.
“It’s a sector that’s very internationally focused,” said Carl Burlock, senior vice-president and global head of financing and investments with Export Development Canada. “Since 2012, EDC has supported over $3.5 billion in clean technology exports to over 100 countries. That level of activity reflects what’s happening in the global cleantech sector.”
Burlock noted that by some estimates, cleantech was a $1 trillion sector globally last year, with the potential to grow to $2.5 trillion by 2020. To that end, the federal government is looking to deploy what tools it can to support cleantech through its entire life cycle.
“We’re very cognizant of that scale-up challenge in the innovation sector generally,” said David Lametti, MP for LaSalle-Émard-Verdun, QC, and Parliamentary Secretary to the Minister of Innovation, Science and Economic Development.
“With a variety of different tools, with a variety of different partners, we are trying to see that life cycle through and make sure that Canadian companies can have the initial research, do the initial start-up, get to scale-up, and hopefully be getting to export and being leaders on the world stage,” said Lametti.