Ottawa too slow on clean tech investment, new report warns
20 Apr, 2017 • Alex Ballingall - Ottawa Bureau
OTTAWA—Growth in Canada’s clean tech industry has slowed to the point that the sector could miss out on billions in revenue and thousands of new jobs without urgent government action, according to a report published Thursday.
Celine Bak, president of Analytica Advisors, a firm in Ottawa that monitors the industry and published the report, said investments to boost clean tech in the 2017 budget aren’t moving fast enough. Without quick access to capital, many of the biggest players in Canada’s $13-billion clean tech sector will fall behind global competitors, Bak said.
“There’s an urgent need for the money you’ve proposed to be deployed,” said Bak, referring to the Liberal government’s 2017 budget pledge of $1.8 billion over three years for clean tech financing.
None of that money, however, is slated to roll out this year.
“It’s back-end loaded and the need is really short term,” Bak said.
“That’s not going to be sufficient, especially for the biggest firms that are in very competitive global markets, where we’re talking about weeks — not months — as a timeline that needs to be executed upon.”
The industry includes more than 850 firms in Canada that employ 55,200 people, the report says. These companies range from those working on more efficient power grid technology and cleaner ways to dig for oil, to recycling, transportation and agriculture.
The 2017 Canadian Clean Technology Industry Report, released Thursday, paints a picture of an industry that is still growing, but at a slower rate than previous years. Revenues in the sector jumped 8 per cent from 2014 to 2015, while they grew at around 11 per cent per year from 2011 to 2013, the report notes.
But profits retained by clean tech companies in Canada continue to drop, and the report says “the industry is awash in red ink and shareholder returns are negative.” This includes companies working on low-carbon transportation, which have seen five straight years of negative returns in a developing sector that is vital in the push to meet Canada’s global emissions targets for 2030, according to the report.
At the same time, the report says Canada’s global market share in clean technology dropped 12 per cent from 2008 to 2015, when it stood at 1.4 per cent.
Canada’s environment minister, Catherine McKenna, is in California this week, where she is meeting with clean tech companies such as Nest — which makes systems to more efficiently cool and heat people’s homes — and Google. She is also meeting with the state governor and the California Environmental Protection Agency.
In an emailed statement, McKenna told the Star Wednesday that California is a hub for clean tech innovation.
“Our government knows that private sector innovation plays a key role in fighting climate change and creating jobs. And we want the world to know Canada is open for business,” McKenna said.
Thursday’s report welcomed moves by the government to eliminate coal production and implement carbon pricing across the country — moves seen to make openings for clean tech — but Bak said more action is needed, and quickly, to spur on Canada’s clean technology industry.
Bak said that much of the industry has reached a point where, after billions have been invested in research and development, financing is needed to “scale up” and attain the ability to produce and sell their technology en masse.
The report says the current trajectory for the industry in Canada means that, by 2022, the industry will see revenues that are much lower than the $50 billion projected as a best-case scenario in recent years. The report also says as many as 42,000 fewer jobs could be created by 2022.
“They need capital in the next six months in order to realize certain market opportunities, and if they don’t then that intellectual property will not stay in Canada,” said Bak.
With this in mind, one of the key recommendations in the report is for Ottawa to start the working capital and project finance funds proposed in the 2017 budget as soon as possible.
Bak also said Bay Street needs to come to the table to help clean tech companies secure the financing they need. The report recommends that Canada’s finance department establish consultations with the investment sector in Canada to bring more money to clean tech.
The report also calls on Ottawa and the provinces to “unwind” $3.3 billion in subsidies that governments give the fossil fuel industry, to ensure new infrastructure projects include global best practices on sustainability.
“Hope is not a strategy. Good intentions will not enable us to win. We have to actually execute,” Bak said.