Nu­tur­ing Canada’s grow­ing clean­tech fu­ture

Policy - - Before The Bell - BY DALE SMITH

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.

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