A Clean Tech Case Study

Policy - - Contents - Karen Ham­berg

Canada’s clean tech­nol­ogy sec­tor is near­ing a tip­ping point that will tilt it to­ward trans­for­ma­tive, sec­tor-wide crit­i­cal mass, but we need more made-in-Canada clean tech­nol­ogy suc­cess sto­ries to grow and scale-up. How do we get there? As many lead­ers in gov­ern­ment and the pri­vate sec­tor can at­test, money is only part of the for­mula for a break­through.

In a re­cent let­ter to Canada’s first min­is­ters signed by more than 100 busi­ness and civil so­ci­ety lead­ers that com­prise the Smart Pros­per­ity Ini­tia­tive, the gaunt­let was thrown down for noth­ing short of a home­grown clean tech­nol­ogy revo­lu­tion. “Tar­geted pub­lic funds are needed to spur break­through clean tech­nol­ogy re­search, de­vel­op­ment and de­ploy­ment across all sec­tors, lev­er­ag­ing pri­vate cap­i­tal,” the let­ter de­clared. It’s a call to ac­tion these min­is­ters would ig­nore at their peril, given that its sig­na­to­ries in­cluded the Busi­ness Coun­cil of Canada’s John Man­ley, NRS­tor’s An­nette Ver­schuren and McKin­sey’s Do­minic Bar­ton—the lat­ter the chair of the Prime Min­is­ter’s Ad­vi­sory Coun­cil on Eco­nomic Growth.

In­deed, the Gov­ern­ment of Canada has re­sponded in kind. The Pan-Cana­dian Frame­work on Clean Growth and Cli­mate Change in­cluded rec­om­men­da­tions for new ac­tion to sup­port the clean tech­nol­ogy sec­tor and ad­vance the com­mer­cial­iza­tion of clean tech­nolo­gies. The Trudeau gov­ern­ment stepped up, turn­ing words into ac­tion by set­ting aside $2.3 bil­lion for in­vest­ments in clean tech­nol­ogy with match­ing tools and new man­dates for es­tab­lished fund­ing part­ners in­clud­ing the Busi­ness De­vel­op­ment Bank ($950 mil­lion), Ex­port De­vel­op­ment Canada ($450 mil­lion), and Sus­tain­able De­vel­op­ment Tech­nol­ogy Canada ($400 mil­lion). With po­lit­i­cal will and cap­i­tal firmly in place, it would ap­pear that Canada is well po­si­tioned for a break­through to tran­si­tion to a low car­bon econ­omy via the cre­ation of high-skill, high-wage, knowledge-based jobs in a rapidly grow­ing clean tech­nol­ogy sec­tor. But we are still very much at the starting gate to ful­fill our prom­ise, achieve crit­i­cal pol­icy ob­jec­tives, and de­ploy made-in-Canada clean tech­nol­ogy in a ma­te­rial way to di­ver­sify our econ­omy. Canada’s in­no­va­tion strat­egy has slowly shifted from ideas and star­tups to mar­ket cre­ation and scale-up. We have funded many promis­ing clean tech­nolo­gies to vary­ing de­grees of suc­cess, re­sult­ing in a di­verse ecosys­tem of com­pa­nies at dif­fer­ent stages of their de­vel­op­ment cy­cle. Canada fea­tures a hand­ful of mar­ket lead­ers who have com­mer­cial­ized prod­uct glob­ally and man­aged to scale-up. We also have a larger num­ber in the pre-com­mer­cial­iza­tion stage with promis­ing tech­nolo­gies, and many more start-ups pur­su­ing dis­rup­tive tech­nolo­gies that we need to keep a close watch on.

To the credit of the cur­rent gov­ern­ment, there is wide­spread recog­ni­tion that we have an op­por­tu­nity to con­tinue to not only in­vest in but ac­tively sup­port com­pa­nies in the clean tech­nol­ogy sec­tor. We need a lot more of our made-in-Canada clean tech­nol­ogy suc­cess sto­ries to grow and scale-up. This will in turn lead to a much more ma­ture sec­tor, re­flected in com­mer­cial­ized prod­uct, es­tab­lished sales, rev­enue, prof­itabil­ity, mar­ket share, and a com­pelling size of the prize. But how do we get there? As many lead­ers in gov­ern­ment and the pri­vate sec­tor can at­test, money is only part of the for­mula to drive change and growth.

There is a com­plex re­la­tion­ship be­tween reg­u­la­tion and in­no­va­tion, and the chal­lenge of tech­nol­ogy ad­vance­ments out­pac­ing cur­rent reg­u­la­tory frame­works is well doc­u­mented. There are many ex­am­ples of the ways inefficient reg­u­la­tions can block in­no­va­tion, stran­gle the flow of cap­i­tal, and re­in­force a sta­tus quo that doesn’t al­low com­pa­nies with new tech­nol­ogy so­lu­tions to emerge as mar­kets de­mand.

Stake­hold­ers from the Gov­ern­ment of Canada’s six Eco­nomic Strat­egy

We are still very much at the starting gate to ful­fill our prom­ise, achieve crit­i­cal pol­icy ob­jec­tives, and de­ploy made-in-Canada clean tech­nol­ogy in a ma­te­rial way to di­ver­sify our econ­omy.

Ta­bles have spent the sum­mer fi­nal­iz­ing their chap­ters and re­fin­ing the sig­na­ture rec­om­men­da­tions spe­cific to their sec­tors. I had the priv­i­lege of serv­ing on the Clean Tech­nol­ogy Eco­nomic Strat­egy Ta­ble for the past nine months. This ta­ble, along with those fo­cused on re­sources for the fu­ture, ad­vanced man­u­fac­tur­ing, agri­food, health/bio­sciences, and dig­i­tal in­dus­tries were wisely cho­sen for a key rea­son; their abil­ity to trans­form our econ­omy. How­ever, it is not sur­pris­ing that there is an emerg­ing con­sen­sus among them that reg­u­la­tory chal­lenges rep­re­sent the most sig­nif­i­cant road­block to ac­com­plish­ing that very trans­for­ma­tion.

For many Cana­dian busi­nesses, the reper­cus­sions of these reg­u­la­tory road­blocks only come into fo­cus when they im­pede real-world mar­ket op­por­tu­ni­ties. At West­port Fuel Sys­tems, we have learned just how dif­fi­cult it can be to nav­i­gate a reg­u­la­tory en­vi­ron­ment that wasn’t de­signed to ac­com­mo­date new tech­nolo­gies in ex­ist­ing frame­works.

Our flag­ship and pro­pri­etary high­pres­sure di­rect in­jec­tion tech­nol­ogy, West­port HPDI 2.0™, en­ables heavy­duty trucks to op­er­ate on nat­u­ral gas with re­duced fuel costs, re­duced CO2 emis­sions, and diesel-like per­for­mance. It has been suc­cess­fully com­mer­cial­ized and launched in Europe with our en­gine man­u­fac­tur­ing part­ner. Two 13L en­gines (rated at 420 and 460 horse­power), cer­ti­fied to strin­gent Euro VI reg­u­la­tions and suit­able for de­mand­ing Class 8 long­haul ap­pli­ca­tions are cur­rently be­ing de­ployed in key Euro­pean mar­kets to lead­ing fleets seek­ing com­pa­ra­ble diesel per­for­mance and deep green­house gas emis­sion re­duc­tions. One of our great­est chal­lenges, how­ever, is de­ploy­ing prod­ucts in the do­mes­tic mar­ket.

Given the long lead time as­so­ci­ated with heavy-duty en­gine de­vel­op­ment pro­grams, the lack of cost­com­pet­i­tive, mar­ket-ready so­lu­tions for the long-haul com­mer­cial freight sec­tor in North Amer­ica with en­gines 13L and greater—and the ur­gency of green­house gas emis­sion re­duc­tion tar­gets from heavy-duty trans­port—we see a mar­ket op­por­tu­nity to de­ploy these en­gines in Canada. But given the dis­tinc­tion be­tween the Euro VI stan­dard and the North Amer­i­can EPA stan­dard and dif­fer­ent en­gine test­ing cy­cles, our cur­rent op­tions are to seek a ne­ver­be­fore-granted ex­emp­tion un­der the Cana­dian En­vi­ron­men­tal Pro­tec­tion Act (CEPA) to im­port a num­ber of West­port HPDI 2.0™ trucks or to ex­plore a sep­a­rate reg­u­la­tory har­mo­niza­tion path­way.

The suc­cess of our en­deav­our will de­pend on our abil­ity to nav­i­gate a com­plex and lengthy reg­u­la­tory process that ap­pears opaque, with an in­vest­ment of time and re­sources that bal­ances our ap­petite for risk. As a made-in-Canada clean tech­nol­ogy suc­cess story head­quar­tered in Van­cou­ver, it is dif­fi­cult to fathom that we would face so many chal­lenges in bring­ing to Canada a tech­nol­ogy that was in­vented in the Univer­sity of Bri­tish Columbia’s Depart­ment of Me­chan­i­cal Engi­neer­ing in the 1980s.

Ul­ti­mately, we will need as much in­no­va­tion in our pub­lic pol­icy tools as there is in tech­nol­ogy to en­sure progress on crit­i­cal eco­nomic and en­vi­ron­men­tal ob­jec­tives. How do you cre­ate the right reg­u­la­tory en­vi­ron­ment to al­low for the rapid adop­tion of clean tech­nol­ogy? A new ap­proach fo­cused on reg­u­la­tory agility that en­ables and al­lows new­com­ers and so­lu­tions providers to chal­lenge in­cum­bents should in­cor­po­rate the fol­low­ing el­e­ments:

1 An en­hanced work­ing re­la­tion­ship be­tween reg­u­la­tors and in­dus­try that en­cour­ages early and fre­quent di­a­logue and guid­ance on new and evolv­ing clean tech­nolo­gies,

2 A frame­work that can adapt to the pace of change of new tech­nolo­gies,

3 A time­line and de­gree of cer­tainty that pro­vides com­pa­nies and in­vestors with the con­fi­dence needed to con­tinue in­vest­ing in projects at

var­i­ous stages of de­vel­op­ment and risk,

4 An ini­tia­tive to ed­u­cate so­lu­tion providers on the real hard bound­aries of the reg­u­la­tory en­vi­ron­ment,

5 A sys­tem that is de­signed to scale so­lu­tions, not just spe­cific tech­nolo­gies or com­pa­nies,

6 The pro­vi­sion of safe har­bours to al­low for the demon­stra­tion and test­ing of clean tech­nolo­gies that in­cludes mu­tu­ally agreed upon mile­stones lead­ing to an ex­emp­tion,

7 A stage-gated process that iden­ti­fies what could be ac­com­plished quickly to de­ploy clean tech­nol­ogy ver­sus longert­erm re­quire­ments, while en­sur­ing that crit­i­cal health, safety, and en­vi­ron­men­tal ob­jec­tives are met, 8 A process or method­ol­ogy for de­ter­min­ing best avail­able clean tech­nol­ogy and an ex­pec­ta­tion that so­lu­tions providers “show their work,”

9 A mech­a­nism to build and nur­ture stronger re­la­tion­ships be­tween reg­u­la­tors and the vast tech­ni­cal ex­per­tise in the clean tech­nol­ogy sec­tor, and

10 A com­mit­ment to ac­count­abil­ity to en­sure best-in-class reg­u­la­tory per­for­mance and lead­er­ship.

Like so many in our sec­tor, we are writ­ing the next chap­ter in our cor­po­rate story with an eye to those ju­ris­dic­tions en­act­ing strin­gent reg­u­la­tions spe­cific to ur­ban air qual­ity and pub­lic health, im­proved fuel econ­omy, and re­duced green­house gas emis­sions. The op­por­tu­nity to fur­ther de­velop our tech­nolo­gies and ex­pand our footprint in Canada has never been bet­ter, and the po­lit­i­cal will is read­ily ap­par­ent—and greatly ap­pre­ci­ated. And yet we know that with­out a con­certed ef­fort by gov­ern­ment and key stake­hold­ers to ad­dress reg­u­la­tory road­blocks, this prom­ise could read­ily evap­o­rate.

The Gov­ern­ment of Canada has al­ready con­ducted the heavy lift­ing of set­ting aside valu­able cap­i­tal. What is needed now is a com­pre­hen­sive, co­or­di­nated, and col­lab­o­ra­tive ap­proach to reg­u­la­tory agility. This can be the kind of strat­egy that will truly spur in­no­va­tion through the de­ploy­ment of clean tech­nol­ogy and sup­port the abil­ity of com­pa­nies to scale up. We can see the way for­ward and are ready to work to­gether, with gov­ern­ment and our key part­ners, to make it hap­pen.

Karen Ham­berg is Vice Pres­i­dent of In­dus­try and Gov­ern­ment Re­la­tions at West­port Fuel Sys­tems in Van­cou­ver.

IS­tock photo

The light bulb has al­ways sym­bol­ized ideas, which are driv­ing clean tech.

Newspapers in English

Newspapers from Canada

© PressReader. All rights reserved.