Canada’s clean tech sector loses ground

Canada’s clean technology sector, once pegged as a growth industry with the potential to be worth $50 billion by the year 2022, is bleeding money and falling behind international competition, a new report says.

Using financial data provided by 148 clean tech companies, the 2017 Analytica Advisors report finds an industry that has grown quickly, with 850 firms and 55,200 direct employees, up from 729 firms and 38,800 employees in 2011.

In its first annual report on the industry in 2011, Analytica said clean technology had the potential to become an industry worth upwards of $50 billion in Canada over the course of the next decade.

That goal is now “out of reach,” said Analytica president Celine Bak, without a significant change in how financial markets make capital investments. Revenues by 2022 are expected to be closer to $18 billion.

In 2015 the industry had $13.27 billion in revenues, up eight per cent over 2014. Retained earnings, however, have declined every year for the past five years and all but one area have seen negative returns on sales in the same period.

Only green power generation companies had positive returns on sales.

“It means we have an industry where companies are not yet at a scale where they can be profitable,” said Bak. “They need capital in order to get to that scale. Private-sector financial markets, by virtue of the regulation that they must abide by, do not yet have the flexibility to lend to companies that are not profitable.”

Canadian companies do well on research and development — investing about $1.5 billion in 2015 — but are applying for fewer patents and struggling to get the money to produce the products for sale. That makes those companies ripe for foreign takeover, says the report.