Losses continue to mount for Canadian clean-tech sector

CALGARY — Canada’s promising clean-tech sector continued to pile on losses and even employed fewer workers as the industry reeled from rising competition from foreign competitors, according to a new report.

Analytica Advisors study released on Thursday shows cumulative losses for domestic clean-tech companies reached $3.6 billion in 2015, the most recent year considered in the study, compared with $3.1 billion a year earlier. However, cumulative revenues hit almost $13.3 billion in 2015, up eight per cent from $11.6 billion a year earlier.

“Public investment in clean technology R&D was strong at 28 per cent, but Canada’s market share of clean-tech exports declined by 12 per cent from 1.62 per cent in 2008 to 1.43 per cent in 2015, suggesting investments in innovation are not leading to greater competitiveness,” according to the report.

The sector’s losses show “markets for low-carbon innovation have yet to emerge,” the report said, calling on the federal government to offer more support for the industry, including “the rapid phase out of fossil-fuel subsidies.”

“In the next 35 to 85 years, we will transition to a world in which we no longer burn fossil fuels to meet our energy needs,” the report said, noting that oil is Canada’s single largest export. “Eventually, we will need to replace this export revenue with other globally competitive goods and services.”

Last month, the federal Liberal government announced it would allocate $1.8 billion of public money to equity investments, debt financing and venture capital investments in clean technology companies.

Analytica Advisors president Celine Bak said that federal funding “needs to flow right away, not in 2018 or 2019” because clean tech firms need funding immediately to keep pace with competition in the U.S., Europe and Asia.

Bak said that eliminating subsidies for the oil and gas industry would not result in that sector failing, because conventional energy companies have better access to financing and markets.

“Those financial markets don’t yet exist for much of the clean technology industry,” Bak said.

Under the slow-growth scenario, the Analytica Advisor report projects industry revenue would hit $18 billion by 2022 — a long way from the $50 billion in sales estimated by the consultancy in previous editions of the report.

Government funding has been used in the past to support innovation and development in the oilsands, which are now a major and important driver of Canada’s economy, and the same approach could be applied to the clean-tech sector, Bak said.

Her organization’s report also calls for big Canadian banks on Toronto’s Bay Street “to come to the table” and demand that other companies in Canada report their carbon emissions to “support the growth of companies delivering solutions to climate change.”

The organization’s report defines clean-tech companies as firms involved in a broad range of activities such as green power generation, recycling, energy efficiency, green buildings, water and wastewater, and clean industrial processes.

The report notes that around 850 clean-tech companies in Canada employed 55,200 people in 2015 — a slight decline from the 55,600 employed earlier.

If the industry can regain its momentum and achieve an eight per cent growth level, it will directly employ 95,000 people before 2022, Analytica estimates.