Canadian clean-tech sector hit hard by U.S. pullout from Paris climate pact
Some firms express disappointment, fear negative global effects as shares fall
Canadian clean-technology companies said it’s “extremely disappointing ” that U.S. President Donald Trump will withdraw from the Paris climate-change agreement, but believe state-level green legislation still represents an opportunity.
Stock prices at domestic cleantech companies plunged this week amid reports Trump would take the U.S., the world’s second largest emitter and Canada’s largest trading partner, out of the Paris Accord to reduce pollution.
“In order to fulfil my solemn duty to protect America and its citizens, the United States will withdraw from the Paris climate accord but begin negotiations to re-enter either the Paris accord or an entirely new transaction,” Trump confirmed at a White House press conference Thursday. He said the withdrawal from the agreement was a reaffirmation of U.S. sovereignty.
“We’re getting out and we will start to negotiate but we will see if we can make a deal that’s fair,” Trump said, adding the Paris agreement allowed China to increase its emissions and India to receive foreign aid in exchange for its support of the agreement. He said the burdens of reducing emissions should be equally shared around the world.
The Paris agreement required countries to submit their own “intended nationally determined contributions,” which allowed each country — including the U.S. — to set its own targets.
Trump said U.S. compliance with the agreement would cost his country 2.5 million jobs by 2025 and said, “The agreement is a massive redistribution of United States’ wealth to other countries.”
Politicians in Canada, Europe and China — the world’s largest air polluter — reaffirmed their commitment to the deal this week despite expectations of a U.S. exit.
Those expectations sent shares in the world’s second-largest solar company, Guelph, Ont.-based Canadian Solar Inc., down 5.4 per cent Wednesday to US$12.81 each but rallied slightly to US$12.91 on Thursday.
Mississauga, Ont.-based lithium battery maker Electrovaya Inc. shares have dropped 21 per cent to $1.33 each in two days and Questor Technology Inc., a Calgary-based company that provides systems to reduce oilfield emissions, fell 12 per cent Thursday to close at $1.10.
“I think it’s extremely disappointing and it’s going to have some negative effects globally,” Questor CEO Audrey Mascarenhas said of the U.S. withdrawal.
Questor recently moved 95 per cent of its rental fleet to Colorado and has seen a six-fold increase in its U.S. business, Mascarenhas said.
She added that Trump’s decision to exit the Paris climate change agreement would not likely affect state-level regulations on emissions. “The reality is whether Trump withdraws support for the Paris agreement or decimates the (Environmental Protection Agency), the governor in Colorado isn’t going to (go) back to people and say, ‘Now that President Trump has repealed all of these rules we’re going to give you dirty air,’” Mascarenhas said.
She said clean-tech companies, like hers, have already demonstrated to state legislators that emissions can be reduced and costs can be reduced so “it’s possible to get a win-win between energy and the environment.”
Electrovaya chairman and CEO Sankar Das Gupta also believes state legislators will continue to require companies to reduce their emissions, and his company is selling a product that achieves that goal while reducing costs.
“Also in the U.S., the states have the environmental mandates, not the feds. Hence California, New York, Massachusetts etc. will keep on their climate change mandate,” Gupta said in an email.
Still, he said, “Climate change is so crucial that it will be a tragedy if the U.S. walks out.”
The U.S. does represent a significant market for Canadian clean-technology companies, said Analytica Advisors president Celine Bak, “but those firms are also succeeding in other markets and I would say the EU is the most significant.”
Bak said the recent Canada-Europe Trade Agreement would help more companies to reposition and focus on selling to Europe. There are also opportunities for clean tech companies in Asia and around the world, as only countries that are not committed to the Paris agreement are the U.S., Syria and Nicaragua, she said.
Vancouver-based Westport Fuel System Inc. vice-president of strategy Karen Hamberg said “the U.S. market is critical for Canadian clean-tech companies” but her firm, which sells medium- and heavy-duty engines that run on natural gas, and other companies are exporting outside of North America.
“What’s fascinating right now is we’re seeing major corporations encouraging the U.S. to stay in the accord,” Hamberg said.
“There’s this boom that’s happening all around the world right now in solar and wind and alternative energy in vehicles and this may not take place in the U.S.”
General Electric chairman and CEO Jeff Immelt was one U.S. business leader to express his disappointment with the decision publicly.
“Climate change is real. Industry must lead now lead and not depend on government,” Immelt said on Twitter.