The Status of Cleantech in Canada Going into 2021
$1.150 trillion. That was the global export market of cleantech products and services in 2015.
It’s hard to even comprehend that amount of money. Yet, we’re challenged to think of what that will look like in 2022 when the global cleantech export market is estimated to increase to $2.5 trillion.
The clean technology, or cleantech, space has exploded over the last 12+ years with the global export market growing 76% between 2008 and 2015, as found in our recent report Cleantech Defined: A Scoping Study of the Sector and its Workforce. And it’s no surprise why the growth has been substantial.
Across industries, non-profits, and governments, there’s a global movement to combat climate change, primarily with technology. However, despite the pressures to meet our climate commitments, Canada is lagging behind in the global cleantech market share, contributing only 1.43% (approximately $16.4 billion) of global exports.
What Is Cleantech?
In our report, we defined clean technology as any technology, product, or service that uses fewer materials or energy, generates less waste, and causes less negative environmental impacts than the industry standard. There are three goals cleantech aims to accomplish:
- Provides superior performance or lower costs than the current norm or standards,
- Minimize negative environmental impacts, and
- Makes more efficient and responsible use of natural responses.
You’re likely familiar with many end-user cleantech products such as programmable thermostats and high-efficiency furnaces. While these products do contribute to the three goals mentioned above, their economic potential is limited by regulations and lower returns on investment, therefore are often classified as ‘GreenTech’. These products represent only a sliver of the potential of the cleantech industry.
Cleantech isn’t just about developing advanced technologies, like the GreenTech products above. It’s about creating and using a model of business that runs cleantech at the centre. When done right, cleantech will improve organizational processes, reduce environmental impact, all at a lower cost across an entire supply chain.
The Money Challenge of Canadian Cleantech
Although the Canadian cleantech industry’s growth has exploded over the last 20 years, it’s still relatively new. For example, from 2015 to 2017, only 1 in 10 enterprises used cleantech goods and services on average. While a few industries reported higher utilization rates, such as Pipeline transportation (38%) and Utilities (36%), as with anything new, it takes time for the market to accept, pay for, and adapt to a new way of doing business.
A 2017 StatCan survey found that only 43% of enterprises are using at least one type of advanced technology, such as business intelligence tools. Of the enterprises who didn’t use any advanced technology, 37% of the StatCan survey respondents indicated the new technologies weren’t applicable to their business or they weren’t needed for their business to continue operations. A smaller percentage (18.2%) didn’t even see the benefit of adopting these new technologies.
How do these technologies impact the bottom line? That’s the question enterprises are trying to answer.
When traditionally bids for new technologies are chosen based on the lowest cost, it’s often harder for cleaner technology alternatives to outcompete, as they attempt to scale and commercialize. And cleantech firms are fighting for the investment to scale and grow their products and services. The cleantech industry itself is expensive to be in, yielding some of the lowest returns on investment when compared to other advanced technologies in the medical and software industries.
However, the Canadian government sees the potential for cleantech to diversify our economy and to set up Canada as a leading innovator in the space. Since 2017, the government has invested over $2.3 billion into the cleantech space, supporting the commercialization and adoption of cleantech, and perhaps most importantly, the capital needed to hire and train a knowledgeable workforce.
Preparing the Workforce for Cleantech
In October 2020, a four-year $100 million investment was announced to accelerate cleantech development and adoption in the oil and gas industry. This was partially spurred on by COVID-19, as it became strikingly clear our country needs to better prepare our economy and workforce for a future with cleaner, sustainable energy sources.
As of 2017, the cleantech industry employed over 55,000 people. However, in order for Canada to transition to what’s called “a clean-growth economy,” the industry needs to prepare its workforce for high-skilled, knowledge-based jobs.
In addition to the skills and occupations needed for cleantech activities, survey respondents in our scoping study noted other specific training and certifications are needed in areas such as waste management and recycling, alternative energy, and sustainability.
Committed to Cleantech
In 2015, there were an estimated 850 cleantech developers and producers in Canada, 12 of which were listed in the Cleantech Group’s 2020 Global Cleantech 100, a report listing the world’s top 100 companies in sustainable innovation. These companies along with new startups and developments are working together on amazing projects across the country, slowly shifting Canada toward becoming a global leader in cleantech.
As it stands at the beginning of 2021, we are still years away from seeing the full potential of Canada’s cleantech industry. Besides funding, the government needs to support Canadian research and development projects by making the patent process easier and establishing better intellectual property (IP) protection policies.
Countries like China and Germany have established themselves as global leaders in cleantech exports in the patent generation which has likely contributed to their competitiveness in the market. It’s by setting the standards and regulations that Canada can bring together innovation and commercialization as a pair. Once we can bring these two things together, Canada will be able to capitalize on cleantech opportunities and create a robust, sustainable economy.