From precision farming to energy infrastructure, all indicators show that Canada is poised for future growth in clean technology. This was the focus of discussions at the Export Development Canada (EDC) held the 6th edition of its Cleantech Week earlier this Fall. EDC is a federal Crown Corporation dedicated to encouraging and helping Canadian companies of all sizes expand their export business activities. It provides trade knowledge, financial solutions, equity, insurance, and international connections. This year’s Cleantech Week marked a decade since EDC made this sector a priority.
There is probably no other government agency in Canada that puts as much priority on cleantech as EDC, a slightly odd situation because it is a frequently expressed wisdom that successes in a domestic market are a necessary precursor to a successful export initiative. However, that is expected to change in the near future.
An estimated 323,000 jobs and $69 billion in GDP were attributable to environmental and cleantech (ECT) activity in Canada in 2020 (with Ontario, by far, the leading cleantech exporter). Canada holds about a two per cent share of the global ECT market with its ECT exports, mostly to the U.S. market.
Recent investment patterns in this sector are stimulating increased activity in energy, environmental resources (air, carbon dioxide, waste, and water), cultivated and fermented products in agriculture and food, soil quality, and innovative technologies in hard to abate sectors such as aviation, cement, chemicals, plastics, and heating and cooling. EDC sees significant future growth in initiatives related to decarbonization and the need to achieve net zero emissions by 2050.
EDC reports that Canada has many recognized success stories and a strong ecosystem for cleantech innovation that should help with future growth. However, the sector faces many challenges and will have difficulty meeting the government’s export target of C$20 billion in cleantech exports by 2025. Although investors and corporate executives may be less concerned than the government about meeting government targets it would seem likely that the challenges in this sector may encourage the government to implement measures that will encourage renewed investment and export activity to stimulate cleantech sector exports in the next year or two.
Closely parallelling Statistics Canada, EDC defines cleantech as any process, product, or service that reduces environmental impacts through:
- Environmental protection activities that prevent, reduce, or eliminate pollution or any other degradation of the environment;
- Resource management activities that result in the more efficient use of natural resources, thus safeguarding against their depletion; or
- The use of goods that have been adapted to be significantly less energy‑ or resource‑intensive than the industry standard.
With such a broad definition already in place there would seem to be little room for the government of Canada to further expand the definition so as to claim to have met the 2025 target but changing definitions is not unknown as a tool used by governments in order to claim to have met some objective or other.
Canada currently experiences a significant trade deficit in the ECT sector. Most imports are complex manufactured products which make up 58 per cent of total ECT imports and 79 per cent of cleantech imports. Other cleantech imports significant enough to get a mention include scientific research and development services, waste and scrap goods, and cleantech support services. Complex manufactured goods and biofuels make up the majority of Canada’s cleantech trade deficit.
In its 2022 annual cleantech report, referenced below, EDC lists a number of companies that it considers to have been Canadian cleantech success stories in 2021 and it also provides a three-page summary of global cleantech trends. This summary of global cleantech activity combined with EDC’s knowledge of Canadian sectoral strengths makes for interesting reading for anyone interested in investment opportunities in the cleantech sector.
EDC is to be commended for its analysis of Canada’s cleantech sector, not just for exporters but also for investors and anyone interested in greening of Canada’s economy. While EDC seems to be a little gloomy, repeatedly mentioning that despite the cleantech opportunities that exist the economic, financial and business environment for the foreseeable future will pose significant challenges, many investors and business executives will remember that for every challenge there is an opportunity. EDC, more than any other government department, seems to have the information needed to help businesses address those opportunities, both in domestic and export markets.
A useful report, Exploring Canada’s Cleantech Sector, was published by EDC in advance of Cleantech Week 2022 and is available here.
In related news, EDC and Desjardins Group recently announced a loan guarantee partnership to provide up to $1 billion in sustainable financing over three years to medium and large export businesses looking to reduce their greenhouse gas emissions. The partnership was made possible through the EDC’s Sustainable Finance Guarantee pilot program. The program is a risk-sharing solution developed alongside the Bank of Montreal to increase financing for medium- and large-sized businesses planning to transition from carbon-intensive operations to a low-carbon future.
According to the experts at EDC, developing goods, services and processes to increase energy efficiency and reduce the world’s carbon footprint on the planet is big business—here and abroad—and opens the door to many opportunities for Canadian businesses.
Colin Isaacs is a chemist with practical experience in administration, municipal council, the Ontario Legislature, a major environmental group, and, for the past three decades, as an adviser to business and government. He is one of the pioneers in promoting the concept of sustainable development for business in Canada and has written extensively on the topic in the popular press and for environment and business platforms.
Featured image credit: EDC Canada.