General Market Commentary

The Bank of Canada increased its interest rate 25 basis points once again, to 5.00%, on July 12.  The Bank continues to raise the rate of borrowing, as high inflation persists, and its July report projects the global economy will grow by around 2.8% this year.

Canada’s economy has performed stronger than expected, with more momentum in demand. While the Bank expects consumer spending to slow in response to the cumulative increase in interest rates, recent retail trade and other data suggest more persistent excess demand in the economy.

Meanwhile, federal investments continue to support the green economy, globally and nationally. Ahead of the seventh Ministerial on Climate Action (MoCA7) in Brussels, Belgium, Steven Guilbeault, Canada’s Minister of Environment and Climate Change announced a $450 million contribution to the second replenishment of the Green Climate Fund (GCF), the world’s largest dedicated climate change fund and a critical funding mechanism of the Paris Agreement.

With regard to cleantech in particular, Canada’s Federal Budget 2023 proposed $500 million over the next 10 years for the Strategic Innovation Fund, which focuses on advancing cleantech and sustainable solutions projects. Additionally, the budget provides $1.4 billion over five years for Natural Resources Canada to support clean technology research and development.

“We are going to make Canada a reliable supplied of clean energy to the world, and, from critical minerals to electric vehicles, we are going to ensure that Canadian workers mine, process, build and sell the goods and resources that our allies need,” said Chrystia Freeland, Canada’s Minister of Finance and Deputy Prime Minister.

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Hot Sector News

This month we’re putting the spotlight on CHAR Technologies Ltd., a leading cleantech development and environmental services company listed on the TSXV (YES.V). CHAR is trading today at $0.78. The company is projecting 2025 revenues of $20 million with $8 million EBITDA.

Toronto, Ontario-based CHAR is at the forefront of delivering innovative and sustainable technology solutions. With their proprietary high temperature pyrolysis (HTP) technology, CHAR can convert woody materials and other organic waste into two valuable resources, including renewable energy (RNG or green hydrogen) and biocarbon (activated charcoal and solid biofuel). CHAR’s technology provides alternative fuel sources while also effectively preventing hazardous materials from polluting the environment.

Established in 2011, CHAR has experienced a steady rise in activities and support. Most notably, on July 5, the company secured a $6.6 million strategic investment from ArcelorMittal S.A., a leading steel and mining company, through ArcelorMittal XCarb S.à r.l‎. and ArcelorMittal’s XCarb® Innovation Fund.

With a presence in 60 countries and primary steelmaking facilities in 16 countries, including ArcelorMittal Dofasco in Hamilton, Ontario, ArcelorMittal generated revenues of USD$79.8 billion in 2022.

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CHAR CEO Andrew White at a recent Ontario Clean Technology Industry Association (OCTIA) event in Markham, Ontario participated in a panel on clean energy. (Image credit: CHAR Technologies.)

CHAR’s recognition as one of the “best companies and brightest breakthrough technologies that hold the potential to accelerate the decarbonization of the steel industry” ultimately led to its selection by ArcelorMittal. ArcelorMittal’s XCarb® Innovation Fund received an overwhelmingly positive response, with over 90 start-ups from five different continents submitting applications across seven distinct technology domains.

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CHAR also signed a Memorandum of Understanding under which ArcelorMittal Dofasco will purchase biocarbon produced at CHAR’s cutting-edge facility in Thorold, Ontario, starting in 2023. This agreement paves the way for larger-scale trials of CHAR’s biocarbon in the Electric Arc Furnace (EAF), targeting a reduction of greenhouse gas emissions by 35,000 tonnes over four years. Biocarbon produced by CHAR has already undergone successful testing in the Blast Furnace at ArcelorMittal Dofasco since 2021. This partnership marks a significant milestone in the collaborative efforts of CHAR and ArcelorMittal Dofasco to develop a replacement biocarbon to reduce ArcelorMittal Dofasco’s consumption of fossil-based carbon sources.

Andrew White, CEO of CHAR Technologies Ltd., emphasizes the importance of this partnership, stating: “This strategic partnership with ArcelorMittal will be instrumental in propelling CHAR’s mission to revolutionize carbon-free solutions within heavy industries. The funding will be used to accelerate engineering solutions that produce green steel and expand production capacity. We are excited to be the first Canadian company to receive support from the XCarb® Innovation Fund as it demonstrates our ability to roll out first in-kind wood waste to energy solutions backed by long term industrial contracts.”

 Stocks to Watch

Here is a list of Canadian cleantech stocks that we are monitoring for this column. This list of public companies is by no means complete, and we are open to suggestions from our advisors and readers.

Name Symbol Price in $CDN
(June 15/23)
Price in $CDN
(July 14/23)
% Change
Algonquin Power & Utilities Corp. AQN $11.03 $10.68  -3.17%
Anaergia Inc. ANRG $1.75 $1.60 -8.82%
Ballard Power Systems Inc. BLDP $6.07 $6.10 +0.4%
*Biorem Inc. BRM $1.01 $0.94 -6.93%
Boralex Inc. BLX $36.77 $35.32 -3.94%
*CHAR Technologies Limited YES $0.68 $0.78 +14.7%
Electrovaya Inc. EFL $0.97 $0.97 0%
Engine No 1 Carbon Streaming ETF NETZ $67.28 $69.86 +3.8%
Evergen Infrastructure Corp. EVGN $ 2.81 $ 2.99 +6.41%
Greenlane Renewables Inc. GRN $0.26 $0.26 0%
H2O Innovation Inc. HEO $2.97 $3.18 +7.07%
Li-Cycle Holdings Corp. LICY $7.53 $7.47 +0.8%
Loop Energy LPEN $0.46 $0.55 +19.56%
*Thermal Energy International Inc. TMG $0.11 $0.12 +9.09%
TransAlta Renewables Inc. RNW $11.87 $13.23 +11.46%
UGE International Ltd. UGE $1.40 $1.29 -7.85%
Westport Fuel Systems Inc. WPRT $10.95 $11.68 +6.67%
Zinc8 Energy Solutions Inc. ZAIR $0.08 $0.07 -12.5%
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*The author of this column owns equity. It is not meant to be an endorsement, but simply a statement of this fact.

James Sbrolla is a veteran of the financial and environmental industries. His career has been focused primarily on public and private companies in the clean technology sector. He is a member of the Environment Journal Advisory Board.

This column is written by James Sbrolla and Connie Vitello, editor of Environment Journal. To pitch an idea for an upcoming Market Watch column, or to suggest a stock, please email connie@actualmedia.ca.

 

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