Post-Trump: Two opportunities and a challenge for the Canadian cleantech sector
A blog post by Neil Huff:
It’s been a while between blogs for me, but not much has happened – right?
Only a new U.S. president, who (between tweets) is pulling the U.S. out of the Paris Agreement – the international pact that commits countries to a low-carbon path.
A new NDP/Green government in BC, which may have significant policy ramifications – from our electoral system to BC’s position on pipelines.
And here at Foresight, we’re contemplating changes of our own as we look around and see what gaps we can fill in the cleantech ecosystem.
In the meantime, here is my take on two big opportunities and the primary challenge for Canadian cleantech.
OPPORTUNITY #1: Trump won’t trump cleantech momentum
The U.S. federal government may be pulling back on climate change and environmental protection, but countries like China, Germany and France are still openly committed to a low-carbon path. A loud majority of U.S. states, cities and companies are, too. Here in Canada, our government is standing strong in its commitment to address climate change. It is also investing in cleantech, to the tune of $1.8 billion over the next three years.
As the world transitions to low carbon, the market for cleantech solutions will inevitably grow. According to a recent Pembina report, the clean technology market is already worth $1.15 trillion globally. That represents a huge opportunity for Canada to diversify its economy and create new jobs, and for Canadian innovators and entrepreneurs to grab a share of a burgeoning market.
OPPORTUNITY #2: Vancouver is the place to be
According to a recent KPMG report, Vancouver now has Canada’s largest concentration of cleantech companies. The number of companies is up 35 per cent, and the sector increased its revenues by 20 per cent over 2014 to $1.8 billion. The industry looks set for growth.
Vancouver as Silicon Valley North…what better way to attract the top talent and top dollars we need to build a commercially viable cleantech sector? Vancouver-based Foresight grads like Dark Vision and Neurio, and current Foresight companies such as Hydra Energy and Novarc Technologies, demonstrate that the ideas and innovators are already here…and they’re ready to compete on a global stage.
CHALLENGE: Scaling up is still a problem
A persistent theme in Canadian cleantech circles is that Canada is a great place to start cleantech companies, but not to grow them. The most recent Analytica Advisors report offered a sobering look at the profitability of the average Canadian cleantech company (spoiler: they’re not profitable), and confirmed that many have difficulty obtaining financing. Making it even harder for cleantech companies to scale is the fact that the cost of financing projects has increased.
It’s a vicious cycle: if a company doesn’t generate profits and positive investment returns, it’s harder to convince investors to pump more money into the sector…which in turn makes it challenging for cleantech innovators to scale up.
The consequence? Canadian cleantech is losing global market share…and the opportunity to create new jobs and diversify our economy.
The good news is that we can do something about it. Currently, there is a big gap in existing government support as companies move from the startup phase to commercial scale-up. We need to do something about the access to capital issue, and put more focus on creating commercial-stage financing mechanisms. We also need to find ways to provide these companies with access to international markets.
Foresight is not just thinking about these challenges…we’re hoping to do something about them. We don’t just want our cleantech sector to survive, but to thrive. If we can get it right, our sector will create Canadian jobs, diversify our economy, and provide technologies that are good for the planet and for the bottom line. Stay tuned!