Canada was ranked second on the 2021 Cleantech Innovation Index, just behind the US. We’ve long been cognizant of our resources, and in 2022, the Canadian Minister of Natural Resources announced $12 Million in investment projects in different areas of CleanTech. In addition to these exciting updates, 12 Canadian companies cracked the Global Cleantech 100.
With a global desire for more circular economies and lofty carbon emission goals, more businesses will be looking for cleantech solutions to help them re-purpose or dissolve waste streams from production. So, if you have a CleanTech start-up and are looking to scale globally, there’s no better place than here in Canada.
What is Cleantech
CleanTech was a term coined by investors and VCs in the 90s, referring to new technologies that aim to improve environmental sustainability. And investment interest in CleanTech Companies is only growing. In April 2022, Cycle Capital and Demeter announced a new CA$244.5 Million Cleantech Canadian fund.
Canada defines cleantech under a few different pieces of criteria;
1) provides superior performance or lower costs than the current norm or standards
2) minimizes negative environmental impacts
3) makes more efficient and responsible use of natural resources
– Eco Canada
The global export market for cleantech products and services was approximately $1.150 trillion in 2015, up 76% from $880 billion in 2008. With a wide market for applications, it becomes a very attractive industry for entrepreneurs looking to make a difference.
Areas of CleanTech
The most common industries CleanTech is adopted by include;
- Natural resources
- Waste Management & Remediation Services
- Educational Services
- Public Administration
Top Canadian CleanTech Market Sectors
- Research & Development
- Energy Efficiency
- Green Building Materials
- Waste Reduction
- Lifecycle Management
Skill Gaps in CleanTech
In a detailed industry report by Eco Canada, where they conducted a National Employment Survey in 2019, 30% of employees at interviewed companies had some involvement with cleantech work, and almost half of the companies interviewed planned to hire more in the field.
Companies are having a hard time hiring cleantech workers, and it is commonly cited as one of the largest barriers to growth for the Cleantech market in Canada. Industry, Government, and academia are already creating bridges to help close these gaps, but there will need to be more financial support to help older workers gain the new skills needed. In fact, the World Economic Forum reports that around 40 percent of workers will require re-skilling of six months or less by 2025.
Commercialization Of Cleantech
The second hindrance to CleanTech’s growth is that many companies fail to commercialize their products. Canada’s cleantech industry is mainly composed of SMEs who have trouble attracting growth funds and sales.
Our industry is largely reliant on exports, but we currently only make up 1-2% of the global market. The Government set targets for cleantech exports to reach CA$20 billion by 2025, which would require tripling our export value, exceeding a growth rate of 11% a year.
What is slowing down the commercialization of Cleantech products?
There are a few factors that contribute to low rates of commercialization in cleantech. First, the Canadian markets are largely risk-averse. If cleantech companies want to increase their chances of end-user adoption they need to ensure companies have the training and support they need in place before the integration begins. They should also be able to create a clear picture of the benefits that the technology will bring to the business past the longevity of the general planet and population.
Currently, in Canada, there are also gaps between environmental policy targets set and actual regulations. In recent years, the government has added new streams of funding to help different industries adopt new clean technologies, and there will be big opportunities for Cleantech companies to educate potential customers on these options.
The government also believes the following are slowing the commercialization of clean technologies;
- Low access to patient growth capital, scale-up investments and grant funding suited to the unique risks and costs of clean technology
- Small relative firm size, a lack of strategic expertise, market information and participation in targeted international bodies hamper market access for Canadian clean technology firms
- Women and Indigenous people are insufficiently represented in the workforce
- Limited entrepreneurial/business and soft skills among start-ups
Biggest Canadian Opportunities for the Commercialization of Cleantech
There have been a few recent announcements that show the Canadian government is serious about changing the way Canadians move about the country. First, they set goals to have all new light-duty passenger cars and passenger trucks be electric by 2035.
To date, the Federal government has invested over $1 billion and has launched the Zero Emissions Vehicle Infrastructure Program, and will invest an additional $680 million by 2027. This investment will be divided into 5 main pillars.
First, the government is supporting the addition of vehicle charging infrastructure in both public and private places. You may have started seeing electric charging stations at places like service stations, retail, restaurants, arenas, libraries, medical offices, and park and ride spaces. Not only will this encourage SMEs to support infrastructure initiatives, but it gives them the opportunity to also look into solar generation or other cleantech upgrades to round out their corporate social strategies. This will work in tandem with their second pillar, on-street parking with EV charging, managed by municipal governments.
They also want employers to help build this infrastructure to support their employee’s commutes. Zero-emission transportation infrastructure projects that are mainly used by a company’s employees can also apply for the government for up to 50% of project costs. If your workplace also has company cars, or your business regularly deploys fleets, they will also support infrastructure for shifting your fleet to EVs. While most businesses can apply with project costs of up to $5 million, delivery services can only apply with project costs up to $2 million.
Electric Vehicle production in North America was previously limited to the USA, Canada being ranked 4th in lithium ion production potential. But on Monday, May 2nd, 2022, Stellantis announced that they were extending their contract with their manufacturing plant, with plans to update the facility to manufacture hybrid and electric vehicles.
The plant has received a provincial commitment of $123 million, with a matching federal investment. The plant upgrade is part of a larger Stellantis investment, totalling $3.6 billion between Brampton and Waterloo.
Agriculture & Protein Alternatives
Our modern agriculture practices have been under intense scrutiny from the tech community, starting as early as the 40s, but building rapidly in recent years to an expected new wave of Green Revolution.
Agritech companies have been making waves around the globe. The agritech market in North America is expected to grow from US$6,731 million in 2019 to US$16,005 million by 2027; it is estimated to grow at a CAGR of 12.2% from 2020 to 2027. Earlier this year, Ontario announced its first 60 projects receiving a total of $17.9 million through the Agricultural Clean Technology Program.
The Canadian, and especially Ontario’s, focus on sustainable energy sources such as hydro and solar mean that there is an increased need for storing power after it’s been produced. There have been significant pushes in some areas of the company for homeowners who implement solar to sell back to the grid. If this was taken a step further, there is a big need for micro-grids and smart grids to manage demand and a less predictable supply. Private landowners or communities, and capable of generating and distributing power to meet local needs while also generating cash flows to cover investment and operating costs and return objectives.
In 2018, 78% of all ECT product exports were clean technology products, mostly manufactured goods, like solar panels, clean energy equipment, bioenergy production equipment and a broad range of technologies and services. Clean electricity exports accounted for 16% of ECT product exports.
Ontario accounted for 49% of national ECT product exports, while Quebec accounted for 22%.
Where are the opportunities for firms? Some of the largest sector trends for 2022 include circular waste management, green materials, energy consumption management, and sustainable automation.
Cleantech Regulating Bodies & Funding
The Canadian government started the Clean Growth Hub to give companies access to all the information they need for funding, resources, and new government initiatives. Environment and Climate Change Canada also has a ton of resources ranging from weather and air pollution stats to effects of international affairs.
Expanding Your Business to North America
Looking to grow and take your business to the next level? There is no better place to get your foothold in the North American market than Brampton. BHive is a partnership between the City of Brampton and the Toronto Business Development Centre.
Are you ready to join us? Get in touch today!