In November of 2021, the International Energy Agency (IEA) released the world’s first comprehensive energy roadmap plan before the UN COP26, known simply as Net Zero Emissions by 2050. While the 2015 COP21 meeting in Paris successfully created a new global climate change framework, COP26 took it up a notch with its sheer scale, ambition, and all-encompassing nature.

The Net Zero Emissions 2050 plan, literally and metaphorically, re-energized the momentum towards a more sustainable future. It hammered home the need for urgent action in this decade, aiming for a hefty 45% reduction in CO2 emissions to get us on track for net zero by mid-century. The plan was lauded for laying out a straightforward and practical path driven by data and outcome-led solutions, the highlights of which include:

  1. Ideating and building a wide portfolio of clean energy technologies
  2. Transitioning from non-renewable to renewable sources
  3. Emphasizing reuse and recycling to drive down the material intensity of clean energy technologies
  4. Making investment in renewable energy attractive enough for advanced economies to financially support emerging markets and developing economies.

Since then more than 140 countries, 9,000 companies, over 1000 cities, more than 1000 educational institutions, and over 600 financial institutions have joined the race to zero!

Graph showing how renewable energy investment hit a record $358 Billion in the first half of 2023

(Picture credit: BloombergNEF)

The excitement transformed into a very real investment boom too, with the first half of 2023 global investments in renewable energy hitting a record $358 billion, indicating a 22% rise compared to the start of 2022, and an all-time high for any six-month period in history! Of this, a little over 93% came from investments in Solar ($239 billion), and Wind ($94 billion). 

This was further boosted by investments in the clean energy industry totalling over 1.7 trillion, as compared to the 1 trillion invested in oil, gas and other fossil fuels industry.

 

Canada Leading the Renewable Energy Movement

Canada, with its vast land area and diverse landscapes, boasts an enviable and diverse portfolio of renewable energy sources – with energy from six primary renewable sources – Hydro, Bio, Wind, Solar, Geothermal, and Ocean. There is little doubt that Canada is among the pioneers of climate change activism and leadership, with 83% of the country’s electricity production already coming from non-emitting sources – higher than any of the G7 countries – as early as 2017.

Canadian efforts towards renewable energy had its landmark moment in 2016 with the release of The Pan-Canadian Framework on Clean Growth and Climate Change – Canada’s Plan to Address Climate Change and Grow the Economy. As per the last summary of progress, the key achievements included advancements in carbon pricing, new regulations to reduce methane emissions in the industrial sector, and ongoing support for renewable energy and low-carbon fuels. Additionally, governments also worked on climate resilience, funding infrastructure projects to mitigate climate change impacts and investments in clean technology and innovation.

Canada further demonstrated its commitment by enacting the Canadian Net-Zero Accountability Act on June 29, 2021, becoming one of the few countries to legislate its renewable energy objectives. This act also outlines the 2030 Emissions Reduction Plan – a roadmap for how Canada can achieve greenhouse gas emissions reductions of 40-45% below 2005 levels by 2030.

 

Five Fields in Renewable Energy for Canadian Startups to Thrive in:

As #2 on both the Global Cleantech Innovation Index 2023 and the most represented country in the Global Cleantech 100, Canada’s clean and renewable energy sector is a flourishing ecosystem for entrepreneurship. With giants like Berkshire Hathaway Energy, Copenhagen Infrastructure Partners and EDF Renewables continuing to invest big in solar and wind in Canada, along with cleantech startups securing massive funding, across Seed, Series A, B, and late-stage funding (CA $1.2 billion across 46 deals in 2022!) – Canada has truly become a global hotbed for high-impact innovations in renewables. 

Reports suggest nearly half a million people are already employed in this sector, and projections indicate a potential rise to nearly 650,000 jobs in the next seven years; the opportunities for Canadian startups are more promising than ever. 

We delve into five key sub-sectors in renewable energy where startups can thrive and make a significant impact not just in Canada, but across the globe:

  1. Generating Electricity:  Electricity is poised to become the predominant end-use energy source. This shift towards electricity is driven by the adoption of electric vehicles, heat pumps, and the electrification of various industries. Nearly $4.5 billion has been sanctioned to be invested across various programs to meet smart and renewable energy goals. This does not include the additional $340 million sanctioned to support remote and Indigenous communities towards conservation efforts and to help make the transition from coal to renewable energy.

2. Electric Vehicles: The government is working on establishing a homegrown electric vehicle (EV) and battery ecosystem in Canada. To propel this, the Government greenlit nearly $3.3 billion towards a more robust effort to reduce emissions from transportation – aiming to mandate that 100% of the sales of light vehicles and 35% of the sale of medium to heavy vehicles are zero-emission vehicles (ZEVs) by 2035. This is on top of the $19.7 billion worth of investments identified in Canada’s EV production industry. 

Some of the latest investment news in the EV space in Canada include the Governments of Canada and Ontario finalizing an agreement with Umicore Rechargeable Battery Materials Canada Inc. for a new plant in Loyalist Township, the Northvolt project that aims to have an annual battery cell manufacturing capacity of up to 60 GWh, which is enough to power approximately one million electric vehicles per year, and the Government of Canada investing in GM-POSCO to strengthen Canada’s EV battery supply chain.

3. Waste-to-Energy (WTE): Canada has also taken on a leading global position in adopting WTE technologies, primarily due to the implementation of numerous beneficial government programs and policies. An excellent illustration of where this is heading is how a renewable natural gas facility under construction at a landfill near Blenheim, Ontario, has taken on the conversion of methane gas from rotting organic waste into green energy. The landfill gas will be purified and transported to an injection point 5.7 km away, where it will be added to the regular natural gas supply. The Blenheim site is expected to power 40,000 homes annually for the next 20 years, reducing emissions equivalent to taking 24,000 passenger vehicles off the road each year.

4. Home & Building (Civilian) Power: To combat the 18% greenhouse gas emissions stemming from household electricity consumption, the Canadian government has sanctioned $2.6 billion over the seven years following 2020-21 to help homeowners improve home energy efficiency. This came as part of Canada’s strengthened Climate Plan released in 2020.

5. Nature Projects: Recognising the role that Mother Nature herself can play, the Government launched the $4 billion Natural Climate Solutions Fund. The fund strikes the perfect balance between ownership by Canadian citizens, with an example being the 2 Billion Trees Program while seeking sustained entrepreneurial efforts in the country’s nature-based economic sectors.

 

More Government Support for Startups Emerging in Renewable Energy

Canada is actively driving clean energy innovation through various policies and investments. Canada’s 2023 federal budget allocated an additional $83 billion for clean electricity, cleantech, manufacturing tax credits, and strategic financing. Specific policies and regulations you can bookmark are:

Federal Funding:

  • Strategic Innovation Fund and Net Zero Accelerator Initiative: The 2023 budget allocated $500 million over a decade for cleantech, and directed up to $1.5 billion from SIF’s resources to sectors like clean technologies.
  • Sustainable Development Technology Canada: Provides financial support and expertise to help Canadian companies develop and commercialize clean technologies that have the potential to deliver both environmental and economic benefits.
  • Global Innovation Clusters: After already investing $2 billion, Canada announced another $750 million over five years in 2022, to advance its five innovation clusters:  Digital Technology, Protein Industries, Advanced Manufacturing, Scale AI, and Ocean.
  • Canada Growth Fund (CGF): A $15 billion public initiative to boost private investment in clean energy and cleantech.
  • Strategic Innovation Fund (SIF): The Strategic Innovation Fund (SIF) offers significant investments in pioneering projects aimed at helping Canada’s economic growth for the benefit of its entire population.
  • Energy Innovation Program (EIP): Promotes clean energy tech for Canada’s climate goals and the shift to a low-carbon economy through research, development, and demonstration projects.

Cleantech Tax Credits:

  • Clean Technology Investment Tax Credit: Offers a 30% refundable tax credit for investments in clean technologies.
  • Clean Hydrogen Investment Tax Credit: Provides varying support levels for clean hydrogen projects, with a 15% tax credit for hydrogen-to-ammonia conversion equipment.
  • CCUS Investment Tax Credit: Available for capital investments in various CCUS applications.

Other Support:

 

Want to Start a Cleantech Business in Canada?

We are BHive, a startup incubator located in Brampton, Ontario. We offer international startups the tools, resources, and space to establish – and quickly scale – their businesses in Canada and North America. To apply to our Global Entrepreneur Incubation Program, click here!