- Canada’s significant experience with renewable energy generation, energy transmission and resource extraction has given rise to a vibrant cleantech and energy tech sector that is focussed on increasing sustainability.
- The support systems for Canadian tech entrepreneurs and start-ups are generating a lot of momentum in the sector, but tech development takes time and patience.
- Market diversification is always smart business, especially into promising markets like Europe and Asia, but the US remains Canada’s most important trading partner – it is the largest, nearest and easiest to access for Canadian companies.
New cleantech start-ups should focus on a specific market and develop a solid value proposition to succeed in that market, before broadening their scope.
How competitive is Canada in the global cleantech and energy tech marketplace?
It is an impressive feat that Canada, as a relatively small country, has evolved into an international leader when it comes to cleantech. We ranked 4thoverall on the Global Cleantech Innovation Index (GCII) in 2017 and 13 Canadian companies were listed in the Global Cleantech Top 100 list. This shows the level of innovation in Canada that ranges across all the different subsectors that cleantech touches. EDC is now serving over 200 cleantech companies to help them with their international activities. We are seeing growth in our customers in all the subsectors of clean technology from wastewater and water management, transportation and power generation to industrial processes, energy infrastructure, smart grid, building efficiencies and agricultural technology. Canada might not have many large global consumer brand names but Canada, as a brand, is very strong globally. It stands for value and integrity.
“Canada might not have many large global consumer brand names but Canada, as a brand, is very strong globally.”
A major factor in the evolution of Canada’s cleantech sector is our economic and geographic makeup. We generate a large percentage of our energy from hydro, which gives us a solid base of experience in that sub-sector of cleantech. We also have an economy that is largely dependant on natural resources, so we’ve developed considerable experience in renewable energy generation, in energy transmission over long distances and in resource extraction. Essentially, Canada has an ecosystem where technologies have been created to make the energy sector more efficient and effective, and that has given Canada an advantage in the cleantech space.
To what do you attribute the success of the Canadian cleantech ecosystem?
There are multiple factors that make Canada an ideal ecosystem for the development of cleantech companies: the superclusters that have formed in recent years serve to encourage innovation and growth within the sector; the Government of Canada created Sustainable Development Technology Canada (SDTC) to sponsor companies in their early R&D stage; industry associations such as Écotech Québec, MaRS Discovery District, Alberta Clean Technology Association and BC Cleantech Association have done a great job of getting the industry working together; government organizations are also now working much more closely together; finally, centralized services like the Clean Growth Hub help companies access various government services faster. So, there is a lot of positive momentum in the sector right now.
“Canada has an ecosystem where technologies have been created to make the energy sector more efficient and effective, and that has given Canada an advantage in the cleantech space.”
Add to this the fact that governments around the world have signed onto the Paris Accord and are creating regulations that promote clean technology. Also, we’re seeing that large global corporations are adopting clean technologies into their business, irrespective of the type of industry they may be in. This all adds to the momentum for Canadian businesses.
Which are the three main regions or countries where Canada’s energy tech and cleantech companies have the most opportunities?
The world is trending towards not just shipping from point-to-point but also investing. And cleantech is about both exporting and investing – foreign investors are coming in and participating in technology and Canadian companies are taking their technology and investing in other markets. So, that link between trade and investment is very strong.
The first promising market is the United States, which is still the largest cleantech market for Canadian companies. Despite some of the dialogue at the federal level around support for climate technologies or clean technologies, states like California are encouraging sustainable technologies and municipalities are looking to reduce emissions in their transit fleets and manage water, among other goals. There is also lot of innovation and venture capital in the United States around clean technology. Canada’s proximity to the US, common business practices, common language and culture and the size of the American market have been big drivers for Canadian exports to the US.
“High growth markets like China and India, which are spending hundreds of billions on clean technology, are promising options for Canadian companies in the sector.”
The second market is Europe, especially with the Comprehensive Economic and Trade Agreement (CETA) that not only eliminates tariffs but also covers all kinds of other areas like labour mobility, industrial standards, and more. Europe is a large, growing market where countries have put a lot of focus on clean technology. Many multinational companies are also based in Europe. So, when it comes to exporting Canadian cleantech to Europe, it is not only about selling a product into that market but also about establishing partners that can be leveraged to expand into more markets.
Lastly, the high growth markets like China and India, which are spending hundreds of billions on clean technology, are promising options for Canadian companies in the sector. They have a focus not only on environment, but also on food technology, food safety, security and so on. But of course, as you get further away, it takes more effort and more time to develop your value proposition in those markets.
What role do you see Canadian energy technology companies – and their exports – playing in the global energy transition? Are there specific areas where we lead the global competition? For example, the oil & gas sector?
The Canadian oil and gas industry has always been a leader in terms of innovation. Canadian oil and gas companies have found ways to reduce the impact of extracting oil and gas reserves, to do it more efficiently, to do it in a way that lowers environmental impact. Canadian companies have continuously done that and there is a lot of energy experience and technology in Canada that can be exported. This is an area of strength the Canadian oil and gas industry possesses.
“Cleantech is about both exporting and investing – foreign investors are coming in and participating in technology and Canadian companies are taking their technology and investing in other markets.”
Outside oil and gas, hydro is another area where we have deep expertise and we’re actually seeing Canadian investors taking a role in owning and operating hydro assets around the world. Brookfield Renewable and other Canadian companies have been involved in the hydro sector around the world. We also have companies like Northland Power that build and operate wind projects around the world. We have companies that touch a number of other areas around energy technology, whether it is in transportation, hybrid or electric transit vehicles, battery storage in marine applications, distributed power, long-distance power transmission, and grid control. So there is a lot of energy experience and technology in Canada that can be exported.
What role does EDC play in promoting exports of Canadian tech around the world?
Cleantech has been a priority for EDC since 2012: we see it as a vital sector in the Canadian economy and have built a team to focus specifically on clean technology. We also offer a number of solutions to help cleantech companies succeed internationally.
One of the key challenges in clean technology is that a company needs to convince its buyers that its new product or new solution, which will displace existing solutions, is going to work. To be assured of performance, foreign buyers of Canadian cleantech will often ask for guarantees of performance from the company they are buying from. EDC’s contract bonding solution helps provide that guarantee.
When a company is starting to expand into new markets and finding new buyers, it exposes it to the risk of not getting paid by those buyers. The biggest solution that EDC provides in the cleantech sector is Accounts Receivable Insurance, which insures companies against that risk.
“Cleantech has been a priority for EDC since 2012: we see it as a vital sector in the Canadian economy and have built a team to focus specifically on clean technology.”
The third challenge that our customers often face is access to capital for growth. We have customers that land contracts for big orders with large international buyers, which is great news, but they have to increase their capacity to fill those orders. So, EDC can provide them financing that is tied to their contracts so that they can build their capacity and then repay the loans from the proceeds of their contracts.
In terms of what entrepreneurs themselves must do, the number one thing is to focus; focus on the specific offering for a specific segment in a specific market. Make sure you have a good value proposition and go after it. So, it is about focusing to find the right partners and the right set of buyers because there are tremendous opportunities and options available for small companies. The ones that are successful are always those that begin narrow in their focus, develop their value proposition and then find the buyers and partners. There are certainly lots of resources for small Canadian companies to access. For example, Canada has a terrific Trade Commissioner Service that is located in markets around the world to help with market access and operational guidance. EDC, of course, is also here to help with managing their risks and capitalizing on opportunities.