Canada has declared a BHAG (Big Hairy Audacious Goal) for the clean technology sector: to capture a sizable part of the global market for cleantech. This market is expected to exceed $2.5 trillion by 2022. The goal is to triple the value of Canada’s annual exports to $20 billion per year by 2025 from $7.8 billion in 2017. Given the relatively small size of Canada’s domestic market, strong export growth is simply a necessity. For clean technology and environmental products and services to be in the top five exports by 2025, exports will have to grow by an average of 11.4% per year. There are a handful of examples that prove that it can be done; Canadian cleantech companies that are very well recognized internationally include Ballard Power Systems, Ecobee, and MineSense. Notably, all of these success stories are small- and medium-sized companies (SMEs) that are global leaders in their respective field.
Accessing capital
But successful as they are, they are also few and far between. Cleantech start-ups face enormous challenges. In general, SMEs in cleantech often lack the critical access to public and private capital. Many clean technologies are capital intensive, but this capital also needs to be patient, as investments take time to reveal their true potential. Fortunately, we can see a progressive increase in size and sophistication of Canadian funds. This promises to play a role in preventing Canadian cleantech companies from migrating south of the border or being acquired by foreign firms.
Accessing talent
A second challenge among cleantech start-ups and SMEs are barriers to accessing talent on the technical side and limited entrepreneurial, business, and soft skills. Such start-ups are often founded by tech entrepreneurs with vision and expertise, but a lack of knowledge of the regulatory and policy environment results in some of these companies failing to become successful. Mitacs aims to fill a portion of this gap by helping companies bring in talent from post-secondary institutions to assist them in executing their roadmaps.
Canadian SMEs — who make up over 70% of cleantech employers in Canada, with about 50% being companies with under 100 employees — face an additional challenge: the Canadian domestic market is relatively small compared to the global market. It is therefore crucial that Canadian cleantech can be supported domestically in order to lay the groundwork for export success. This would allow Canadian cleantech companies to validate and showcase their technologies at home before tapping foreign markets.
Embracing the risks of early-stage technologies
To strengthen the Canadian market, we need a thoughtful and agile regulatory environment that rewards the adoption of cleantech. We need not just government to be receptive and embracing of the risks related to taking on early-stage technologies, but we also need the same with our utilities and private corporations. A culture of risk avoidance and, in turn, innovation avoidance, is holding us back. Procurement practices that allow small cleantech companies to compete are also essential.
Due to their size, SMEs do not automatically have the means and access to shape the policy and regulatory environment. Industry-led cleantech associations play a major role in helping Canadian companies succeed both domestically and internationally. These groups constitute a voice for the industry and drive issues related to policy, regulation, and funding. The Canada Cleantech Alliance, the Ontario Clean Technologies Industry Association (OCTIA) and Cleantech North are only three examples of organizations working together to ensure that Canada becomes a true global cleantech leader, ensuring holistic industry support from the community and access to capital, provincial and national policy, and advocacy.
The goal of tripling Canada’s clean technologies exports by 2025 is bold, but within reach. To achieve it, all elements of the cleantech ecosystem must work in tandem. Researchers, entrepreneurs, start-ups and SMEs need the collaborative support from the government and from all of us ecosystem developers, to succeed.
