There is an enormous opportunity for Canadian businesses in clean technology to grow and capture a large share of global markets, while improving environmental outcomes. Clean technology can create jobs in Canada, grow the GDP and help scale up some of the great technology companies that are already in the Canadian market and exporting abroad.
The clean technology sector today
Clean technology refers to any process, product or service that reduces environmental impacts. These technologies are developed by a broad array of firms, and their adoption spans all sectors of the economy. By developing and adopting clean technologies, companies and industry can better control costs, meet new regulatory requirements, improve global competitiveness and reduce impacts on climate, water, land and air.
At A Glance
Clean technology is a significant economic contributor
- ~3% of Canada's 2016 GDP (~$60 billion) was attributed to production of clean technologies, clean energy, waste management, and environmental goods and servicesFootnote 1
- To approximate the clean technology contribution (separating out clean electricity and waste management), the remaining environmental and clean technology activity accounted for 1.4% of Canada's 2016 GDPFootnote 2 and 178,000 jobsFootnote 3
Clean technology exports align with Canada's export intensity overall
- Excluding electricity and waste management, 17.1% of Canadian clean technology production in 2016 was exported—in line with total economy exports at 16.9% (2014 figure)Footnote 4
Canada has many strengths
- A strong research ecosystem—contributing 3.1% of global clean technology research publicationsFootnote 5
- Ranked 4th overall in the Global Cleantech IndexFootnote 6
- A young, sophisticated, highly skilled and entrepreneurial workforceFootnote 7
- A pan-Canadian approach to support clean growth and address climate change, which encourages the development and adoption of clean technology
Canada has many challenges
- A risk-averse domestic market for clean technology adoption
- Low access to patient capital or investment models suited to the unique risk, cost and returns (including time-to-return) of clean technology
- Need for greater domestic drivers of clean technology adoption to increase Canadian market demand (e.g., enforced accountability for environmental cost of pollution, government procurement practices)
- Underrepresentation of women and indigenous persons employed in all aspects of clean technology from innovation through to leadership positions
- Low adoption versus other types of advanced technology due to the high capital intensity of unproven systems
- Relatively low export market access and expertise make it hard for Canadian clean technology companies to win customers and investments, navigate global supply chains and collaborate with partners
Priority themes
Canada has much of what it takes to excel in clean technology: strong innovation capacity, good access to capital, and high global demand for goods and services. To seize the clean technology opportunity, the Table is considering how to strengthen and address gaps in research commercialization; improve the scale-up of firms and better support clean technology's unique investment needs. With that in mind, the Clean Technology Economic Strategy Table has identified the following priority themes:
- Strengthening early-stage innovation and growing firms to scale
Canadian clean technology innovators face challenges as they strive to develop new products and solutions, grow their companies and demonstrate their technologies to the market. New models of support and targeted initiatives could help build the capacity to grow capital at the size needed to take advantage of the demand for large-scale solutions. Efforts to identify companies ready for scale-up along with the right set of supports required at each stage of their growth could ensure more Canadian clean technology makes it to market. These additional efforts could build on the recent initiatives launched by the federal government—including support for both early and late-stage innovation—while encouraging more private-sector engagement. - Developing domestic and export international markets
Canadian clean technology goods and services are in demand; however, there are challenges in building a robust domestic market. Current tools such as government investments in infrastructure and procurement can be used to advance clean technology adoption and create market opportunities. Domestic adoption of clean technology can create a strong Canadian "first market" and support market-ready Canadian technologies that have the potential to be exported. Canada needs to build the export capacity of small and mid-sized companies by increasing their knowledge of global market opportunities and promoting mentoring of smaller firms by multinationals. Engaging in more strategic international outreach and identifying pathways to increase foreign direct investment in Canada will also help. - Driving innovation through regulations and standards
Regulations and standards can be powerful tools for advancing innovation. Canada should seize the strategic opportunity to create regulatory frameworks that proactively encourage the demonstration of clean technologies, and also facilitate closer collaboration among regulators, innovators and adopters, to ensure that regulations keep pace with technology advances. Regulatory harmonization across jurisdictions, along with taking a leading role in setting international standards, will both strengthen Canadian sectoral growth and environmental outcomes. The Table will look to other jurisdictions to better understand how other countries are encouraging innovation through regulations and standards. - Growing jobs and advancing skills
Canada needs an effective clean technology workforce, with the skills to support inclusive and sustainable growth. The Innovation and Skills Plan identifies many important first steps by focussing on strengthening science, technology, engineering and math (STEM) skills; accessing global talent; and promoting work integrated learning. The Table will continue to explore ways to increase opportunities for underrepresented groups—including women and Indigenous persons—working across the clean technology innovation ecosystem from start-ups to globally competitive firms. To better enable Canadian clean technology firms to grow and scale, the Table will look at how to build the sector's entrepreneurial capacity in areas such as finance and business development. Investors' clean technology expertise could also be improved to better tailor investment models and risk appetite to clean technology.