20 03 2014
Does the cleantech sector really exist?
This may seem like heresy to those (like myself) who are very actively engaged in what is labelled the ‘cleantech sector’ but it is a valid question and one that needs to be addressed objectively, honestly and quickly if cleantech is to find a permanent home in the public lexicon and therefore increasingly in our policy framework.
So what’s at stake? What could possibly be worth raising the ire of my colleagues and fellow ‘cleantech’ proponents by asking this question? Well, allow me to make my case –
At the recent Canadian Energy Innovation Summit in Toronto, Ontario Premier Kathleen Wynne declared that ‘Ontario has about 3000 cleantech firms that employ 65000 people, generating revenues of more than $8B’. Those are fantastic numbers and great news for the sector in Canada except for one problem, the 2014 Canadian Clean Technology Industry Report launched less than a week later suggests that the sector consists of 700 companies in all of Canada employing 41000 people generating $11.3B.
Do you see the problem here beyond the fact that the numbers don’t add up? Both sources of information are well respected and credible yet they seemingly contradict each other by a factor of four on some very basic numbers. Sure, we can start dissecting and hand-waving to explain the differences but the bottom line is if I were a policy maker I would find it difficult to take seriously and address a sector with such dramatically different views of itself. That’s why asking whether the ‘cleantech sector’ is real and if so, what exactly does it mean is so important.
According to the Cleantech Group founded by Nick Parker who famously coined the term Cleantech and introduced it to the business and investment community in 2002 cleantech ‘represents a diverse range of products, services, and processes, all intended to:
- Provide superior performance at lower costs, while
- Greatly reducing or eliminating negative ecological impact, at the same time as
- Improving the productive and responsible use of natural resources’
More than 10 years after the introduction of the term the definition is still being refined by the Cleantech Group and spans several industry verticals organised into 18 sectors.
Meanwhile Analytica Advisors who have contributed tremendously to giving an identity to the ‘cleantech industry’ in Canada through the Canadian Clean Technology Industry Reports in the 2014 report define a clean technology company as ‘a company with proprietary technology or know-how that addresses one or more of…’ and goes on to list ten sectors organised into three market segments; upstream sectors, downstream sectors and water and agriculture sectors.
Of note here is that there are only about seven easily recognisable overlaps between the 10 sectors in the Analytica Report and the 18 of the Cleantech Group.
Tom Rand, also a panellist at the Canadian Energy Innovation Summit and Advisor to the Cleantech Practice at MaRS suggested that similarly as ‘IT is no longer a sector’ ‘cleantech is not a sector it is a new way of doing business in a low-carbon world’.
Wow, three heavyweights in the ‘cleantech whatchamaycallit’ with three very different perspectives on what cleantech is. So which version is correct? They all are to a degree in my opinion but that’s not nearly as important as how they meld together to form a cohesive narrative to inform policy and win hearts and minds.
Katie Fehrenbacher a well known writer and blogger on cleantech at Gigaom suggested the following in response to a somewhat biased and inaccurate (or at least incomplete) 60 Minutes coverage on the sector under the title ‘The Cleantech Crash’.
‘The underlying problem is that “cleantech” is a convoluted term that can mean many things, and isn’t all that helpful as an organizing group. Let’s figure out in 2014 if we should kill that term or not.’
Katie certainly has a point but killing the term by itself doesn’t shed the necessary light on the very real phenomenon of the emergence of a totally new kind of global infrastructure made sustainable by advances in technology and business models. Replacing it with another term that is not adequately defined and recognised won’t help either.
Personally my own definition of the sector would include the focus on cleantech being a class of companies having some kind of proprietary technology or know-how that enables other sectors and society in general to meet their objectives sustainably while remaining competitive on price and performance with existing, unsustainable approaches. This also recognises that cleantech represents a technology enabled way of doing business in an increasingly resource-constrained and environmentally responsible world.
Regardless of what it is called and how it is defined Crosstaff and our partners along with many others across Canada and around the world will continue to facilitate the transition to a sustainable global infrastructure through accelerating and enabling the commercialisation and adoption of clean technologies. Whether and how these activities get formally recognised and accepted as a cohesive sector only time will tell.