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.

What the 2013 Throne Speech Means for Canada’s Cleantech Sector – The Speech from the Throne delivered by Canada’s Governor General yesterday outlines the Government’s agenda in broad terms over the upcoming year. Here are some key takeaways for what this agenda could mean for Canada’s cleantech sector.

 

80% of Canada’s 700 cleantech companies are exporters. The speech outlined several initiatives under ‘the most ambitious trade agenda in Canadian history’ including:

  • A comprehensive economic and trade agreement with the EU – Although likely targeted at some of our major manufacturing and resource sectors the tighter environmental regulations and comparatively limited availability of natural resources makes the EU an attractive market for our cleantech companies. Strong cultural and historic ties and similar legal and business frameworks would also contribute to making the EU a preferred market for many of our cleantech solutions.
  • A commitment to expanded trade with emerging markets in Asia and the America’s – If one of the positive characteristics of the EU is the relative ease of doing business for a Canadian cleantech company it is counterbalanced by the raw demand for solutions from Asian economies that are going through the transition from developing to developed. There is no question that opportunities here are huge and any commitments to increase trade in these markets is a positive trend.
  • A comprehensive plan to assist Canadian businesses as they expand abroad – With most Canadian cleantech companies being SME’s the less internal resources consumed through establishing a presence in foreign markets the better.

 

There is a clear commitment to build on our ‘immense natural wealth’ to ‘seize Canada’s moment’ to ‘lead the world in security and prosperity’. The speech goes on to say however that the government believes that ‘resource development must respect the environment’. The majority of what came next focuses on environmental protection from spills and similar risks to local communities (a direct reference no doubt to the tragedy at Lac Megantic). There are related opportunities for some cleantech companies in monitoring and cleanup but the resource extraction sector has for the last few years recognised and invested in combating the environmental and economic risks associated with their operations which in the oil sands for example is more energy and water intensive than in other parts of the world. I have maintained that some of the biggest local cleantech opportunities would be tied to greening our biggest industries, a theme that featured prominently in a national summit I co-chaired in 2011. With the fate of Keystone pipeline in question based on the environmental impact of our oil sands sector you can bet that technologies that lower the environmental impact of these and other resource extraction operations will be in high demand.

 

Canada’s forests are of course another major natural resource. The government plans to continue to ‘support innovation and pursue new export opportunities for Canadian companies’. Whether this means another round of investment into the Investments in Forestry Industries Transformation Program launched in 2010 where the government allocated $100M over four years to invest in innovative technologies for renewable energy and non-traditional, high value forest products to make Canada’s forest sector more economically competitive and environmentally sustainable remains to be seen.

 

Clean technology companies are, as the name implies, technology companies and are therefore very knowledge intensive. The throne speech highlighted that Canada leads the G7 in post-secondary research investment and outlined the following initiatives building on a refocused NRC, Venture Capital Action Plan and expanded IRAP program which could mean greater support for moving these technologies into the market:

  • An updated Science, Technology and Innovation Strategy
  • Targeted investments in science and innovation chains from lab to market

The Advanced Manufacturing Fund to support new products and production methods could also be useful here.

 

Finally there were several references to developing and maintaining the sovereignty of Canada’s North. The ‘responsible development of its abundant natural resources’, establishment of the High Arctic Research Station, opening of the deep water Arctic port and other activity all point to the need for environmentally sound technologies to support settlements and operations in these remote locations particularly in supplying energy  and water and managing waste.

 

Although any specific action on climate change was not mentioned there is still a lot to be gained by the cleantech sector in Canada and the industries and communities that stand to benefit from these solutions in the year ahead.

 

For a transcript of the speech follow this link.

Policy Makers are People Too – The title of this post is a bit tongue-in-cheek as I do have considerable respect for policy makers and the difficult choices they have to make. I use the title to illustrate that policy makers, like all people, can be persuaded and it is in this persuasion that there are opportunities to improve outcomes for the leveraging of technology to increase efficiencies, reduce costs and reduce negative environmental impacts.

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