Canadian Manufacturing

Canada losing cleantech market share as global competition ramps up

A new study says Canada has lost 41 per cent of its global cleantech market share since 2005 as other countries have moved aggressively into the sector



PHOTO: CanWEA

Canada’s cleantech industry encompasses a wide range of businesses, ranging from power generators like solar and wind companies, to energy efficiency firms and wastewater management businesses, among many others. PHOTO: CanWEA

OTTAWA—A new report finds that revenues from Canada’s multibillion-dollar clean technology industry contracted slightly in 2014 after six consecutive years of growth that outpaced the rest of the economy.

But the study by Analytica Advisors still determined that almost 800 cleantech companies directly employed more than 55,000 people in 2014, an increase of 11 per cent over the previous year.

The numbers point to a Canadian sector that’s facing intense international competition from a flourishing global industry.

Nationally, clean tech revenues were pegged at $11.63 billion in 2014, down marginally from Canada’s $11.7 billion in 2013—after climbing by eight per cent in each of the previous two years.

Analytica president Celine Bak says Canada has lost 41 per cent of its global clean tech market share since 2005 as other countries have moved aggressively into the growing field.

Federal Environment Minister Catherine McKenna will be on hand today when Bak formally releases the 2016 report, signalling the emphasis the Liberal government places on fostering home-grown clean tech growth.

“This is not a consumer-focused industry, generally,” Bak said in an interview.

“Both the public sector and industry are important buyers, where regulation and prices on externalities (such as carbon pollution levies) are key factors.”

Bak convinced 107 public and private companies in 2015 to open their books to Analytica Advisors in order to benchmark themselves against others in the clean tech industry. The unique access provides research that’s attracted the attention of government.

Canada’s cleantech companies invested $1.2 billion in research and development in 2014, a bigger share of R and D against revenues than the aerospace industry. For the first time in 2014, more than half the industry revenues—$6.6 billion, or 57 per cent—came from exports.

The average cleantech company in Canada has 68 employees and 21 per cent of workers across the industry are under age 30. Twenty per cent are engineers.

The Canadian industry’s top concern in financing. The heavy innovation spending has come at the expense of growth, and companies are having difficulty borrowing in order to scale up their operations.

Bak noted that 70 per cent of cleantech firms are based in cities, yet municipalities find it difficult to buy from innovators because new start-ups don’t have deep enough balance sheets to provide long-term warranties. Private companies may be even more risk-averse buying their wares.

The clean tech industry should get a boost later this week when some 147 countries convene at the United Nations in New York to sign the Paris climate accord, signalling a global intention to decarbonize.

Coupled with the Liberal government’s budget emphasis on green infrastructure, it’s a clean tech opportunity that needs to be carefully considered, said Bak.

“If we do business as usual, investment in infrastructure will not necessarily be a tide which (lifts) all boats,” she said.

Bak suggests the public sector act as a backstop for private-sector lending, as we do with home mortgages, to encourage more aggressive financing and growth.

“We need to work on that and do so quickly, because the investments that are being made in infrastructure are important in the next few years and these should be opportunities for us to renew our economy and build some new companies.”

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