Canadian Manufacturing

Carbon pricing could provide $120B of business for cleantech, says Lux Research

The Boston-based research firm says carbon pricing presents opportunities for transportation, waste, building, agriculture and electricity sectors; but economic shortfalls and political opposition complicate matters



BOSTON—Companies developing technologies to cut carbon emissions are in line for an opportunity worth up to $120 billion, as the federal government kicks off a carbon pricing program aimed at cutting greenhouse gas emissions.

This is according to a report by Boston-based research and advisory firm Lux Research.

Prime Minister Justin Trudeau has mandated that all 10 provinces implement a carbon pricing scheme by 2018, with a minimum of $10 per metric tonne (MT) and steadily increasing to $50 per MT in 2022. By 2030, our government seeks to cut emissions by 28 per cent, to 524 million MT of CO2 equivalent.

“While it remains to be seen how Canada’s provinces will spend the billions in tax revenues, proper allocation of funding can eventually position Canada as a global hotspot for innovations,” said Yuan-Sheng Yu, Lux Research senior analyst.

Lux Research analysts identified and evaluated 76 companies out of a list of 349, high-potential technology developers across seven sectors: oil and gas, transportation, electricity, building, industrial, agriculture and waste.

The analysts found transportation and waste firms are best positioned to take advantage of carbon pricing and directly reduce emissions.

The building sector is also is on track for emissions goals, and agriculture and electricity show near-term promise, while the industrial sector will likely have to wait longer as promising solutions have proved challenging to implement at scale.

The report states that Canada will emerge as a destination for global technology developers as well. Canadian technology developers will also strengthen their own portfolios of technologies for deployment in the rest of the world as other countries impose their own carbon tax schemes.

While Lux Research paints an optimistic picture of the potential of clean technologies to benefit from carbon pricing, the reality may be more complicated.

The 2017 Analytica Advisors report found that retained earnings in cleantech declined every year for the last five years, and all but one sector within the industry have seen negative returns on sales in the same time period.

The 2011 Analytica Advisors report predicted the Canadian cleantech industry to be worth $50 billion by 2022, but the 2017 report expects revenues to be closer to $18 billion.

In addition to cleantech falling short of economic expectations, political opposition to carbon pricing is fierce in some quarters.

In October 2016, Saskatchewan Premier Brad Wall said Ottawa’s plan to impose a price on carbon country wide showed a “stunning level of disrespect.”

During the same period, Alberta Premier Rachel Notley said her province would not support Ottawa’s climate change plan unless the federal government made progress on new oil pipelines to Canada’s coasts.

The potential of cleantech is there, but realizing lofty expectations could be easier said than done.

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