The latest federal budget could prove to be a watershed moment for the clean-technology industry in Canada, and signals that the transition to a low-carbon economy remains a national priority.
At the very time that the Trump administration is backtracking in the United States, the Trudeau government is moving forward with a clear commitment to increase clean tech’s contribution to GDP, which is good news for economic growth and job creation.
Backing it up with more than $2.2-billion in new clean-tech spending, the budget shows Ottawa is moving beyond a focus on research and development and now is seriously committed to taking the next step: boosting the demonstration, adoption and export of Canadian energy and environmental technologies.
In clean tech, R&D is tremendously important, and Canada’s support for it has been good, if not consistent, over the years. Smart people in labs, garages and basements have invented and innovated, assisted by provincial and federal grants. Innovation hubs and incubators helped nurture the entrepreneurs that emerged. Private venture-capital firms invested early in companies that have worked to become market-ready.
The result is a clean-tech “farm team” that Canada has been growing for about a decade. But, as coaches often say, we didn’t come this far to only come this far.
Clean tech is now a $1-trillion global game – and growing. Spending on R&D is always welcome, but won’t get us into the big leagues on its own; it doesn’t magically transform innovations into commercial winners.
Customer orders are what matter, as well as having enough capital to fill those orders and kick-start the early revenues required to drive growth and enter new markets.
Herein lies clean tech’s chicken-egg problem: Customers and funders won’t come to the table if a technology hasn’t been successfully demonstrated on a commercial scale, but getting those first commercial deployments requires customers and private investors who are willing to take on daunting first-time risks.
The budget tackles this conundrum head on, recognizing that clean tech is a hard, capital-intensive journey that’s too risky and takes too long for traditional venture capitalists.
So on top of committing $430-million in R&D toward clean energy, transportation and natural resource innovation, the budget is putting nearly $1.4-billion over three years into the hands of the Business Development Bank of Canada and Export Development Canada. About $450-million of the new money will be used to finance first-of-kind clean energy and technology projects. Another $380-million will go toward equity financing for clean-tech firms, with the rest available as working capital to help firms buy inventory, hire talent, accelerate sales and boost exports.
Source : The Globe and Mail