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signs of change: canada’s new economic reality

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This is part of an occasional series on Canada's economy and its shift away from resources.

Fielding Chemical Technologies Inc. has been in the industrial recycling business for 60 years, since it began recovering solvents from a waste stream at Ford Motor Co.'s Oakville, Ont., plant and returning the material to the auto maker for reuse.

Fielding is positioning itself as a Canadian leader in clean technology, promoting the concept of the "circular economy," in which waste material is treated as a valuable resource, rather than simply disposed of.

The company says its process for recycling solvents emits a quarter of the greenhouse gases that the production of the same volume of virgin chemicals does.

The claim to be a "clean-tech company" is much in vogue in Canada.

Governments at all levels are increasingly insisting on better environmental performance from industry, and Mississauga-based, family-owned Fielding is reaping the benefits.

"There is a momentum building across this nation from municipal politicians, to provincial, to federal [ones] that clean tech is an imperative for the country and for the globe," Ellen McGregor, the company's co-owner and chief executive officer, said in an interview. "We're feeling the difference and the difference is translating into growth – we're seeing remarkable growth in our business."

But as more companies declare themselves "clean" or "green," a blurring of lines in the clean technology sector and a lack of data about its scale and scope has left a crucial blind spot for a group of companies touted as an emerging growth engine. Governments at all levels are pursuing new policies to boost clean technology including tax breaks, providing incentive for venture capital, and using public procurement to build markets. But it is unclear which companies should benefit and what impact those policies would have on the broader economy.

The "clean-tech" description is applied far beyond the renewable-energy producers to include companies that work in more traditional industrial sectors, including autos and construction, oil production and chemicals.

Indeed, clean tech is not a single industry, but includes any company that provides goods or services that reduce the environmental footprint of other businesses or consumers. It can involve the substitution of fossil fuels for cleaner ones or ways to enhance efficiency and reduce waste in production and consumption.

Fielding recently changed its name to Fielding Environmental to highlight its waste-diverting, energy-saving, business model. Wind and solar industries promote their green credentials, as do companies that deal in energy-efficiency or waste-water-reduction technologies.

With the signing of the Paris Agreement on climate change last December, global leaders have signalled the world must transition from a fossil-fuel, resource-intensive economy, to one that relies on clean energy and far more efficient goods-producing sectors. Canada's fossil-fuel sector is widely seen as a declining industry, although the pace of its retreat is greatly debated, and governments are looking for new sources of economic growth to sustain the country's standard of living.

The federal and provincial governments are deliberating this summer on joint approaches to climate-change policy and aim to reach a pan-Canadian climate strategy when Prime Minister Justin Trudeau meets again with premiers in the fall. At their session in Vancouver in March, the leaders established four working groups to devise policies, one of which deals with "clean technology, innovation and jobs."

Its mandate is to recommend policies that encourage innovation that would both stimulate jobs creation and drive Canada's transition to a low-carbon economy. Based on that work, Ottawa and the provinces will be introducing a host of measures to encourage the adoption of environmental technologies and foster the growth of clean-tech companies.

But which companies deserve to qualify as the beneficiaries of that clean-tech policy? And how do we assess the economic potential when we don't have a clear view of its present state?

Take Grafoid Inc. It's hard to say exactly what kind of company Grafoid really is. The Kingston-based firm is developing applications for graphene, a remarkable material that is made of an ultrathin layer of carbon molecules. Graphene's uses range from coatings that make solar panels more efficient, to improved battery cathodes, to sponges that can help clean up oil spills.

The raw material for these products will come from a graphite mine in Quebec that is owned by one of Grafoid's parent companies, Focus Graphite. So is Grafoid a resource company, a research and development firm, or a technology company?

Founder and chief executive officer Gary Economo thinks that there should be no debate: "We are clean-tech company. Everything we do eliminates environmental impacts," he said.

Grafoid's multiple dimensions underlines the difficulty of classifying, and measuring the size of, the clean-technology sector in Canada.

The federal government allotted $2.1-million to Natural Resources Canada in the March budget to "enhance clean-technology data" in conjunction with Statistics Canada and the Industry Department. The idea is to get a better handle on the clean-tech sector's contribution to the Canadian economy, the budget said.

In the absence of formal data from Statistics Canada or other official sources, Ottawa-based consultant Céline Bak produces an annual "Canadian Clean Technology Industry Report" that quantifies the industry's size and impact.

She counts 774 firms – with total revenues of $11.6-billion and 55,600 direct jobs, which exceeded employment in the forestry industry or the pharmaceutical sector. The companies are grouped into 10 sectors, including water and waste water; energy efficiency and green buildings; industrial processes and products; extractive processes and products, and power generation. Their spending on research and development rivals the aerospace industry.

But the clean-tech industry's growth is slowing and – while export revenues are still climbing – Canada's share of the booming global market for "environmental goods" has seen one of the steepest declines among the top exporters.

A survey of Canadian clean-tech firms released last week noted that their most immediate concerns revolve around access to capital, availability of critical talent, and barriers created by government regulations. Looking at the longer term, they cited defence of intellectual property, access to business development talent and the opportunities to benefit from government procurement.

In order to address those concerns, governments need a clearer picture of who the players are and the business environment in which they operate, said Ms. Bak – a senior fellow at the Waterloo, Ont.'s Centre for International Governance Innovation.

"We face two imperatives: the need to increase our productivity and the need to reorient our economy so that we can have an orderly unwinding of the fossil-fuel economy globally and in Canada," she said. The combination of those two things is why it's important for us to understand the evolution of Canada's clean-tech industry and its potential."

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Tickers mentioned in this story

Study and track financial data on any traded entity: click to open the full quote page. Data updated as of 28/03/24 3:13pm EDT.

SymbolName% changeLast
F-N
Ford Motor Company
+1.68%13.28
FMS-X
Focus Graphite Inc
+3.13%0.165

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