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The Plasco Energy plant near Ottawa converts residential solid waste into a synthetic gas that is used to generate electricity.

Blair Gable/The Globe and Mail

Canada's $10.6-billion clean technology industry is on course to eclipse the aerospace industry in size within five years, according to a report being released Tuesday.

But Canada risks getting "left behind in the global race" because key foreign rivals are doing a better job of supporting their homegrown industries with focused trade, investment and innovation policies, according to Analytica Advisors president Celine Bak, author the Canadian Clean Technology Industry Report 2013.

"Canada needs a coordinated policy framework," Ms. Bak said in an interview, noting that countries such as the United States, Germany, China and South Korea already have a substantial lead in clean technology.

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"It's not always about expensive policies and big budget items. A lot could happen with the signals that governments send – that they think these industries have great economic potential," she said.

The Canadian industry is made up of 720 companies. But they tend to be relatively small. The report says policy should focus on creating at least 20 companies with annual revenues of more than $100-million.

The fast-growing clean tech industry – made up of companies involved in areas such as bioenergy, waste water and energy efficiency – is on a pace become a $26-billion industry by 2016, the report says. Aerospace generated revenue of $22.4-billion in 2011.

The federal government could spread the technical risk of commercializing new products by offering more loan guarantees, according to Ms. Bak.

Canada has the potential to become an export champion in clean technology, eventually grabbing as much as 3 per cent of the estimated $1-trillion global market for clean technology. That's up from 1 per cent now, according to the report, sponsored by Export Development Canada.

The industry exports 48 per cent of what it produces. That share is expected to grow to 70 per cent by 2015.

The industry already employs more people than aerospace in Canada (52,600 against 38,000) and spends nearly as much on research and development ($1-billion against $1.3-billion), according to the report. The industry outspends the resource and pharmaceutical industries on R&D.

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Clean tech has many of the same characteristics as the aerospace industry did in the early 1990s, Ms. Bak said. The industry is focused on exports, growing fast and invests heavily in R&D.

"But it doesn't have the depth of capital or the robust supply chain structure of the aerospace industry," she said.

Among other key findings:

– Exports totalled $5-billion in 2011, 44 of which went to markets outside the U.S.

– Industry employment grew 17 per cent between 2009 and 2011.

– Companies spent an average of $97,000 a year to register their intellectual property.

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