The Liberal government is aiming to propel Canada into a leadership role in the $1-trillion (U.S.) global clean-technology market, but one industry analyst said the country will need a more aggressive and coherent strategy to get there.
In his budget this week, Finance Minister Bill Morneau announced a number of measures aimed at supporting research, development and commercialization of technology that is used to reduce pollution, improve resource efficiency and cut greenhouse gas emissions.
"There are significant, multiyear commitments – both in [Natural Resources Canada] and across the government – that lead to combined objectives in clean tech," Natural Resources Minister Jim Carr said in an interview from Winnipeg Thursday. "Our aspirational goal is that we should be an international leader in the development and exporting of green technologies. I think we can be confident and optimistic that we can get there."
At the Paris climate summit in December, Prime Minister Justin Trudeau pledged to double the federal government's spending on research and development in the clean-tech sector over five years, and Mr. Carr said the budget represented a sizable down payment on that promise. However, he added that Ottawa has not identified what exactly falls under the rubric of "clean-tech" research and development and will have to establish that baseline as part of its Paris commitment to the so-called Mission Innovation, an international initiative spearheaded by Microsoft Corp. founder Bill Gates.
In total, the budget outlined $400-million over two years in spending on clean-tech R&D, much of it allocated to Natural Resources Canada to disburse. Ottawa's venture capital fund, Sustainable Development Technology Canada, got a relatively paltry $50-million to invest in the commercialization of startup companies. Government bureaucrats across government will be disbursing hundreds of millions to, among other things, help reduce carbon emissions in the oil and gas sector, prepare demonstration projects for advanced electric vehicle charging stations and support clean technology in the broad resource sector.
"The budget reflects bureaucratic ambitions for clean-technology innovation and broad public ambitions for a green economy and infrastructure," said Celine Bak, president of Analytica Advisors and a senior fellow at the Waterloo, Ont.-based Centre for International Governance Innovation (CIGI). "The two are not yet connected but they could be."
Ms. Bak said Canada needs to reverse its recent slide in the global market before it can aim for a leadership role. Between 2006 and 2013, the country's share of the fast-growing global market in internationally traded environmental goods fell 41 per cent to 1.3 per cent from 2.2 per cent and the sector employs 50,000 workers. In that same period, China doubled its global market share to 20 per cent.
The consultant insisted that a clean-tech strategy requires more than federal support for R&D. A national effort is needed to overcome major impediments to commercialization for small, startup businesses, including backstopping financial risk, extending trade finance, insisting on small-business set-asides in public procurement and ensuring Canada's trade promotion effort, she said.
Carbon prices that rise over time are also a critical element, she said. Mr. Carr agreed that carbon pricing is an important element in the effort to commercialize clean tech and noted that Ottawa is working with the provinces to forge agreement on a pan-Canadian approach.
Even as Ottawa pours hundreds of millions of dollars into the clean-tech sector, Natural Resources will work with Statistics Canada to provide a better picture of the clean-tech universe, which is currently not tracked as an industry sector. Mr. Carr said it is important that Canadians understand how the sector is contributing to the overall economy. Ms. Bak added that without proper statistics, the country's economists and financial institutions undervalue the sector, making it harder for companies to raise capital.