Revenue growth in Canada's clean-tech industries stalled in 2014 despite a strong performance among international competitors, as the deep oil-industry slump also hurt many small companies that offer technologies to clean up the traditional resource sector.
Combined revenue for 774 technology companies fell to $11.6-billion in 2014, down from $11.7-billion the previous year, even as the global market for clean-tech goods grew at a rapid clip, according to the Canadian Clean Technology Industry Report which is due to be released in Ottawa on Tuesday.
There are several reasons for the slowdown: the lack of federal-provincial climate policy as of 2014; a reluctance by the financial industry to fund clean-tech startups, and the slump in the oil and gas sector, which represents a key customer base for Canadian technology companies, the report's author, Celine Bak, said on Monday.
"A significant number of companies in clean-tech industry – both in water and energy areas – have been focused on the oil and gas industry," said Ms. Bak, a management consultant who runs Analytica Advisors in Ottawa. "And they have had their business curtailed significantly as the oil and gas industry has drastically reduced its capital investment and its plans for future investment."
The Liberal government is keen to expand the contribution of clean-tech firms to Canada's economic growth. In its recent budget, Ottawa allocated $2-billion for a low-carbon economy fund, which will support provincial and territorial action to cut greenhouse gas emissions; earmarked $50-million over two years to invest in technology that will reduce emissions in the traditional resource sector and; $62.5-million to support deployment of electric vehicles and other alternative transportation fuels.
Clean-technology firms operate in a broad array of industries that offer products and services to reduce air and water pollution or greenhouse gases, either through efficiency gains or alternative technologies. Companies range from solar-panel makers, to water-treatment specialists, to manufacturers of lithium batteries, to makers of home-energy efficiency applications.
Ms. Bak said the federal plan provides important support for technology companies, but is missing some key elements. "We are investing in innovation without any comprehensive market approach," she said.
Ottawa should ensure that small innovation companies participate in the massive infrastructure investment that is planned over the next several years, she said. The United States has such a policy and public projects serve as an important customer base for the fledgling clean-tech sector.
Governments also need to provide guarantees for startups that have proven their technology in precommercial demonstration projects but have trouble raising financing for commercial projects because they don't have a track record, Ms. Bak added.
Despite the stalled revenue growth, clean-tech industries continued to expand employment in 2014 to 55,600 people from 49,900 the year before. That exceeds the aerospace industry and forestry and logging. The companies invested more than $1.2-billion in research and development – roughly on the scale of aerospace.
Ms. Bak warned that Canada is falling behind the international race for market share in environmental goods, a sector that has 8-per-cent average annual growth rate in recent years. Canada's share of that market has dropped to 1.3 per cent from 2.2 per cent in 2008, second only to Japan in loss of market share.