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Canada faces hard climb in clean tech

In many parts of the world, countries are looking for the next generation of good jobs — and clean energy is seen as one of the best hopes.

In many parts of the world, countries are looking for the next generation of good jobs — and clean energy is seen as one of the best hopes.

The looming threats from climate change and the concern over the viability of future supplies of petroleum products, along with the technological possibilities that exist to transform the world energy system to one that is cleaner, as well as the opportunities to become much more efficient in our use of energy as prices rise, are all driving forces for a clean tech world.

But it is also a highly competitive environment, as the United States, the European Union, China, Japan and South Korea all strive to become world leaders.

Something like $100 billion out of the almost $800 billion U.S. stimulus package is targeted at clean tech.

China is spending even more, investing up to $600 billion over the next decade, and South Korea plans to spend $84 billion on clean tech by 2013.

So how can Canada be part of this great transition to a low-carbon world? We are not a big player right now — our exports of renewable energy technologies in 2008 were just under $1 billion, which represents a tiny fraction of global demand.

We need to do much more if we are to be in the front ranks of the clean-tech world. But we haven’t yet figured out how to do this.

The problem is compounded by the fact that we do not have an action plan to deal with climate change.

A smart policy to price carbon at a high enough level to change industry and consumer spending decisions in favour of low-carbon technologies and systems and to provide an incentive for innovators to develop new technologies and create new jobs is on hold.

Both our government and industry believe Canada should mirror U.S. policies rather than getting ahead of the U.S., and the U.S. could be in political gridlock until after the 2012 presidential election.

At the same time, while calling on the federal and provincial governments to launch a national energy strategy that would lead to cleaner energy and new jobs and businesses, corporations, led by the Big Business lobby oppose major new spending programmes until government deficits have been eliminated, which means doing little until 2014 unless major cuts are made in other programmes.

While the Canadian Council of Chief Executives argues that industry itself must invest much more of its own money in research and development of new technologies, it also calls for “strategic public investment”, especially to help demonstrate and commercialize promising new technologies.

Some funding is available through the Sustainable Technology Development Fund, which was establishe3d by the Chretien government, and additional funding was contained in this year’s federal budget for demonstration projects.

But the funding falls short of what is needed to facilitate the development of world-competitive technologies and companies.

It is true that Canada has a number of promising clean-tech companies, and has the capacity to create more. But they tend to be small by world standards and have serious difficulty in attracting venture capital.

Moreover, if they come up with good technologies they inevitably become takeover targets, and because there are virtually no Canadian companies with the scale and scope to become acquirers of small Canadian companies, they tend to be purchased by foreign corporations.

Clean Edge, a U.S. organization that tracks developments in clean energy, argues that “clean-energy technologies are becoming cheaper and ever more ubiquitous,” contending that “the commoditization of solar PV, smart meters, energy storage devices, wind turbines, and other clean technologies will be one of the top stories of the decade.”

But, and this is the great challenge for Canada, “as markets mature in the coming decade, we believe that we’ll see considerable consolidation, with multinationals and the strongest pure plays gobbling up smaller competitors to compete in a commoditized environment.”

In other words, just as is happening with many of our software, biotech and other high-tech companies, predatory multinationals will buy them up for their technology so that few, if any, Canadian-based multinationals will emerge in cleantech.

So if we want to participate in the clean tech revolution we not only have to invest to develop the new technologies.

We also have to figure out how we can create and grow to world-scale some Canadian companies that can become our clean tech champions.

David Crane can be reached at crane@interlog.com.