Report calls for boost to clean tech research in Canada
July 18, 2017
By PLANT Staff
July 18, 2017 - As the federal government accelerates Canada’s transition to a low-carbon economy, it needs more smart policy to build markets, unlock private investment and secure innovation, according to a report by Analytica Advisors, an Ottawa-based cleantech research firm.
In terms of cash flow, the 2017 Canadian Clean Technology Industry Report says cleantech appears reasonably healthy, with revenues up 8% over 2016.But overall it’s not profitable.
Shareholder returns are very low, with retained earnings declining every year each of the past five years. All cleantech sectors but one have experienced years of negative returns on sales, rising slightly from -4 per cent in 2011 to negative -2 per cent in 2015.
At 3.5 per cent, the return on capital employed for companies with commercialized projects was lower than the average for all nonfinancial Canadian companies (4.4%), providing investors with negative incentives to invest in clean technology firms.
Poor returns translated into decreasing competitiveness.
Globally, Canada’s market share of cleantech exports declined by 12 per cent from 1.6 per cent in 2008 to 1.4 per cent in 2015.
International competitiveness is affected by declining innovation performance. Canada’s global market share of patent applications plunged by 19 per cent from 1.6 per cent in 2011 to 1.3 per cent in 2015.
Poor returns in clean technology made it difficult to access money, with firms paying 38 per cent more for working capital than the OECD average. Between 2014 and 2015 industry revenue grew from $11.63 billion to $13.27 billion.
Direct employment sat at 55,200 people, with 23 per cent of employees aged 30 or younger. Wages are 48 per cent more than the Canadian average.
Fifty-one per cent of revenues in 2015 came from sales outside of Canada, of which 18 per cent came from non-U.S. markets.
The think-tank suggests Ottawa overhaul policies that convert innovation into wealth. Doing so involves securing intellectual property through standards and public procurement that seeks lower-cost innovative solutions.
Investors must also identify where climate policy impacts financial returns.
The report concludes industry exports could be worth up to $19 billion (while employing up to 95,000 people), contingent on the development of market-based policy that emphasizes innovation and its ability to address climate risks.
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