An Increasingly Convenient Truth: Climate Change’s Business Potential
In 2016, Canada’s Liberal Party placed a tremendous focus on environmental and economic issues. This is clearly evidenced in their Real Change program, which contrasts the strategic differences between them and the previously elected Conservative Party.
Publications on Canada’s clean technology (cleantech) sector note that Canada lost between 41-71% of its market share globally since 2004. This decline has meant that Canada now ranks 19th among global cleantech innovators. Although the cleantech sector is growing within Canada, we have the potential to become a much more significant player. Canada’s business environment and access to resources makes us ideal innovators in clean energy, energy efficiency, and clean water.
Since being elected, the Liberal government appears to have kept environmentalism as a core focus of their strategic action plan. Budget 2016 included a $5 billion spend over the next five years on green infrastructure, supplemented by another $1.75 billion spend over the next two years developing a clean economy and protecting the environment.
Canada lost between 41-71% of its market share globally since 2004.
These federal investments are creating excitement among many of our clients. There are many Canadian government funding programs targeting businesses who research, develop, and implement clean technologies which are set to release this fall.
Why is the Canadian Government Interested in CleanTech Development?
There are a variety of reasons why government needs to be involved in the cleantech sector. Two broad arguments that can be made in support of government intervention; particularly that:
- Government legislation, taxes, and other measures will ensure that all businesses are held accountable for their impact on the environment; and
- Government grants and incentives will help businesses make strategic investments in a high-growth segment of the economy.
On both levels, the Government of Canada plays a key role in making the shift towards a clean, competitive economy. Let’s take a closer look at both of these factors, then discuss Canadian government funding programs that can assist businesses making the shift to cleantech.
Canada’s CleanTech Industry: An Environmental Opportunity
Global ecosystems can be completely transformed by government policies. A particularly powerful image that resonated with me while reading An Inconvenient Truth by Al Gore was an image of the Haiti/Dominican Republic border. Haiti’s forest is nearly barren as a result of its eco-policies, while the Dominican Republic’s forest is so lush it’s impossible to see the ground.
Similar policies in Canada will result in the preservation of breath-taking landscapes that we regard as a national treasure, and help control the climate. The impact of these programs will extend far beyond the reach of our borders as well.
The earth’s atmospheric layer is incredibly thin, and its composition can be dramatically altered by governments enforcing measures such as stopping deforestation or limiting carbon dioxide emissions. Although Canada has many environmental protectionism measures in effect, it’s also beginning to implement more.
Within Canada, environmental protection measures are a split responsibility between all levels of government. Recent provincial policies coming into effect include Ontario’s Cap and Trade legislation and Alberta’s Carbon Taxing system, to name a couple. It is expected that all provinces and territories will adopt similar carbon-emissions laws, however Ontario and Alberta are taking immediate action to set an example and lead the charge of cleantech innovation.
Learn More About Carbon Pricing: What is the Ontario Cap and Trade Program?
Canada’s CleanTech Industry: A Strategic Business Opportunity
There is a particularly interesting point in An Inconvenient Truth that I believe needs further analysis. The book laid out the following equations:
Old Habits + Old Technology = Predictable Consequences
Old Habits + New Technology = Dramatically Altered Consequences
What does this model tell us? There are two trains of thought:
- Technology is compounding environmental issues through the magnification of old, inefficient habits.
- Technology is limiting or reducing environmental issues through innovation and new ways of completing old habits.
The difference between these two stances comes down to whether the technology is helpful or harmful to the environment. In almost all cases, cleantech is being used to limit or reduce environmental concerns while having little to no impact on the competitiveness of businesses. Businesses are now implementing technologies that are more efficient and environmentally safe, whereas in the past businesses needed to make trade-offs between production and environmentalism.
CleanTech is Becoming More Affordable for Companies to Implement
Companies who have been apprehensive about adopting green technologies are now becoming more comfortable with the idea, since there is a lower barrier to implement and maintain these technologies than ever before. This is especially true for solar panels and wind turbines which have become efficient enough that they are now viable solutions for residential and commercial/industrial power generation.
Renewable energy payback periods have decreased substantially across all clean technologies. In 2008, residential solar panel investments took nearly four years to break even. This breakeven point was minimized to as low as 0.75 years by 2013. The continuation of this trend will continue to make clean energy generation a much more attractive investment in the future.
Energy Efficiency is Required to Compete on a Global Level
Energy efficiency seeks to enhance both sides of the outlet, including power generated versus energy consumed. To see dramatic reductions in energy consumption over time, businesses must focus on reducing the energy required to produce their goods.
Canadian businesses are facing increased pressure to adopt highly advanced manufacturing equipment. For many companies it’s the only way to stay competitive in a global market that includes manufacturing alternatives from China and other low-cost nations.
Canadian Government Grants to Make Your Business More Energy Efficient
To manufacture products within Canada, businesses must achieve a level of energy efficiency that is much higher than other countries around the world. While some business owners and executives believe this makes Canadian businesses less competitive, measures being implemented by the government are offsetting the investment which reduces short-term drawbacks and promotes long-term productivity enhancements.
Some of the Canadian government funding programs that businesses may access to develop or adopt innovative clean technologies include:
- CME SMART Green Fund: The upcoming CME SMART Green Fund supports clean technology adoption projects among manufacturers operating in the Province of Ontario. Manufacturers who reduce greenhouse gas emissions per unit produced may be eligible to receive up to $200,000 per facility or a maximum of $500,000 across multiple facilities to reduce the cost of upgrades.
- IRAP ARP/Mid-Size Projects: The Industrial Research Assistance Program (IRAP) is a well-known source of funds for companies performing research and development activities that will lead to additional revenue. There are two main streams of this program, including IRAP ARP grants providing up to $50,000 in funding, and IRAP Mid-Size Project grants providing up to 65-80% of internal labour fees.
- SD Tech Fund: Innovative Canadian firms who are developing clean technologies may be eligible for up to 33% reimbursement of project expenses through SD Tech. Technologies should improve the productivity and competitiveness of Canadian companies across multiple industries.
- IESO Conservation Fund: The IESO Conservation Fund aims to reduce or displace the energy consumed by businesses, especially industrial producers, across the Province of Ontario. Several streams of funding comprise the IESO Conservation Fund, and may cover up to 50-100% of project costs to a maximum $250,000-$1,000,000.