Sustainable Development Technology Canada

Sustainable Development Technology Canada

November 26, 2009 09:00 ET

Western Canada's Cleantech Industry Well-Positioned for Growth and Job Creation

Deloitte and SDTC study: "Canada can choose to seize current opportunities and be a technology maker-or can lag behind and become a technology taker."

EDMONTON, ALBERTA--(Marketwire - Nov. 26, 2009) - In the current global context, an increasing number of countries are entering the cleantech race, convinced that investments in low-carbon technologies and green infrastructure can help create jobs in the short-term and play a key role in the shift to a new clean economy. According to the results of a new survey from Deloitte and Sustainable Development Technology Canada (SDTC), cleantech companies based in Western Canada are well-positioned to seize this opportunity.

"Given the current economic weakness, and relatively slow growth seen in many more mature technology sectors, cleantech in Western Canada is likely to be one of the leading bright spots for economic growth and jobs," says David Sparrow, Associate Partner Financial Advisory, Deloitte. "As the global cleantech race continues, there will be a strong demand for market-ready clean technologies."

"Successful clean technologies lead to broader and more integrated supply chains, spin-off economic opportunities, and have a multiplier effect on job creation," says Vicky Sharpe, President & CEO, Sustainable Development Technology Canada. "As these technologies are manufactured, distributed and then enter into markets, this creates jobs and wealth in Western Canada for a greater number of individuals."

Executives and leaders of Western Canadian cleantech developers and users located in British Columbia, Alberta, Saskatchewan, and Manitoba participated in the Deloitte and SDTC survey. Respondents represent cleantech organizations from small start-ups to large public companies and includes cleantech processing and production companies, distributed energy production and conversion companies, as well as cleantech service and product providers.

Small, but surprisingly mature and growing

The Western Canadian cleantech industry is powered by small to mid- sized companies more than half (53%) of which have fewer than 10 employees and sales of less than $500,000 per year. By 2010, 70% of the companies surveyed plan to have a majority of their products and services in the market and generating revenue. 54% are planning on 2010 sales of more than $2 million and to fuel that growth, many plan to double their employee headcounts.

More than just energy

The prevalent view sees the Western Canadian economy as dominated by the natural resource and oil and gas sectors. Indeed, the majority (52%) of the Western-based cleantech developers surveyed are focused on serving the oilsands, conventional oil and gas, mining and related energy services markets. However, the survey shows that cleantech developers are also targeting a variety of other end-markets, from utilities and renewable energy to consumer business and the public sector, with almost two-thirds (62%) of their revenues coming from outside of Canada.

Strong on people, but weaker on raising capital

Companies stated that the availability of a skilled an educated workforce is their greatest competitive advantage, but offsetting that advantage is a difficulty in raising new growth capital, which almost 60% of respondents cited as a "key challenge."

"As many cleantech projects approached market entry and required substantial investments to move forward, traditional sources of capital suddenly became challenging to locate" says Sparrow. "In 2009 we are seeing stabilizing macroeconomic conditions, improved availability of credit, a rebounding public equities market, and acceleration of global policy, including numerous green stimulus announcements, all of which may provide for a more supportive environment for the growth of cleantech in Western Canada."

Widely aware of government assistance

Between 60% and 80% of companies surveyed either currently receive money from government programs such as IRAP (Industrial Research Assistance Program), federal and provincial SR&ED (Scientific Research & Experimental Development) and investment from SDTC, or expect to do so soon. Yet while government support is important for this emerging industry, government provided only 15% of 2008 financing, with 21% coming from private equity or venture capital, and an amazing 49% internally generated from cash flow or founder's equity.

A need to educate customers

When cleantech developers were asked to articulate the greatest barriers to customers adopting cleantech products or services, almost half (42%) stated it was "The lack of strategic importance placed on environmental values by the customer." Along a similar vein, 15% of developers selected "The inability to quantify environmental value received by the customer," as a key challenge.

"This reinforces the need for developers to communicate the superior economic value as well as the environmental benefits that accrue to cleantech users," says Sharpe. "Cleantech companies must clearly demonstrate to users that they will achieve a return on investment at a minimum equal to, or better than, the status quo."

For a full copy of the report please visit www.deloitte.com/ca/tmt or http://www.sdtc.ca/en/knowledge/Deloitte_SDTC_WesternCanadaCleantechReport.pdf

About Sustainable Development Technology Canada

Sustainable Development Technology Canada (SDTC) is an arm's-length foundation created by the Government of Canada which has received $1.05 billion as part of the Government's commitment to create a healthy environment and a high quality of life for all Canadians. SDTC operates two funds aimed at the development and demonstration of innovative technological solutions. The $550 million SD Tech Fund™ supports projects that address climate change, air quality, clean water, and clean soil. The $500 million NextGen Biofuels Fund™ supports the establishment of first-of-kind large demonstration-scale facilities for the production of next-generation renewable fuels. SDTC operates as a not-for-profit corporation and has been working with the public and private sector including industry, academia, non-governmental organizations (NGOs), the financial community and all levels of government to achieve this mandate. For more information, please visit www.sdtc.ca.

Contact Information

  • SDTC
    Patrice Breton
    Director, Communications
    613-234-6313 x 295
    media@sdtc.ca