Three Paths to Canadian Clean Energy Competitiveness

While growing and vibrant, Canada's clean energy industry currently holds 1% of the $1 trillion global clean tech market—an industry that will triple in size by 20201. With clean tech already a driver of innovation and employment, and over 700 companies at work, what can Canada do to fully capture the opportunity of the 21st century?

There are three public policy paths the Canadian federal government can take to move our clean technology industries forward, according to a new report by the Pembina Institute, discussed via webinar this week. A number of entrepreneurs, academics and executives were interviewed for the report, and they relayed the challenges Canadian clean tech firms have in accessing capital—as well as dealing with "among the worst clean energy policies in the industrial world," according to interviewee Dan Balaban of wind producer Greengate Power. They are:

1) Develop a toolkit of financial supports

Experts recommend green bonds as among the tools to inject more capital into Canadian clean tech. Interviewee Tom Rand, Managing Partner, MaRS Cleantech Fund, MaRS Discovery District, favours a public/private partnership model where government lends money at low rates for projects managed by the private sector, so "capital can play offense." The good work of Sustainable Development Technology Canada (SDTC) was also discussed, with the report recommending a new injection of government funds into that clean energy investment foundation.

2) Create a national energy strategy

With provincial action taking place, a national strategy could be the overall carrot for the shift to renewables. A stable policy structure that clearly favours clean energy could leverage the value of traditional energy to support clean energy innovation for deployment at home and sale abroad.

And 3) but number one according to many:

Set national carbon pricing for Canada (and remove fossil fuel subsidies):

Price on carbon pollution + removal of fossil fuel subsidies = a playing field where clean tech can thrive. There was major agreement in the report that a federally set price on carbon that monetizes what is now an externality is the number one lever for change: "The single most meaningful thing that could be done very quickly in this country that would make a material difference in the performance of this country from an environmental point of view and immediately get the attention and the commitment of the citizens of this country is a carbon tax," said John Coyne, VP, General Counsel & Corporate Secretary of Unilever Canada in the report. The complementary removal of government fossil fuel subsidies would free up an estimated $1B for clean tech investment, report author Penelope Comette noted in the webinar this week.

As a sidebar, several energy companies operating in Canada are already using a shadow carbon price, as discussed in another new report from Sustainable Prosperity. The report concludes that many companies, both oil and gas and in other industries, are already prepared for the introduction of a carbon price when it does arrive.

The Pembina report makes clear that it is not about a choice between traditional and clean energy. Presenters suggested that clean tech leadership would gain Canada the social license to see the Keystone XL pipeline proposal move forward. We will see what happens in the coming months.

Full report and webinar are available at http://www.pembina.org/pub/2406

1 Comette, P., Whittingham, E., & Woynillowicz, D. (2013). Pembina Institute Report. Competing in Clean Energy. Retrieved from http://www.pembina.org/pub/2406