The Government of Canada recently assigned $800 million for developing CleanTech innovation clusters and networks. To ensure a successful return on the government’s investment, startups need to be in a location where they have access to expertise, investment capital and are near similar businesses to compete and collaborate with.
A worthwhile approach to supporting innovation clusters is to look at where Canada’s traditional technical expertise is concentrated; if there is a green application to that expertise, exploit it. This approach presents a viable route to creating a “Silicon Valley North” cluster focused on CleanTech, and companies that leverage the opportunities effectively should be able to attract expertise from the traditional economy while leveraging infrastructure synergies.
Competitive Funding Advantage
More money is coming for Canada’s CleanTech industry, and allocating those funds is as much a question of geography as it is of business plans and technology. As mentioned in a previous article, in the 2016 budget the Canadian Federal government announced $800 million in support of innovation would be allocated over four years, and wisely mandated this money go to supporting clusters or networks where Canada has an existing or potential competitive advantage.
A key challenge faced by the organizations distributing these funds is determining what is Canada’s competitive advantage in CleanTech, and where is it located. Perhaps, given Canada’s size and diversity of resources, what and where is each province’s competitive advantage in CleanTech is the better question. Unfortunately, there doesn’t appear to be a good answer to these questions.
Canadian CleanTech is dispersed across the country with little in the way of common sector definitions. Clusters definitely exist, but they are challenging to identify and characterize. Industry Canada’s reporting on CleanTech is limited to a handful of specific sectors such as Hydrogen and Fuel Cells, and the other current North American Industry Classifications (NAICS) which lump most CleanTech businesses under the category of “Environmental Consulting Services”. We believe that clarity around sectoral definition is as critical to the success of the stimulus money for the success of Canadian CleanTech. After all, if you do not define the category, how can you measure its success? I.e. “You can’t manage what you don’t measure”
In this article we first assess the data on CleanTech clusters available in Canada and discuss some of the challenges. We believe that in looking for clusters of competitive advantage in Canadian CleanTech investors, entrepreneurs and policy makers should look to traditional clusters of excellence that can be applied to green solutions.
The Data on Canadian CleanTech
The Inconsistent terminology and fragmented data surrounding CleanTech is frustrating for investors and entrepreneurs alike. When it comes to global investors there is capital available for local opportunities, and the 2014 Global Sustainable Investment Review illustrates the growth of sustainability focused investment. From 2012 to 2014, global investments managed in funds with sustainability guidelines increased from $13.3 trillion to $21.4 trillion.
However, when looking at CleanTech a lack of clear leadership in defined industry categories can be challenging. Compared to countries like Germany and Denmark with identified world leaders in Wind Turbine manufacturing in Vestas and Enercon, Canada has no identified global names in CleanTech.
For entrepreneurs, it is frustrating because the best minds tend to migrate to be where the action is in your field. Whether for competition or collaboration, you need to be connected to other companies or researchers solving similar problems. If an entrepreneur has a bioenergy technology to commercialize, where should they set up shop? That is a hard question to answer in Canada.
Let’s get into the data by looking at CleanTech as a whole. Analytica produces one of the most comprehensive reports on Canada’s CleanTech industry and they recently released 2016 numbers on the distribution of CleanTech employees across the country. These numbers are compared to Canada’s population distribution in the chart below.
