Despite a federal commitment to accelerate clean growth, a new report finds the nation's cleantech sector is awash in red ink.
OTTAWA, April 20, 2017 /CNW/ - Canada's federal government wants to accelerate the transition to a low-carbon economy, but without smart new policy to build markets, unlock private finance, and secure innovation, our nation's clean-technology sector will quickly fall behind.
That's the conclusion of the latest edition of the 2017 Canadian Clean Technology Industry Report, the most comprehensive annual assessment of Canadian companies and organizations that use market forces to advance social and environmental goals.
On a cash flow basis, the industry appears reasonably healthy—revenues are up 8 per cent over the previous year, the report finds. But the overall industry is not profitable, and shareholder returns are very low, with retained earnings declining every year for each of the past five years. All clean-tech sectors but one have experienced years of negative returns on sales, the report notes.
Celine Bak, president of Analytica Advisors, which produces the report, said that federal and provincial governments—along with Bay Street—can play a part in fixing the current disconnect between intention and reality.
The report recommends that Ottawa overhaul policies that convert innovation into wealth. Chiefly, government should secure intellectual property through standards and public procurement that seeks lower-cost innovative solutions. Bay Street must also identify where climate policy will impact financial returns, the report says.
"With the right federal, provincial and private sector policies, we'll see 'Made in Canada' stickers on clean technologies across China, India, Malaysia, and elsewhere—and that would be a real mark of quality," said Bak.
With market-based policies that target the value innovation to address climate risk and grow the economy, Canada's clean-tech industry could generate around $19 billion in exports, the report finds. This could mean 95,000 Canadians employed in well-paid jobs.
About Analytica Advisors
Analytica Advisors is an Ottawa-based company that monitors and reports on Canada's and the world's expanding clean technology sector through thought-leadership in evidence-based research. It is focused on translating evidence into policies and business practices for the good of society, the environment and the economy, in Canada and around the world.
Key Findings of the 2017 Canadian Clean Technology Industry Report
- Industry Return on Sales rose only slightly from negative 4 percent in 2011 to negative 2 percent in 2015.
- At 3.5 percent, the Return on Capital Employed (ROCE) for companies with commercialized projects, was lower than the average for all nonfinancial Canadian companies (4.4 percent), providing investors with negative incentives to invest in clean technology firms.
- Poor returns were translated into decreasing international competitiveness. Globally, Canada's market share of cleantech exports declined by 12 percent from 1.6 percent in 2008 to 1.4 percent in 2015.
- International competitiveness is affected by Canada's declining innovation performance. Globally, Canada's market share of patent applications declined by 19 percent from 1.6 percent in 2011 to 1.3 percent in 2015.
- Poor returns in clean technology made it difficult to access capital, with firms paying 38 percent 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; 23 percent of employees in the industry are age 30 or younger.
- Jobs in clean technology firms paid 48 percent more than the Canadian average.
- 51 percent of revenues in 2015 came from sales outside Canada, and 18 percent of industry revenues came from non-U.S. markets.
About the Report
- The 2017 Canadian Clean Technology Industry Report builds on seven years of research conducted at the firm level by Analytica Advisors. This year's edition is based on a national cohort of more than 800 companies.
- Specific business sectors covered by the report include Transportation, Energy Infrastructure/Smartgrid, Energy Efficiency/Green Buildings and Extractive Industries.
- To compile the report, between August and November of 2016 Analytica Advisors examined the confidential financial information and plans of 148 companies, including 18 public companies and 130 private companies as well as data extracts from public sources.
- Analytica Advisors monitors and reports on Canada's expanding clean technology sector. It is focused on strengthening the global and domestic success of the Canadian clean technology industry and innovation-based companies that are core to the industry.
SOURCE Analytica Advisors
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