Welcome to Navigating Net Zero: COP26 Series. Navigating Net Zero is JWN Energy’s framework for curating conversations and content related to Canada’s climate opportunities and challenges in a transition to a low-carbon economy. In this special series in advance of COP26, we have asked nine individuals to reflect on where Alberta and Canada fit within a global climate leadership nexus and offer perspectives on navigating collaboratively. Today, Jeanette Jackson, chief executive officer of Foresight, describes how Alberta cleantech ventures will continue to make a significant positive contribution to climate solutions.
Alberta has been a pioneer in cleantech, establishing industrial carbon pricing in 2007, constructing three of the world’s megatonne-scale carbon capture and sequestration projects, and transacting over 15 megatonnes of compliance-grade nature-based offset credits. As one of the world’s leading exporters of both hydrocarbons and agricultural products, it has incumbent industries that are under pressure to transform, creating a strong domestic market for innovation. As the world looks to bend the curve on emissions and feed nine billion people sustainably, Alberta’s cleantech sector has an opportunity to lead.
The reach and impact of cleantech has increased substantially across Alberta in recent years. Growth in investment into cleantech ventures, support through acceleration programs, matchmaking events, and upward trends in employment reflect the growing importance of climate solutions both in Alberta and in Canada.
The Alberta Cleantech Report 2021, an initiative of Foresight Alberta with support from MaRS Discovery District, is based on a survey in Fall 2020 of the province’s pureplay clean technology ventures. It focuses on companies developing novel services, processes, and products that improve economic performance and reduce environmental footprint. The report provides an important snapshot of the Alberta cleantech sector.
State of Cleantech in Alberta
- Employment is growing: Responding cleantech SMEs employed 625 people in Alberta in 2020. Most (85 per cent) expect to hire new employees, an estimated 1,200 new staff in 2021.
- Sector is maturing: Although nearly half of responding companies were under five years old, there are fewer new (less than two years old) cleantech ventures in 2021 compared to 2017 and 2019. More are in a growth phase, two to 10 years old, where Technology Readiness Level (TRL) is higher.
- Energy industry dominates customer markets: Nearly three-quarters of Alberta cleantech companies seek to sell to the oil and gas industry. Nearly half seek customers in power and utilities, and about one-third in either “other manufacturing,” the agricultural sector, or mining. Over half are developing hardware-based solutions, which is distinct from the digital/AI focus of many cleantech ecosystems.
- Greenhouse gas (GHG) emissions reduction is the most common environmental benefit: 58 per cent of cleantech ventures identify reducing GHGs as their primary environmental benefit, followed by water (12 per cent) and resource management & efficiency/recovery (nine per cent).
- Growing focus on CCUS: About one in eight of Alberta’s cleantech ventures are in carbon capture, utilization and storage (CCUS). This focus on CCUS is perhaps inspired by the success of Carbon Engineering, a spin out of the University of Calgary, the $20 million NRG COSIA Carbon XPRIZE, the network of CCUS-specific testbed facilities, and abundant government funding for emerging CCUS ventures. Foreight and Carbon Management Canada are providing sector-specific support through our new carbonNEXT initiative.
Connecting Industry and Innovators
Industry Challenge programs connect corporate leaders facing sustainability challenges with market-ready cleantech innovators. Using a “reverse pitch” format, industry seeks solutions to specific challenges they face.
A recent Foresight Industry Challenge was hosted by Vestas, a pioneer in sustainable energy solutions who design, manufacture, install, and service wind turbines in 81 countries. They were seeking circular economy solutions to create the next generation of fully recyclable blades for its wind turbines. Vestas worked in partnership with Foresight and the Canadian Trade Commissioner Service to create and market the Challenge to Canadian companies.
ZILA Works, based in Edmonton, was selected as a winner of the Challenge and is actively exploring partnership opportunities with Vestas. ZILA Works uses industrial hemp to change the way that plastics are made and has developed a patented, 100% BPA-free bio-epoxy resin made from industrial hemp. Through this Challenge, ZILA Works now has a pathway into the multibillion-dollar and growing global turbine market.
This is just one of many Industry Challenges that are drawing attention, engaging corporate leaders in cleantech adoption, and accelerating the path to market for cleantech ventures.
Barriers to Success for Cleantech in Alberta
Commercialization and accessing capital are the top two most significant barriers to success identified by Alberta cleantech ventures, according to the Alberta Cleantech Report 2021. Ventures report difficulty getting partners to commit to a pilot test and securing financing to provide the backing they need to complete the test properly. Given industry’s willingness to adopt validated, market-ready technologies, this challenge can be attributed to earlier stage technology providers.
Overcoming industry’s cautious approach, corporate partner red tape, and lack of regulatory drivers for adoption are also challenges for emerging cleantech companies in the province.
Charting a Path to Net Zero
It is significant that 80 per cent of ventures surveyed for the Alberta Cleantech Report have a moderate or better outlook for the coming year. The spirit of optimism and innovation are hallmarks of the Albertan spirit — and necessary for the continued growth of cleantech commercialization and adoption.
The report reveals that Alberta cleantech ventures are well supported by a range of support from partners and programs spanning federal government, provincial government, non-profit, corporate, academia, and investors.
Based on Foresight’s experience supporting the growth of 700 cleantech ventures and our extensive network of ecosystem partnerships, we have identified several specific opportunities to accelerate cleantech in Alberta:
- Expand support for startups. Acceleration programs work in two ways: they accelerate startups to launch and success, and they accelerate them to failure. Both approaches are valuable; entrepreneurs often build on lessons learned in failed ventures to develop successful companies. Structured training programs combined with one-on-one coaching with experts is a proven successful approach.
- Increase access to capital. Emerging ventures consistently identify fundraising as a top priority to enable their growth. A recent study by Cycle Capital and SDTC reveals that Canadian cleantech ventures raise only half the capital as peer ventures from the U.S. More emphasis should be placed on making ventures investor ready, matching impact investors with high potential ventures, and educating investors on emerging technologies in cleantech. While investors are quite comfortable investing in new tech broadly, there is an information gap surrounding many new technologies (i.e. hydrogen, battery storage, energy innovation), which can lead to hesitation and increase the early stage cleantech investment gap. In early 2021, Foresight and partners hosted an angel investment summit focused on Alberta’s cleantech sector, focused on training first time angels. The summit mobilized over $500,000 of equity investment into three ventures and firmly established local interest.
- Provide tailored support to help ventures scale. After ventures gain traction, they require coaching and resources to build a strong leadership team, access international markets, and raise capital. As the cleantech sector matures, the need for this support is growing. A new acceleration program for scaling startups introduced by Foresight in 2019 has produced stellar results: the 31 participating ventures generated $222 million in revenue, raised $429 million in capital, and created 492 new jobs in 18 months. Expanding programming like this will propel high-potential cleantech ventures.
- Support Industry Challenge programs. Reducing emissions to achieve ambitious targets will require substantial adoption of cleantech solutions. Industry Challenges are a proven effective way of mobilizing industry to define their sustainability needs and introducing innovators to opportunities for pilot projects and potential for partnerships.
- Continue to build an engaged ecosystem. Collaboration is essential to solve a problem on the scale of climate change. This involves bringing together all ecosystem players — innovators, investors, industry, academia, and government — to share best practices, advance solutions, and create synergies. Alberta has a long history of cross-sector collaboration that it can build upon, as demonstrated by the Canadian Oil Sands Innovation Alliance and the Alberta Ecotrust Foundation.
By addressing obstacles to success, increasing support for emerging ventures, and seizing opportunities, Alberta will continue to make a significant positive contribution to climate solutions.