If the energy transition is a journey, what are the paths to get there? Our future isn’t in a single resource based economy or a silver bullet solution. Instead, it’s a series of paths leading to the same destination, paved by diverse talents and opportunities. But we need to quickly recognize the tools and resources we have, and looking at the trailblazers in cleantech is a good place to start.
To better understand the potential for cleantech in Canada, Rudayna Bahubeshi sat down with EFL Fellows Kipp Horton, President and CEO of WindRiver Power and Meera Nathwani-Crowe, Director at Alberta Clean Technology Industry Alliance, Manager at Canada’s Oil Sands Innovation Alliance, and Environment and Technology Manager of Heavy Oil at Shell.
Heck, if we’re going to be doing all this fantastic stuff in the oil sands to eliminate the environmental impact, it’s all just cleantech. Why can’t we re-frame to become a world leader in cleantech?
Rudayna: Meera, you stated that Canada has an opportunity to be a seller and not just a buyer of cleantech innovation. Where are the greatest opportunities?
Meera: In Canada, oil is currently a source of economic benefits. We can think about how we innovate the oil sands to eliminate the environmental footprint, and increase social benefits. Or we can look at how we create completely different business models out of the oil sands.
Heck, if we’re going to be doing all this fantastic stuff in the oil sands to eliminate the environmental impact, it’s all just cleantech. Why can’t we re-frame to become a world leader in cleantech? It’s the new business model. Oil sands is not just exporting or producing bitumen. It’s exporting clean technology. Technology for environmental remediation, revegetation, re-establishment, anything.
Kipp: It’s such a fascinating topic. It’s one I struggle with 24-7. I have very conflicting views and emotions around it as a small entrepreneurial company. I’m sort of at the bleeding edge of trying to constantly balance attracting appropriately costed capital, gross capital in my business. Clearly, I understand the concept of higher cost of capital versus risk. I’ll be perfectly frank. It’s very frustrating in the North American context to try to find the right combination of economically priced capital, appropriate time horizon, investment horizon, aligning with these types of assets. This is where I feel Canada’s falling behind.
American investors are used to investing in this space. They’re able to harness investment tax credits and production tax credits. Which is a very uneven playing field for Canadian companies trying to play in that space. Then, even beyond that a next level up of awareness and investor awareness is the Europeans. I’ve talked to lots of German, UK investment groups lately who totally get the triple bottom line of social, environmental, and financial returns. On top of that they prioritize those first two, which to be frank 99.9% of Canadian investors actually don’t value. They might say they do. Hopefully that’s changing over time, but as of today the broad majority don’t.
I feel that Canadian investor companies are going to fall very far behind here. That’s my concern, and that’s why I’m a advocate for trying to bridge that gap by employing things like green bonds to try to somewhat level that playing field. It’s very challenging. I know Meera, you’re in a corporation that has very different stressors, different challenges.
Meera: We have the same financing challenges. In fact my challenges are probably more difficult than the average entrepreneur on the street, because you have access to global banks and you have access to the world capital. As long as you have the relationships to phone people up, you have your choice of finances, where I only have one bank. The bank is Shell.
The same pressures and the expectations for return on investment are there. It’s a challenge I think for Shell in the energy transition because the rates of return which a company like Shell, and any large oil and gas company expects, are going to be very difficult to generate during the energy transition.
As the energy system electrifies, investors in the energy space are going to have to get more accustomed to being content with utility company type of rate of return.
Rudayna: What other barriers do you see?
Meera: We need to be very intentional about how we attract and develop talent in Canada. For example, Immigration Canada recognizes we have a shortage of chefs in our country, so on immigration applications, chefs receive the highest profession rating possible. I don’t believe Immigration Canada prioritizes people with expertise in innovation and commercialization in the same way.
I think Canadians, have a very good track record for coming up with innovative ideas. Where we don’t seem to make it work is in the commercialization. The maturation of the opportunity to full commercial business opportunity. That is something we have a lot of expertise in in Calgary. I think Calgary is a very entrepreneurial, business-minded city. We’re not necessarily the most innovative thinkers. It’s the matter of how do we get this business mindset developed very strongly in Calgary permeating to our other sectors throughout the country, and transferring that knowledge that acumen.
Kipp: I really think Calgary is the perfect city, in the Canadian context, to be able to make improvements and move towards a cleantech future. Perhaps we need to say to ourselves: Yes there’s a lot of forward thinking here, but it was developed in an economic climate, and in a business case that perhaps wasn’t sustainable in the longer term. We do need to draw upon the tech start ups of Vancouver or Waterloo. To meld those two together.
Is there a barrier? I’m just asking this out loud. Is there a barrier from that Waterloo person thinking, “Calgary is just an oil and gas town? I don’t want to deal with that.” Does that create a hesitancy for us to take that first step together? I don’t know. Maybe it doesn’t. But of course Calgary’s always branded itself as energy related, and it is. We all know that. Does it have to just be energy?
Meera: Exactly. We’re missing out on so much opportunity to just think that way.
Rudayna: With some of the barriers we’re talking about– whether the maturation of ideas, moving beyond a more comfortable time in economic prosperity, or attitude shifts– what is the how to? How do you think different players can accelerate these mental shifts?
Kipp: Something as simple as the Calgary Economic Development reaching out directly to its counterpart in Vancouver, saying, “Hey let’s cut through all the provincial rivalry to do something together.” Of course everything gets tainted by political views and inter-provincial squabbles. That’s the challenge of Canada. All the diversity is phenomenal. It’s great. But when it comes to collaboration across provinces, cities, and communities it sometimes creates a bit of a barrier too.
Meera: Yes, I agree. There’s a little bit of a rivalry between Canadian cities. I don’t necessarily think that rivalry promotes collaboration, but I think there’s definitely a role for other organizations to step in that space. I think also, similar to that is what ACTIA is doing with the VC innovation group and the Ontario, and the Quebec innovation counterpart. They’re creating collaboration and building relationships so we can further facilitate knowledge transfer and other things.