Historically, growth in environmental and clean technologies has been uneven across the country. Three provinces contributed the most to Canada’s environmental and clean technology GDP in 2018: Ontario (33.3 per cent), Quebec (30.5 per cent), and British Columbia (13.6 per cent). This is partly a function of the relative size of these provincial economies. Measured as a percentage of provincial/territorial GDP, however, Newfoundland and Labrador, Manitoba, Quebec, the Yukon, Nunavut, and New Brunswick generate a higher share of ECT products (Figure 3.2). Detailed provincial/territorial data show that a significant proportion of economic activity in leading provinces is driven by hydroelectric production, construction, and services (Statistics Canada, 2020b).

Clusters of clean technology activity are emerging across Canada, underpinning these regional trends, in part. In 2019, the Toronto Stock Exchange included five Canadian cleantech companies with market capitalization exceeding $100 million (Neufeld, 2019). Quebec has developed a strong transportation technology sector, with $1.4 billion in export revenues in 2018. B.C. is leading in bioenergy-related equipment and products (Statistics Canada, 2020d). 

A 2019 study of the Alberta cleantech sector found significant technology development activity in small and medium-sized enterprises focused on cleantech, particularly in the Calgary region. Out of 78 companies, roughly half were less than five years old. Over half sell to oil, gas, and mining sectors; one-third sell to power and utilities; and one-fifth sell to agriculture and food processing. Almost 80 per cent of reported revenues came from exports to the U.S. market, as discussed in Indicator #5 (ACTia & MaRS Data Catalyst, 2019). 

While environmental and clean technology economic activity illustrates technology development in Canada, it has several limitations.

1. ECT data do not provide a sense of potential future technology development. The ECT GDP data shown in Figure 3.1 capture historical trends in environmental and clean technology product economic activity, not future growth potential. New, high-value innovations might look quite different from previous ones, especially with acceleration of domestic and global efforts to reduce emissions and respond to a changing climate.
2. ECT data do not capture a full range of technology developments or innovations. The data omit several key aspects of innovation. First, it excludes economic activity relating to products that are “cleaner” than comparable alternatives but are not purely “clean.” Second, it excludes internal innovations developed by companies to improve their own environmental performance that are not sold to others. Statistics Canada’s 2017 Survey of Innovation and Business Strategy provides some insight into these aspects of business innovation (Statistics Canada, 2019a; 2019b). The data illustrate a substantial proportion of firms in emissions-intensive sectors self-reporting the implementation of environmentally beneficial technologies and innovations (e.g., product and process innovations are shown in Figure 3.3).

3. ECT data omit technologies relevant to economic resilience and low-carbon growth. Water technologies are included in the ECT dataset and in patent data, but there are few other technologies that directly connect to resilience to a changing climate. A 2016 report prepared for Natural Resources Canada identified an initial list of potential technologies and services, including pest control, flood and fire-resistant building materials, saltwater intrusion remediation, and species monitoring (Deloitte & ESSA Technologies, 2016). And while the dataset includes most clean technologies relevant to reducing greenhouse gas emissions, it misses economic activity that could be important to successfully decoupling GHGs from GDP. For example, it does not include activity related to mining of metal and minerals used in electric vehicles and batteries, or the use of bitumen for carbon fibre production that could help make strong, lightweight wind turbines and electric vehicles (JWN, 2020). While these technologies may not be considered “clean,” they are likely to play an important role in the global low-carbon transition.
4. ECT data do not give a sense of barriers to technology development. Research shows that several factors hinder clean technology development in Canada, for both new and existing firms. These include a risk-averse domestic market, low adoption rates, lack of access to financing, competition for scarce investment dollars, and lack of certainty over climate policy (ESTCT, 2018; Hansen et al., 2017). Understanding these issues at a more disaggregated level would support government policy decisions. Technology developers face various challenges at different stages in the innovation process. Box 3.1 provides an example of the type of analysis that could help, considering a snapshot of electrification cleantech companies in Canada that sit at various stages of technology development. Many of the companies have trouble accessing financing in the middle stage of technology development, between the lab and commercial demonstration, which generally requires more capital investment and involves greater risk (Fellows, Goodday & Winter, 2019).
5. ECT data do not provide a sense of whether products are on track for future market needs and opportunities. Developing technologies in Canada can generate important climate and economic benefits: new technologies can help more cost-effectively address climate change; they can also generate new sources of economic growth and jobs. The first requires an understanding of climate-related technology gaps in Canada to achieve climate objectives. The second requires understanding global market opportunities and identifying areas where Canadian companies could be competitive. For example, several studies have identified global technological innovation gaps relating to GHG reduction (Table 3.1).

The scope of Statistics Canada’s Environmental and Clean Technology Products dataset currently provides an imperfect measure of technology development needed to achieve clean growth. However, addressing these issues and limitations would not necessarily require a new approach, but rather supplementing and expanding existing datasets to consider a broader range of technologies and economic activities. 

Greater technology disaggregation at a regional level could help identify specific sources of emerging expertise and comparative advantage. For example, the MaRS Data Catalyst (2019) survey shows some emerging technology development concentrations relating to electrification: several Quebec companies are active in off-road and application-specific electric vehicles; companies in Ontario are active in smart grid and smart home technologies; companies in Alberta are focused on industrial processes; and companies in British Columbia are targeting electric vehicles and electrification infrastructure (Filion, 2019; CTG, 2020). Statistics Canada’s Survey of Environmental Goods and Services has made significant improvements in providing more detailed breakdowns for domestic sales and export revenues, but the data quality remains poor and detail is not available for some provinces and territories.

Improved tracking and analysis of the various sources of public research, development, demonstration, and commercialization programmes across governments would also help to identify successful approaches or combinations of approaches in terms of both emission reductions and economic growth.