When Kevin Loiselle needed a partner to help finance the installation of his company’s water management and sanitation systems, he had to jet across the Atlantic to find one.
© Mark Holleron
Clearford CEO Kevin Loiselle had to look beyond Canada's borders to land financing for his Kanata-based firm.
The CEO of Kanata’s Clearford Water Systems turned to Signina Capital, an asset management company in Zurich that specializes in water and sewage projects, because no fund in Canada would invest in his firm’s clean technology.
Thanks to Signina, his growing enterprise now has access to a $100-million fund from which its customers – most of which right now are Ontario municipalities – can borrow money to cover the construction and operation costs of its Clearford One system and repay the loan over a 30-year period. If the system doesn’t work, the client doesn’t pay.
Mr. Loiselle says the pay-for-performance model is the only sure way to convince budget-conscious municipalities to overcome the initial “sticker shock” and adopt multimillion-dollar technology that doesn’t have an extensive track record.
“These big-priced items that are meant to last a generation or two, you don’t want to make a mistake in purchasing one that doesn’t end up working,” he explains.
But even though Canada is considered a world leader in the clean-tech sector, he says the country’s most innovative firms often have to look abroad for much-needed cash to finance such models, as well as fund more research and demonstration projects.
“We couldn’t find that kind of support here in Canada, and that’s a pity,” he says. “Everywhere you go in the world, people are racing into this sector and Canada is already a significant player and, in many cases, leader. It’s difficult to maintain that position if you’re not going to be supported.”
Mr. Loiselle was reacting to a recent call from a British Columbia-based group of clean-tech investors and entrepreneurs for more government support to develop the sector.
The B.C. Cleantech CEO Alliance wrote Prime Minister Justin Trudeau in late February, urging the federal government to invest billions of dollars in loan guarantees and venture capital funding as well as launch a task force of political and industry leaders to devise a national strategy for clean-tech investment and development.
For Clearford’s chief executive and many other clean-tech CEOs in Ottawa, such measures can’t come soon enough. Mr. Loiselle, who tapped into another Swiss venture capital fund when he needed equity, says he can’t understand why Canadian investors have been so slow to jump on the clean-tech bandwagon.
“It would have been nice to have a fund like that here,” he says. “There’s a lot of money on the sidelines (in Canada) looking for a home to make a decent return. I would like to think that once we prove this concept that we will have large Canadian pension funds, for example, taking an interest in getting the kind of return that we can offer.”
The global market for clean technology has expanded to more than $1 trillion over the past 10 years, according to Ottawa-based Analytica Advisors. Exports from the Canadian sector are now similar in value to those of forestry, mining and livestock.
In the National Capital Region alone, the sector employs about 4,600 people at more than 240 companies, according to Invest Ottawa. A recent study from the Kanata North BIA singled out clean-tech as an “area with robust growth potential.”
Yet research from Analytica Advisors shows that Canada’s share of the world clean-tech market has plummeted by 41 per cent since 2005. The country fell from 14th to 19th in total market share between 2008 and 2015, while competitors such as the United States, China, Germany, Singapore and Israel gained ground thanks to an influx of public and private-sector investment in new technologies.
It’s time to reverse that trend, says Bill Crossland, CEO of Ottawa’s Thermal Energy International.
“I think we do need a national policy and a national plan,” says Mr. Crossland, whose company employs about 15 people in the capital and a total of 50 worldwide. “We have fallen behind a lot of other countries over the last few years. As a small Canadian company that sells our products in a number of countries around the world, we do notice that there’s much more support in terms of energy efficiency and carbon reductions in other countries than there is in Canada.”
Countries throughout Europe offer incentives such as tax breaks or government loans to encourage industry to adopt more energy-efficient technologies, a strategy he’d like to see adopted in Canada as well.
“(Companies) pay back the loan through the (energy) savings, and the government gets the money back again that they can recycle and give to someone else,” Mr. Crossland says. “I’m sure there’s much more Canada can do. I don’t think we have to come up with anything unique. There’s enough ideas out there. We just have to figure out what works best for us as a country.”
Analytica president and CEO Celine Bak, who has extensively researched the sector, says the federal Liberals need to work together with a host of partners, including industry, non-governmental organizations and environmental groups, “to make sure that we build approaches that are in synch with Canadian priorities. There’s a lot of work that needs to be done.”
Her organization is a leader of the Canadian Clean Technology Innovation Partnership, an alliance of environmental groups, NGOs and private companies that is pushing for more co-operation between industry and government to promote clean-tech initiatives.
“We’ve got a long list, and many things to do,” she says.
Mr. Loiselle says one of Clearford’s fastest-growing markets is India, where various government incentives encourage private corporations to invest heavily in clean-tech projects. Canada, he says, should be doing the same to ensure the industry reaches its full potential and helps lead the way toward a more diversified economy.
“I can’t imagine we’re the only company in the clean-tech sector that has experienced the difficulty of getting their new technology adopted the first time,” he says. “There should be a real focus on funding the development of these companies and the technologies that they’re creating.”