28 Oct 2019
Is Canada’s cleantech leadership ready to step up?
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As Canada demonstrates the potential of cleantech, how will technology, capital, talent and leadership impact success? Elaine Grotefeld finds some answers.
Only four years ago, I was in a discussion in London when the term ‘cleantech’ came up. More than half the people in the room had never heard of it.
Cleantech is certainly better known now, but what exactly does it mean, why is it important, and can it help to save our endangered planet? If yes, then what are the superhero technologies, what’s holding them back, and how can businesses, governments, and society help?
Cleantech is a term used to refer to any technology that addresses an environmental challenge. This can be incremental, such as more energy-efficient lighting or heating, or radically transformative – such as carbon capture, which sucks CO2 out of the atmosphere like a giant vacuum cleaner.
“New clean technologies are our only hope to come anywhere close to our Paris COP21 targets,” says Wal Van Lierop, Founding Partner and Executive Chairman of Chrysalix Venture Capital, one of Canada’s leading VCs in sustainable technologies.
While Paul Austin, Partner at Vancouver-based M&A advisory firm Fort Capital Partners with a special interest in cleantech, refers to “this hope that as intelligent beings, we can innovate our way out of the mess we have created for ourselves”.
Clean, safe, and radioactive-free
General Fusion, based in Vancouver, is working on the development of the world’s first commercially viable nuclear fusion plant, to deliver clean, safe (radioactive-free), on-demand energy on an industrial scale. Van Lierop refers to it as “the holy grail of renewable energy”.
With its pilot facility, Carbon Engineering (CE) is gaining worldwide recognition as a leader in carbon removal and capture. It is using Direct Air Capture technology to extract CO2 from the air to either bury underground or to create carbon-neutral transportation fuels. When their first commercial plant is up and running (a joint venture with US-based Oxy Low Carbon Ventures) it will pull 500 kilotonnes of CO2 from the air every year. CEO Steve Oldham says this is “the equivalent of 20 million trees.”
Oldham adds that carbon removal is the only clean technology that seeks to address the “95%” of the problem: all the CO2 that’s already out there and the 37 billion tonnes we are pumping into it every year, according to a recent report from the UN Environment Program. “Think of us as garbage collectors for the atmosphere,” says Oldham.
Economic Development Canada cites the current global cleantech market to be worth around US$ 1 trillion and is anticipated to exceed US$ 2.5 trillion by 2020.
Yet significant barriers repeatedly impede success.
Based on our experience working with pioneering cleantech companies and talking with sector experts, the main obstacles relate to commercialization and capital, regulatory inertia – and leadership.
Commercialization, capital, and scale
While innovative ideas abound, a typical challenge faced here is in transitioning from an R&D technology to a solution that is viable, ready to commercialize and scalable.
Toronto-based cleantech veteran, investor and advocate Nicholas Parker – who first coined the term ‘cleantech’ in the early 2000s – adds that there is often a disconnect between the originators of an idea and market need. “You could have an innovation by a Scottish-based firm, but the opportunity may be in India,” he says.
“More thought needs to go to cross-border joint-ventures, licensing, partnership or acquisitions.”
“Raising capital is probably the biggest hurdle for cleantech companies,” says Nancy Wright, former COO of Canadian sustainable business consultancy GLOBE Series, since these are often extremely complex and capital-intensive industrial technologies.
The investment picture is, though, steadily brightening with a new cohort of ‘patient capital’, including high net worth players such as Bill Gates and Jeff Bezos, major investors in Carbon Engineering and General Fusion respectively.
Corporate ‘strategic investors’ are also getting involved, either investing in, partnering with or acquiring early-stage cleantech companies to deliver environmental and cost-benefit returns to their business. For example, US power giant Cummins has acquired early-stage Canadian hydrogen fuel cell provider Hydrogenics for US$290 million.
A classic leadership challenge early-stage cleantech companies face is in the transition from being an R&D organization to a viable commercial entity. Scientists and technical innovators are essential to conceive and develop new technology, but to commercialize, a professional CEO is often needed to bring the business acumen. For these leaders, domain expertise is less important than skillset – and mindset.
Take Steve Oldham, the CEO of Carbon Engineering (CE). He left a 20-plus year career with US$2.14 billion revenues tech company MDA to lead CE from R&D status to raising US$100 million of funding this year to date and securing a partnership with Houston-based Oxy Low Carbon Ventures to design and engineer the world’s largest Direct Air Capture plant. After only 18 months in the role, and he’s just getting started.
Oldham took on this role because he was drawn to the mission and he could see how his skillset in bringing complex, capital-intensive technologies to market in a highly-regulated, global environment could help. Companies at this stage need leaders like Oldham, who can bring strategic vision and structure and can ‘tell the story’ to the outside world. But they also need to be innovative, entrepreneurial, resourceful. And a compelling communicator too.
Oldham believes that to succeed as a cleantech CEO, skillset and mindset are more important than domain expertise.
Van Lierop believes that executive search firms and HR departments of the large corporates can do more to help, especially in recruiting or developing management to invest in or procure cleantech solutions. “There is an inherent HR system that drives middle managers away from pushing the innovation agenda and this needs to change. Creating career progression benchmarks that encourage risk and innovation is needed.”
With the increasing use of AI and other disruptive technologies in cleantech, Wright of GLOBE Series says that in addition to scientists, engineers, and business leaders, “tech-savvy employees will be key to accelerating the global clean economy”.
The cleantech sector also needs a wide range of purpose-driven professionals. Scientists, engineers, AI/coding experts, marketers, finance and strategic business leaders. Meaningful opportunities are on the rise. In Canada, for example, at typically 8% of the US market, we now have over 850 cleantech companies employing over 55,000 people (not all in Canada). This is truly a global market for technologies and for talent. For most of the cleantech companies we work with in Canada, their target markets are in the US, Europe, and Asia.
Given what’s at stake, cleantech innovation leading to adoption and success is arguably the most critical industry of our time.