EDC report: Rapid growth in AI-enabled cleantech unlocking opportunities for Canada

Export Development Canada (EDC) has released its annual cleantech report, On the cleantech frontier: How AI is impacting innovation, which takes an in-depth look at how AI is shaping the future of clean technology and advancing efforts to combat climate change. Per the report, world energy investment is projected to surpass US$3 trillion in 2024 with US$2 trillion allocated towards clean energy technologies and related infrastructure.

AI-enabled cleantech encompasses a suite of products and services that use elements of AI in their offerings. From 2018 to 2023, AI-enabled cleantech attracted global investments totalling US$28.5 billion. The integration of AI in cleantech and its potential to support global decarbonization efforts is massive, with applications spanning from the pureplay software to hardware integration spectrum. According to the Cleantech Group, Canada is ranked third globally for risk capital deployed in AI-enabled cleantech innovation. With 13 Canadian companies featured in the 2024 Top 100 Global Cleantech Companies list, Canada is well positioned as a leader on the global cleantech scene.

Prerna Sharma, EDC Senior Economist, states, “The synergies between AI and cleantech, if implemented at scale, have tremendous potential to accelerate net zero and decarbonization efforts given AI’s ability to analyze large datasets, optimize energy systems and help in discovering new materials for use in sustainable energy solutions. While the opportunities are vast in this space, we also have a responsibility to leverage these technologies responsibly and effectively.”

The rapid adoption of AI is also accompanied by increased demand for clean energy infrastructure, driven by the high energy and water consumption needs of AI data centers. The report also explores three promising technologies for addressing some of these energy challenges including hydrogen and other alternative fuels, carbon capture, utilization and sequestration (CCUS) and long-duration energy storage (LDES). While not AI-enabled cleantech, these three technologies also hold much promise for supporting global decarbonization efforts—particularly for traditionally hard-to-abate sectors—and are already being utilized in Canada to varying degrees.

“Canadian companies have long been at the forefront of cleantech innovation, and EDC is proud to support them in scaling their solutions globally. AI-enabled cleantech is generating significant interest from investors for its potential to support global priorities such as addressing climate change. With the right support, these innovations can unlock new opportunities for growth and sustainability,” said Lissa Bjerkelund, Vice President, Investment and Mid-Market Lending Group. 

Additional highlights from the report: 

• Cleantech contributions to GDP: Environmental and clean technologies (ECT) contributed $80 billion to Canada’s GDP in 2022, representing 3.5% of total GDP, with cleantech exports reaching $20.9 billion.
• AI and emissions reductions: Studies suggest AI-enabled cleantech could help reduce global greenhouse gas (GHG) emissions by 2.6 to 5.3 gigatonnes by 2030, up to 10% of global greenhouse gas emissions.
• Venture investment fell globally but Canadian investment remained resilient: Cleantech VC investment fell in 2023 with investments totalling US$41 billion globally, driven by the broader slowdown in the world economy. Canadian cleantech VC activity remained stable at $1.2 billion.
• Hydrogen and other alternative fuels: Hydrogen, alongside other alternative fuels, hold significant promise for decarbonizing hard-to-abate sectors, with the global hydrogen market estimated to reach between US$500 million and US$1.23 trillion by 2050.
• Carbon capture, utilization and sequestration (CCUS): CCUS technology is expected to capture 230 metric tonnes of CO₂ emissions annually by 2030 in the U.S. alone. This technology has potential to offer Canada substantial export opportunities in reducing industrial emissions globally.
• AI and nuclear energy: The nuclear energy industry is set to benefit from AI advancements, particularly in the development of small modular reactors (SMRs). The Canadian Energy Regulator (CER) estimates that SMRs could help Canada reduce emissions by 41 megatonnes annually between 2030 and 2050, compared to natural gas generation.
• Long-duration energy storage: To address power sector carbon emissions and intermittency of renewable energy, the long-duration energy storage encompasses novel technologies that can store energy for prolonged periods of time. These highlights underscore the opportunities AI-enabled cleantech presents in shaping the future of sustainability.

For more information about EDC’s cleantech sector findings, please download the full report.

*Important Note: The cleantech report is an annual review of the global and Canadian cleantech industry produced by EDC’s Economics team. The report analyzes data from leading organizations, providing expert commentary on the current status of, and future potential for, the Canadian cleantech sector.