Top 5 global markets for Canada’s clean technology

It’s any process, product or service that reduces environmental impacts, fosters sustainability and provides goods that use less energy and fewer resources than the industry standard. It’s now very big business—and getting bigger.

The numbers reflect its growth. Between 2008 and 2015, global cleantech exports increased at a compound annual rate of roughly 4%. By 2015, the value had reached an estimated $1.2 trillion yearly and is now projected to rise to $2.5 trillion by 2022. Cleantech is permeating all sectors of the world economy, most commonly in industrial and extractive processes, transportation, recycling, power generation, energy efficiency, water management and agriculture.

Canada’s domestic market offers many opportunities to cleantech firms. However, the sector’s long-term strength depends on how effectively we can use exports to diversify into global cleantech markets. Our prospects are especially good where we have free trade agreements such as the Canada-United States-Mexico Agreement (CUSMA), the Comprehensive Economic and Trade Agreement (CETA) with the European Union (EU) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).

1. United States

According to a recent report by BloombergNEF, U.S. investment in clean energy hit US$64.2 billion in 2018, surpassing 2011’s previous high of US$62.3 billion. Almost 80% of Canada’s cleantech exports go to the United States under the CUSMA umbrella. Other points to note:

• The U.S. has strong cleantech clusters in California, Florida, New York, Texas, Colorado, Massachusetts, Oregon and Washington. This could make them into leading markets for Canadian cleantech exports.
• In California, for example, long-standing problems with air quality have led to tight emissions regulations. This is driving cleantech research, development and technology adoption in the electricity and transportation sectors. In addition, the growing stress on California’s water resources is escalating the need for advanced technology for water management and conservation. Canada has expertise in all these areas.
• As a second instance, New York State’s economy includes a strong cleantech sector and plans to meet 50% of its everyday needs from clean sources by 2030. The state currently uses its carbon-trading program to fund R&D in energy efficiency and renewable energy. This could give Canadian companies a chance to penetrate a large and quickly growing market.

2. Europe

The EU is Canada’s second-largest cleantech export market after the U.S. It’s also the world’s third-largest importer of clean technology products, worth about C$148 billion in 2016.

CETA should make it considerably easier for Canadian cleantech companies to do business in Europe. The agreement eliminates all EU tariffs on Canadian cleantech products and gives Canadian firms access to regional and municipal procurement. It also simplifies labour mobility, so Canadian cleantech professionals can work more easily in EU member states.

Here are some typical examples of potential EU markets:

• The United Kingdom is concentrating on renewable energy, energy efficiency, green technologies, smart grid technologies and electric vehicles.
• Germany needs technologies for water and wastewater management, air pollution control, advanced recycling and soil remediation.
• Spain is shifting toward smart grids and smart cities and needs to develop supporting infrastructures. It also offers opportunities for freshwater and wastewater treatment and management, as well as pollution control and remediation technologies.
• The Netherlands has established major investment incentives for developing its solar, onshore wind, biomass and geothermal resources.

3.  Asia-Pacific

The Asia-Pacific market offers many opportunities, especially with the advantages provided by the CPTPP. As well as Canada, the agreement covers Australia, Brunei, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam. Typical needs include the following:

• Mexico requires water resources equipment and services, as well as products and technologies for solid waste management, soil remediation, recycling and air monitoring.
• Australia is developing smart grids and advanced energy storage.
• In Vietnam, water and wastewater treatment, solid waste management and air pollution control are key needs.

The Association of Southeast Asian Nations (ASEAN) and its 10 member countries offer an additional regional market. Entry barriers for Canadian cleantech companies can be relatively low compared to many other Asian markets.

In the ASEAN states, a combination of growing demand for cleantech solutions, coupled with a lack of local industry expertise, presents many opportunities. As well, government policies are becoming highly favourable to the deployment of clean technologies. Note that some ASEAN countries (Brunei, Singapore, Malaysia and Vietnam) are also members of the CPTPP.

Typical opportunities across the region include:

• Canadian solar power companies may find customers for consulting and testing services, engineering services and project development and design.
• Medium- and micro-scale hydro power are major areas of opportunity for renewable energy generation in Indonesia, Malaysia, Laos, the Philippines and Vietnam.
• The region’s power sector requires improved process management systems and energy efficiency technologies.
• The need for water quality and wastewater management is urgent across ASEAN. In demand are sewerage treatment infrastructure, leak detection technologies, membrane technology, desalination solutions and water reclamation systems.

For most Canadian cleantech exporters, the ASEAN markets are remote and not well known. Companies who feel that these countries may provide export opportunities should consult with Export Development Canada and the Canadian Trade Commissioner Service.

4. China

China’s heavy investment in green solutions—nearly $270 billion in 2016—flows from the county’s rapid urbanization and from the need for increased sustainability and reduced carbon emissions. Despite this expenditure, however, a large investment gap remains. This is partly because of falling government subsidies and a growing need for industrial-scale remediation. At a conservative estimate, China’s cleantech needs will exceed $290 billion annually over the next four years. This will likely be met not only by the country’s own internal resources, but also by purchases from the rest of the world.

Given this appetite for advanced technology and Canada’s cleantech capabilities, there are opportunities for Canadian exports in a variety of sectors:

• air pollution control and air monitoring;
• industrial air pollution reduction;
• power plant emissions reduction;
• solid and hazardous waste management and recycling;
• municipal water and wastewater treatment and facilities development;
• groundwater monitoring, pollution prevention and remediation; and
• environmental engineering and consulting.

 5. India

In 2017, Ernst and Young named India the world’s second-most attractive renewables market, behind China and ahead of the U.S. This is due to continued growth in solar and wind installations and progress toward the government’s target of 175 gigawatts (GW) of renewable capacity by 2022. About $120 to $130 billion will be needed over the next five years to reach this target. India also needs clean technologies in many non-energy sectors and, since its own supply capacity in these areas is limited, will have to import much of what it requires from abroad.

As the above suggests, Canadian cleantech companies may find opportunities in the following areas:

• solar and wind energy products and technologies;
• drinking water supply and wastewater treatment;
• municipal solid waste management;
• industrial hazardous waste and air pollution management;
• pollution monitoring equipment and services; and
• carbon abatement technologies.