Good afternoon, ladies and gentlemen. I am very pleased to be with you today.
Mr. Chair, thank you for the opportunity to appear before the committee.
I would like to suggest that we imagine when we were children of having a tug-of-war and how we strategized to win the tug-of-war. We all had a place on the rope and we were all thinking about who should be first, second, and third, and we all had a common goal. I'd like us to have this image in mind as we think about the opportunity to create a $50 billion industry for the Canadian clean technology industry.
The context for this opportunity is, as you all know, the important challenge we face in regard to exports. With consumer debt being high, with governments struggling to balance the books, and with industry sitting on cash, exports, including both merchandise and natural resources, are a core part of the Canadian economic story. As we all know, there is a geopolitical risk associated with oil and gas exports, as they currently sit at 25% of total exports. We have a graph here to familiarize you with the current mix of exports, now half natural resources and half merchandise, and the current account of Canada that continues to struggle to regain balance.
We'd like to make a modest proposal for clean technology, and that would be a diplomatic commerce strategy based on four principles: engagement, development, procurement, and capital markets.
We can all benefit from SMEs' clean technology exports if we pull together—meaning all of DFATD, Environment Canada, Natural Resources Canada, and Finance Canada—all of the Canadian capacity that is relevant for clean technology and SMEs.
I'd like to begin by giving you an indication of five things you should know about the industry.
It's made up of hard-working exporters. More than half of revenues are currently from exports, and 40% of those exports are from non-U.S. markets, indicating a highly globalized industry. It's also one of the fastest growing industries in Canada, with revenues growing by 9% to $11.3 billion in 2012.
It's near to us all, with no single company too big to fail and over 800 companies across the country.
In addition to the jobs and the exports that these companies produce, they also produce fuels that keep people working in Canadian forests, chemicals that keep cancer causing chemicals far from our families, electricity grids that keep hospitals up and running no matter what, energy so that the buildings we work in can produce rather than consume energy, water where we need it without wasting money, and transportation that costs less than what we pay for today; that and much more.
These companies are driving great jobs, including high-paying full-time jobs in astounding numbers, which grew by 6% to 41,000 people directly employed in over 800 companies. These firms are mostly SMEs and they are deeply innovative. In fact, 75% of the R and D investment in the industry, for a total of $3.5 billion over the last five years, was made by SMEs. That investment is second only to the aerospace industry in Canada in terms of R and D intensity.
I'll quickly compare and contrast with some industries that we may be more familiar with, including the Canadian aerospace industry, with 73,000 people working in it within 700 firms, with $1.3 billion in R and D, and 80% of revenues from exports. The automotive industry has 117,000 people working within 450 firms and 75% of revenues from exports.
Our vision for the Canadian clean technology industry by 2022 is an industry made up of a 100,000 direct jobs within the firms, 700 or so in total, with $50 billion in revenue, $2.2 billion in R and D, and 80% of revenues from exports. We think that there are some very interesting parallels between these industries.
What does a diplomatic commerce strategy mean? It means engagement, development, procurement, and capital markets. We need to work together across all departments and all letters of DFATD.
The first is an engagement strategy, because clean technology is a strategic conversation when we talk about trade. When we engage in bilateral discussions with China, India, Saudi Arabia, the United Arab Emirates, and with all of our strategic partners, is it Canada's turn to be engaged with the commerce that might occur in clean technologies? One vehicle for that discussion is regulation.
In Canada, we have one of the broadest and deepest arrays of regulatory frameworks in the world, and many emerging markets are building regulations. Can we help them with that as a first step to commerce?
Second, we need a strategy for international development and climate change, which has to be both multilateral and bilateral. International development and climate finance have been the foundations for important industries, both in the G-8 and in the G-20. Multilateral finance must deliver climate mitigation. We absolutely must ensure that, but it has also served to build industrial capacity, and this will continue in the future. For years we've been invited to second technical experts to the World Bank. Will we ever accept these invitations?
In regard to procurement, I would like to refer to four examples: pull credit facilities within EDC, industrial regional benefits within our aerospace contractors in Canada, SME procurement within the federal supplier system in the U.S., and SME procurement via the social economy within the European Union. It is important to note that early deployments in innovation-based industries are the springboard for exports for all innovation-based firms. How are the U.S. and the EU building SME content into infrastructure investments? How should we consider that? How is EDC structuring its approach to engage its pull credit facility clients to pull-through opportunities for SME exporters in clean technology? How are our military contractors in Canada addressing their IRB obligations in regard to an industry such as this one?
The last element of the strategy is for capital markets. Clean technology demands capital for turnkey assets. Can we make SME exports the equivalent of housing starts in this country? Should we deliver regular reporting on exports by size of firm? What are the best practices? Should we be doing quarterly reporting on exports by size of firm? Today, exports by size of firm are invisible to economists, and the same is true for environmental goods, which is another, entirely different opportunity in terms of clean technology and exports.
Let's keep in mind that it is the signals from economists within banks and pension funds that activate new capital markets. With that, we have the opportunity to build jobs, exports, and a stronger economy within a very healthy environment, building on a very capable industry that we have in place today.
I look forward to answering any of your questions.