Mr. Chair, Mr. Vice-Chair, members of the committee, thank you very much for this invitation to appear today.
I am very pleased to represent the Canadian Clean Technology Coalition, whose mandate is to promote information and facts about the clean technology industry.
It gives me great pleasure to follow the presentations of Monsieur Morin and Monsieur Lavoie, because the companies of this industry are providing the technologies that were just referred to in the two previous discussions.
I'm going to speak about three things: first, to characterize the industry; second, to talk about the barriers for Canada to reap the economic benefits of this industry; and third, to speak about the benefits that would ensue if we chose to pursue these strategies.
Just very briefly about the industry as a whole, it's a vibrant and expanding sector where clean technologies are increasingly becoming economic drivers of growth in the energy and other industrial sectors.
There are more than 700 innovation-based SMEs in this sector in Canada, including 10 sectors overall and 60 subsectors. You can think about it like the aerospace industry, where you have flight simulators on one side and then the forming of nanomaterials and things like that on the other side. It's really as diverse as that.
The thing that unifies the industry is that all of these companies have intellectual property, all of them are investing in R and D, and almost all of them are already exporting. In fact 82% of them already export today, with 50% of revenues from exports.
The thing you may find surprising is that whereas the industry is investing about $1 billion a year in R and D, more than 75% of that investment is by companies that have less than $50 million in revenue. It's a bit of an interesting combination of relatively small companies that are very significant investors in R and D.
Together they employ 52,600 Canadians, which again is a surprising figure, but it's a lot of small numbers, with many small companies who together employ the equivalent of the mining industry or the oil and gas core employment.
I'd be very pleased to answer any questions about the sectors that we have included, but at a very high level it includes production of energy, the use of energy including transportation, manufacturing, etc., and then water and waste water. Where you speak about water, it's almost always to do with energy and water applications, be they in an industrial context, in an agricultural context, or obviously in a municipal context.
I think it's helpful to note that the companies are distributed across Canada per GDP. This is an opportunity for all Canadians, for all regions, and reflects an entrepreneurial capacity that we have across the country to incubate and grow companies that are in many cases world class.
The rate of exports at the moment is 50% of revenues. Total revenues of the industry are $10 billion, which is about half of the aerospace industry today. You may know that in aerospace, exports are now 70% of revenues.
That is a very basic characterization of the industry.
In terms of the challenges the industry faces, many of you will already have heard about capital and debt financing. I think Monsieur Lavoie made some very useful remarks regarding STDC.
To build on that, the government funding is leveraged 3:1 with the private sector in the early stage. The policies we have in place are definitely attracting capital from the private sector. I think that's all to the good, and speaks very highly of the programs that are in place.
You may have heard about the 33¢ to the dollar ratio between investments in Canadian companies and their American equivalents. That leads to slower growth and makes our companies more vulnerable. That's something we need to bear in mind.
What I'd like to add to this discussion is the question of debt and project finance, because it's not often brought up. Companies in this area are exporting, and often in the form of projects, whether they are large deployments or multiple deployments in international markets. Those projects will need to be financed through debt. We don't really yet have policies and programs in place for that. I'd be very happy to answer any questions on some possible recommendations in this area.
The other thing is human resources. It's not necessarily often spoken about in terms of innovation and energy, but in this sector the human resources gaps are not what you would expect. They have to do with international business development and complex systems sales. It's not the usual that we need more engineers. It's actually that we need people who can sell into complex international markets.
What is the potential role of the federal government for this industry? It's important for us to think about how domestic markets must act as a springboard for international exports. That means that the government walks the talk, as it already has through the expansion of Public Works' Canadian innovation procurement initiative. It means a strategic approach to supporting the exports for this sector, and possibly doing that in conjunction with new free trade agreements.
I happened to be in Panama earlier this week. We're about to announce a free trade agreement in Panama. That's an opportunity to really shine a light on this new sector. It just happens that in that market there are certainly opportunities.
In terms of the government's recommendations in the recent Jenkins report on procurement, there was mention of a whole of government approach for defence procurement. We would benefit from a similar type of thinking for this new innovation-based industry, as we have done in the past with aerospace, more than 15 years ago now.
In terms of financial markets and financing, I'd like to introduce the concept of a CMHC for technical risk. I'd like to do that in the context of what will probably be quite a lot of new thinking and policy work to be done on the financing of energy-related technologies in developing countries in the next eight to 10 years.
CMHC has played a foundational role in our property development industry, in our banking industry. If we are to have the same growth and success in this industry, we have to address technical risk. Otherwise the debt that I mentioned a moment ago will not be available to enable our companies to grow.
As Monsieur Lavoie and Monsieur Morin mentioned earlier, I also really believe in the importance of coordinating with our provincial and territorial governments in order to expand the programs that are in place.
What is the opportunity if we choose to focus on this sector? Per our research, it's a $3-trillion global market. To give you a benchmark, the aerospace industry is about $360 million. We have a 6% global market share in that industry. For us to have even just our share of global commerce in clean technology, we're talking about something in the order of $60 billion. It's a very significant opportunity. It represents expanded exports and advanced manufacturing, as my colleagues mentioned a moment ago. It represents an opportunity to balance our exports between advanced manufacturing and natural resources. It provides innovation-based opportunity across the country. It's not just in cities; it's also in rural settings. As well, it provides employment opportunity for skilled workers and young people all across Canada.
As has been mentioned earlier, it strengthens our oil and gas industry, mining industry, our forestry and industrial sectors, both through improved performance and through productivity.
Finally, it would definitely be an area of strength for Canada's global brand. It's one that we should take the opportunity to leverage.
Thank you very much.