I'm sorry. I thought it was distributed a couple of days ago. Let me not speak to the slide, then; let me just tell you.
We did a study with Cycle Capital, as I said, that looked at this idea of invention and innovation. If we know that the global economy is moving quickly in clean technologies, where might Canadian companies lead, and how might we identify that? What we did was to look at research and patents for both universities and firms in Canada to see—in each of the clean tech sectors or verticals—where they might be leading.
We got some interesting results. The first thing we found out is that on a per capita basis, Canadian researchers are leading the way in clean technology. We are publishing more papers than would be expected in comparison to countries like the United States, Germany, and China, and that's an exciting thing. It means we have a strong base to build upon and an ability to grow. Where we are challenged, though, is when we look at the patentability of that research; there, we aren't doing quite so well.
Research converted into patents in academic settings lags the world on a per capita basis, behind the United States and, more importantly, China, which is really leading the way, and I'll get to that in a second.
In industrial patenting of clean technologies, we're a bit better than we are in the academic conversion, but we're still not where we'd like to be. What we see in that realm is a lot of multinationals that have offices here in Canada leading the way, but we don't see a robust mid-term and smaller company sector providing a lot of leaders in all the clean tech verticals, which would allow for a more robust, competitive market to be able to function. What we have is a lot of small companies—often the ones that deal with us—and a lot of large companies, but very few—like, for example, MEG Energy Corp.—that are operating in the in-between. That's what we see.
An interesting thing that I'm sure you might have heard from some other presenters is that since about 2010-2011, we really started to see the might of China in clean tech. What you see is a really strong surge in the expansion of patenting, particularly in the academic sectors. In fact, I'm told there was a policy put forth by the Chinese government that encouraged academic researchers to patent and that actually gave monetary incentives to do that. You see translation from academic to patents in academic settings, and you're also seeing it in industrial patenting.
What's interesting there is you also start to see gaps in other places. I can provide this at a later date, but in clean technologies related to agriculture, there is very strong patenting by both academia and industry in China and some of the other Asian nations, while in Germany, the United States, and Canada, that patenting is less frequent. That's not an area where we're necessarily making a lot of headway in patenting.
You might say, “So what? Why does patenting matter?” It matters because when we're trying to go beyond selling resources in their primary state to selling the valuated technologies associated with those productions in a more environmentally friendly way than might have been done historically, the ownership of the ideas related to those technologies is only paid for if you own the patents or the licensing. As we try to grow into that space, we want to make sure we expand in that area.
A key and important thing there, a second message, is that we're doing very well in research and probably leading in many sectors, but we need to convert that into patenting, both in the academic and the industrial sectors.
The next thing I would say—and this gets to a little of what MEG said already—is that we've been really good at getting those 300 companies to a certain point of pre-commercial demonstration and then saying “Go, run. Be free,” and they're not quite ready to run and be free.
What we know from experience in other countries—the United States, Germany, and others—is that the first, second, third commercial applications are really challenging. First of all, it takes a long time to get to that point and do those first, second, third commercial applications, so companies with SDTC are with us for eight to 10 years on average. Then they go to their first commercial application. If you're pre-revenue or low revenue because you haven't quite got to commercial sales, translating to commercial is very challenging. Patient capital that can wait around for eight, 10, or 15 years is something that's missing in our market.
That's not clean tech alone. McKinsey did a study a little while ago that looked at oil and gas in general, and it found that from idea to commercialization, on average, can take 31 years for any technology in that sector.
It's because it's high capital, hard to do, and hard to finance.
To close, then, as the chairman has asked me to do, I think there are some key things we need to think about when we think about clean technologies. We know that we are doing really well in creating research and ideas and in financing that research and development in early-stage pre-commercial demonstration. The next step is to think about the tools for commercialization.
I'll give you a couple of things here. The first is that government has a very strong ability to think about procurement, both in terms of its own procurement and in terms of the incentives it can provide to other people in the industry in their procurement. Someone told me a while ago—and this is ancillary to natural resources, but it relies on natural resources at its base—that some 60% of construction materials are procured by some municipal, provincial, or federal government. If you think about where the resources come from for those construction materials and the life cycle of those materials, you can see that it is quite key for government to encourage environmental procurement along that value chain.
The second thing is that we need to think about strategic and intellectual property management and how government and these companies that are developing it can work together to make sure that, as Canada, we are benefiting from the public investment we're making into strategic IP.
I'll give you an example. The Standards Council of Canada came to see us recently to talk about the different committees at the international standards organization that are focused on clean technologies and to look at the membership of Canadian companies on those technology committees. Now, why does that matter? It matters because any international standard often comes down into national standards and then allows for companies to sell within any kind of jurisdiction. We found again that China is leading in those spaces, but Canada less so. As a result, we're working with the Standards Council to think about how we move forward on strategic regulation. That's just a first example that you could consider as you think about the day-to-day and long-term regulatory vision and strategic regulations that you're debating in this committee.
To close, SDTC thanks you very much for the privilege and the honour of working on your behalf and getting to work with companies like MEG Energy and the other companies we've invested in across the country. We look forward to continuing that work and we look forward to supporting them, with you, as we think about how we can help them to accelerate and scale and get from just invention to innovation as well.