Skip to main content
opinion

LEE JAE-WON/Reuters

Around the world, trade and investment in technologies that reduce greenhouse-gas emissions - such as solar power, energy efficient appliances and hybrid cars - is growing rapidly. Unfortunately, Canadian businesses are largely failing to take advantage of these global opportunities.

Canada's exports of "climate-friendly technologies" did not grow at all between 2002 and 2008, according to new Conference Board of Canada research. Worse, when we account for inflation, this country's climate-friendly exports fell by 2 per cent annually on average. In short, Canadian businesses have failed to seize new - or even maintain existing - opportunities to sell such technologies globally. Our businesses and individuals have also been relatively slow to import and adopt world-leading technologies from others.

Our weak climate-friendly trade performance stands in contrast with exploding global opportunities. While Canadian exports stagnated between 2002 and 2008, and imports grew only slowly, world trade in climate-friendly technologies grew by a massive 10 per cent on average each year.

Europe and Asia are the key drivers of this global trend. For example, Germany is the global leader in selling climate-friendly technologies and the second-largest global buyer of such technologies. Even though it has been in this game for several decades, that country still grew its climate-friendly technology exports by 15 per cent on average over 2002-2008, and grew its imports at a roughly similar rate. Germany's government has made sustained commitments to support the development of climate friendly technologies.

China, the No. 2 global seller of climate-friendly technologies, grew its exports at a rate of over 40 per cent annually, and its imports at almost 20 per cent annually. Over the past decade, China's government has invested heavily in such technologies, and used its stimulus package to reinforce this stance.

Despite some global policy uncertainty and a lack of mainstream adoption of climate-friendly technologies, the stars seem relatively well aligned for continued rapid global growth. Increasing energy and water costs, coupled with massive environmental problems in the developing world, seem likely to reinforce a growing global consensus on the need to move toward a low-carbon future. According to estimates from Roland Berger Strategy Consultants, clean energy technologies will be the third-largest industrial sector in the world in 2020.

In sum, climate-friendly technologies represent a major economic opportunity for Canada, one that has not been fully exploited. Despite this poor overall global performance, the good news is that Canada does certain things well. Canadian businesses "overtrade" - have global strengths relative to other countries - notably in waste management and energy technologies associated with the country's geography and resource base. And our strengths can lie in specific parts of global supply chains, rather than in an entire supply chain. For example, though we are not overall leaders in solar power, we have strengths in selling parts or components into related global supply chains.

Looking forward, Canada may have future strengths in wave and tidal power, as well as the next generation of biofuels. Potential niches include other energy, mining and telecommunications-related technologies that leverage Canada's resources and geography. We are likely to also have relative global strengths in the associated services.

Canadian businesses will need to determine where in global value chains for climate-friendly technologies they can be world leaders, and which world-leading technologies, parts, and services they should buy from others. A recent article by Evan Osnos in the New Yorker sums up the situation well: "No single nation is likely to dominate the clean energy economy. … No nation has yet mastered both the invention and the low-cost manufacturing of clean technology. It appears increasingly clear that winners in the new-energy economy will exploit the strengths of each side."

To capitalize on these opportunities, Canadian governments will need to send clear climate policy signals and commit to sustained public investments in research and development in climate-friendly technologies and related services. Governments should also remove both domestic and international barriers to the development of, and trade in, such products and services.

Greater clarity in policy would give businesses incentives to ramp up investment in these areas. Even with some uncertainty, however, businesses should get out ahead of policy makers. They should do so to protect their brand and reputation, to ensure they are an active player when policies catch up, to take advantage of well-established policy signals in other countries, and to establish long-term relationships in global markets.

The growing global market for climate-friendly technologies represents a major long-term opportunity. Now is the time for Canada to seize this opportunity to "clean up."

Danielle Goldfarb is associate director of the International Trade and Investment Centre at the Conference Board of Canada.

Interact with The Globe