Change happens, with or without us.
Just as social media upended communications, the transition to clean energy is rapidly undoing century-old expectations around electricity, transportation and oil – and it’s happening in market-shifting, often surprising ways.
But while some Canadian companies are finding success in clean solutions, others –notably in Canada’s oil patch – are at risk of falling behind.
Canada should look to where the world is headed. In key areas, our country has room to grow and innovate. At the same time, there are numerous Canadian companies that are thriving and showing us the way forward.
Consider the scale of what we’re talking about. The increasing global market for low-carbon goods and services is now worth US$5.8-trillion – with a t – and is expected to keep increasing by 3 per cent a year.
The Clean200, a ranking of the world’s biggest publicly traded companies earning significant revenue from clean energy, was launched in 2016 and updated this February; over that year-and-a-half period, Clean200 returns outperformed fossil-fuel ones by a factor of two.
In short: It pays to stay current.
Vancouver’s Ballard Power and Toronto’s Hydrogenics have started reaping these rewards. Both companies produce fuel cells that convert hydrogen into clean electricity and nearly half of Ballard’s sales now come from China, as the country adds hydrogen-fuelled electric buses to its roads. Ballard cited a record US$121–million in annual revenue for 2017.
Meanwhile, Canada had a record 13 companies on the Global Cleantech 100 unveiled in January, an impressive showing considering our population. Seven were in B.C. alone (the province, it should be noted, that introduced North America’s first carbon tax).
Elsewhere, however, Canada needs to catch up with global energy trends – or risk falling behind. While our country saw a 68-per-cent increase in electric-car sales in 2017, we’re still trailing other leading countries in terms of electric-vehicle adoption. China, France, Germany, Britain and others have all announced they will ban the sale of gasoline and diesel-fuelled cars. It’s a strong signal to auto makers and the oil sector that they need to innovate and evolve – and it’s a message the Canadian government has yet to send.
Such a signal might also encourage Canada’s oil sector to follow in the footsteps of the world’s largest oil majors, which are increasingly investing in clean energy. Yet Canadian oil companies lag their global peers. Among Canadian oil and gas producers, only Suncor has begun seriously diversifying into renewable energy (and it sold off wind-power assets in the last year).
This is cause for concern. As a recent report from Wood Mackenzie put it, oil and gas companies that adopt renewables early will gain a competitive advantage. As for slow adopters: “They could find themselves at a structural disadvantage.”
And lastly, Canadian businesses should look to some of the world’s largest corporations for inspiration, at least when it comes to clean energy. As of January, 122 multinational companies had committed to sourcing 100-per-cent renewable electricity as RE100 members.
If those 122 companies were a country, its electricity demand would be the 24th-highest in the world. And while we can celebrate Toronto-Dominion Bank’s participation, it’s unfortunately the only Canadian member on the list – compared with 41 companies in the United States and 25 in Britain.
Those American companies aren’t exceptions to the rule, either. Roughly half of the United States’ 500 largest corporations now have renewable-energy targets and that percentage is even higher among the top 100.
What does all this boil down to for Canada? In some cases, pressure to catch up. But these energy-disrupting trends are also creating opportunities, as more and more Canadian companies know firsthand.
Canada is home to a number of world-leading cleantech companies that prove we have the talent to succeed. Our large corporations and oil sector, on the other hand, need to come up with game plans to manage the risks and seize the opportunities that lie ahead.
After all, the global energy transition is happening – with or without us.
This article originally appeared in The Globe and Mail.
