How the Pandemic Has Helped Propel Cleantech

As vaccination programs continue to progress globally, and everyone focuses on reopening instead of locking down, a perhaps unexpected result of the COVID pandemic has been an increase in attention being paid to the clean technology sectors of economies.

The U.S. election at the end of 2020 was international theatre for many reasons, but not the least of which was the Democrat platform of emerging from the pandemic and rebuilding the economy on the backs of some enormous investments in clean and green initiatives. Here in Canada as well, the latest Federal Government budget (announced in April) dedicated a full Chapter to climate action, and the shift toward a green economy specifically, intending to build Canadian prosperity as the country transitions to net-zero emissions by 2050. Budget 2021 allocates “$17.6 billion towards a green recovery that creates jobs, builds a clean economy, and fights and protects against climate change.”

Of course, it is not just North American governments looking to green initiatives as a way to stimulate economic recovery and growth while also working to meet international commitments and avert potential disasters. The European Union consistently leads in such plans and policies. The United Nations and other governing bodies are implementing new directives. And importantly, it is no longer just the scientists and activist groups championing the changes. Banks, fund managers, private investors and ultimately, private corporations themselves, are getting the messages too. The increase in new green and cleantech strategies and investments is becoming remarkable.

“About a third of central banks and sovereign wealth funds have raised their focus on environmental, social and governance (ESG) issues over the past year, as the COVID-19 pandemic highlighted issues from carbon emissions to inequality”, according to an Invesco1 survey. “63% of central banks responding to the survey felt tackling climate change fell within their mandate, and nearly half believe mitigating the consequences of climate change should be a monetary policy objective.”

And this trend shows no sign of slowing,as more governing institutions and financial players see strong value in cleantech, tackling the problems of job creation and economic recovery while spurring sustainable development, profitability and social/environmental good. But how much of the current trend is hype, marketing or opportunism, and how much is real and tangible?

It is true that the broad reach of Cleantech creates opportunities for hardware and software applications across a range of public and private industry sectors. However, many of these solutions tackle big problems that can work with or sometimes against entrenched technologies, infrastructure, supplier and cost structures. This can make the development and sales cycles more difficult and lengthy, and that results in more complex and challenging investment cycles.

That said, there is no denying the flow of funds into Cleantech initiatives has never been greater, the world over. But investors are still looking to do proper diligence and find the same types of indicators as always in terms of investments with real technologies and solutions, credible teams and an accessible market with high growth potential. Impact on existing processes, infrastructures and industries, from a global perspective, will carry significant weight in any decisions. One nuance is that a flexible investment approach and timeline is likely required to help increase the chances of success.

All of this means the time is now for Canadian cleantech policymakers, companies and investors to work even harder at establishing the country as a technology innovator for complex climate problems. And by providing support to such companies, particularly at the early stage of commercialization, programs like the Alacrity Canada Cleantech Initiative helps mitigate some of the risks these entrepreneurs and investors face as they work to found, fund and scale Canadian cleantech companies.