Ontario, as you know from this blog, has many innovative clean technology companies within its borders. They’re mostly small. Mostly having a difficult time raising capital. If they are getting money, it’s mostly from the United States and Europe. We’ve got a problem in Ontario — in Canada, really — and it’s not unique to cleantech. With respect to all technology, we do a good job of investing in and supporting R&D and we even provide decent public funding for one-off demonstration projects. But when it comes to late-stage support, the time when companies really need capital to commercialize their products, and customers to buy them, we fall flat. Lacking this crucial support, companies end up stalling. They’re stuck with inexperienced CEOs. They can’t afford to hire sales and marketing, product development and public relations executives. They either die on the vine or get picked by a foreign company that, in the end, benefits from all our taxpayer-funded R&D and creates jobs outside of Ontario.
Ontario has a chance to break this cycle, according to a new report on the province’s budding cleantech sector — the first comprehensive study of its kind looking into the size and makeup of Ontario’s cleantech market and the challenges companies face. (See Toronto Star story here). The report, authored by Ottawa-based Russell-Mitchell Group Inc. in collaboration with the Ontario Centre for Environmental Technology Advancement, identified 110 Ontario companies that would fall under a narrow definition of “cleantech” and surveyed the CEOs of 31 of them to get a sense of their needs, concerns, and opportunities. It was found that the sector will need an investment of up to $1.2 billion over the next three to five years to ready their products for the global marketplace.
How will it get this capital injection? One main recommendation from the report is to have the provincial government step up, not with funding, but by committing itself as an early adopter of “made-in-Ontario” clean technologies. It suggests that the Ontario government come up with a procurement strategy that broadly supports the purchase of these home-grown technologies, beyond one-off demonstration projects. This approach would “prime the pump” for Ontario companies, make the province a showcase for this innovation, and make local companies more attractive and less risky to investors — both domestic and foreign.
There are thousands of government buildings, schools, hospitals, etc. that could benefit from technologies that improve efficiency, tap renewables, clean water and reduce waste. Same goes for government vehicle fleets. One might argue it’s protectionist, but let’s remember that NAFTA only obliges the federal government. U.S. states and provinces have more wiggle room, and we’re already seeing that local favouritism in competing jurisdictions. Ontario wouldn’t be taking this approach alone, it would be taking this approach because that’s what other provinces (such as Quebec) and states are leaning toward.
What do you think? Is it possible to design a government procurement strategy that gives first dibs to local innovation, where the fit is right? Or is it a slippery slope we should avoid? Is there another way?