Title: Clean technology: from the lab to export markets
Sub-title: A growing consensus is emerging that environmental issues need to be taken seriously. That means new opportunities for developers and marketers of clean energy purification technologies.
It shouldn’t be surprising that Annie Boulanger, marketing manager at Smartsoil Energy, is a friendly person. Much of her job centers around highlighting the company’s landfill gas-to-energy conversion capabilities. It’s a complicated technology, so Boulanger has to be patient when explaining it. As a result she generally assumes a relaxed demeanor. But to see Boulanger’s best side, try not to reach her after she’s been out of the office for a few days.
“It’s been crazy,” she said recently, in mock exasperation, while juggling phone lines. “I am so busy. I don’t know how I am going to clear the backlog and return the calls that piled up while I was out.”
Boulanger’s busy schedule should come as no surprise. When we spoke this spring, Smartsoil Energy had just completed a successful installation at a landfill in Ciudad Juarez, Mexico, where the company’s technology will aid in the collection of gasses created by waste decomposition. These gasses will be cleaned and fed into a generation station. The end product: 6.4 megawatts of electrical power and 212,000 tons of equivalent carbon credits each year, which can be then sold on the open market.
“Everybody wins with this type of installation,” says Boulanger with a smile. “Not only are harmful gasses transformed, but the output converts into electricity, which benefits the entire surrounding community.”
The Ciudad Juarez project is just one of two that Smartsoil Energy is currently contracted to install in Mexico. A second is scheduled to be put in place near Cancun. And the company is in the advanced stages of negotiations to sell another two.
Growing public demand for clean technologies
Smartsoil Energy’s new technologies could not have come into the market at a better time. Growing public consciousness regarding the planet’s environmental challenges is creating new opportunities for many Canadian players. Smartsoil’s sales have already breeched the $5 million mark. Its employee base has shot up from 12 last year to more than 25. By 2009 that total is expected to double again.
During the past two years, public attitudes in North America towards green technologies have undergone a sea change. That’s good news says one expert. “Canadians and Westerners are increasingly willing to bear the consequences of efforts required to clean up the environment,” says Karen Mallory, a sector advisor (Infrastructure and Environment) at Export Development Canada. “In coming years many Canadian entrepreneurs will be able to take ideas that they have been working on their basements and bring them into the real world.”
This evolution in public attitudes should not be underestimated. For almost forty years, it was faddish for westerners to style themselves as environmentally conscious… but only if it did not cost them anything. They were in favor of fuel efficiency restrictions… on their neighbor’s vehicles. They were willing to halt green space development, but only once their own cottages were built. And Westerners always made sure that those unsightly three-bladed wind-turbines ended up in someone else’s back yard.
But those old
habits are changing … on a global scale. There is growing evidence that
during the past year or two, world public opinion has reached a tipping
point. Increased public support for environmental friendly investments can
be seen in several recent developments:
· The initiation of a new round of climate control talks earlier this year in Indonesia, which will cover the 2012-2017 phase, after the Kyoto agreement expires.
· The popularity of Al Gore's film An Inconvenient Truth and his Nobel Prize win played a big role in popularizing the challenges presented by global warming.
· The Beijing Olympics’ high visibility is bringing to the fore the city’s widespread pollution challenges and is even raising questions whether certain events can be held there.
· Increasing recognition of the potential of alternate fuel sources, due to recent high oil prices.
· Recent attention by business magazines like Canadian Business, Fortune and the Economist to the environment, is a key indication of the field's big dollar potential.
· New nuclear power plants, once unthinkable, are now regaining acceptance among many as a lesser evil relative to other technologies.
Opportunities and obstacles for commercializing innovations
According to EDC’s Mallory, these trends and others, give new hope to Canadian companies that are involved in the development of clean technologies. “People are beginning to realize that our resources on this planet are finite,” says Mallory.
The bad news is that in many clean technology sectors, Canadian companies have been late in getting to the table. The biggest players in the field tend to be consulting/ engineering firms, but those that focus on other opportunities have been less prominent. For example in Europe, wind and solar power usage is far more advanced than it is in North America.
In niche areas, the picture is different. “There are a whole pile of Canadian companies that are on the verge of coming into the market. Many others are in the incubator stage and need venture capital,” says Karen Mallory. “The increased visibility that environmental matters are getting in the public space will be good for them. Not only will demand for new solutions increase, the willingness of investors to put up money to fund the development of those solutions will likely increase as well.”
That said, the rewards from developing and refining environmentally friendly solutions can be impressive. For example Cansolv Technologies, which has developed and enhanced carbon dioxide and sulfur dioxide scrubbing solutions, has seen its Canadian employee base double from 20 to 45 employees in just two years. And that doesn’t even include the 15 or so more that work in its recently opened Shenzhen China office.
“Most of our target customers are in the oil and gas, smelter, sulfuric acid and coal burnish industries. But opportunities are springing up everywhere,” says Bernard West, the company’s president. “During the past few years, regulatory requirements in North America have been tightening. Refineries, in particular, have to comply with tougher EPA standards, which in turn leads to new demand for our capabilities.”
Cansolv is also bidding on a major contract to do work at a coal fired plant in Great Britain, which West has great hopes for. “If we land that deal, the potential for duplications are large,” says West. “There are many coal fired plants in the Asian market, which has seen dizzying economic growth coupled with large pollution challenges.”
The worldwide initiatives of companies like Cansolv, are to be expected says Mallory. “Demand for environmental technology tends to be global in scope,” says the trade expert. “A solution that works in one country will often work elsewhere too. That’s one of the reasons that we are so bullish on the sector.”
Getting a leg up in export markets
One big believer in the potential of Canadian companies for getting a foothold in export markets is Wayne Richardson, Director of Climate Change at Technology Early Action Measures (TEAM). Richardson recently chaired a panel at the GLOBE 2008 Conference, titled Charting the Path the Technology Commercialization. The initiative gave him the opportunity to touch base with many sector leaders and inspired serious reflection on their success strategies.
For example Richardson tells clean technology players to keep their eyes on the ball regarding financing. “Although the outlook for clean technology demand looks great, you have to distinguish between the short and the long term,” says Richardson. “In recent months the economy has been hard hit by the credit crunch which spilled over from the United States, which means that some financing has dried up. So we will have to make our way through some immediate challenges.”
Looking outside Canada for new business, even in the early stages of technology development is also a good idea, says Richardson. “Although Canada is a physically large country, the markets here are small on a global scale. The big dollars are abroad. Most of these companies that are in the early stages right now, will only day end up doing a lot of work internationally.
The other challenge says Richardson is that many Canadian businesses that are trying to export clean technologies are SMEs. That means, by definition, it is almost always a stretch for them both physically and financially to get a foothold in new markets. Richardson recommends partnering with external players as an absolute must. Partnering helps get around resource challenges and makes it easier to identify local opportunities and obstacles that may not be quite so visible to a foreign player.
EDC’s helping hand
One common challenge for companies that introduce new solutions, is gaining acceptance in the market, a hurdle that Claude Letourneau, president of Vaperma, is currently trying to clear. The company develops, manufactures and supplies advanced gas separation systems. Its polymer membrane technology combines solvent and high temperature resistances into a fibre that can be used in industrial applications.
Last year, Vaperma inked a deal with Brasil’s Dedini S/A Industries which called for the Canadian company’s dewatering systems used to streamline ethanol production. The two companies had worked together for months to validate the benefits of using Vaperma’s technology to remove the excess water that accumulates when ethanol is produced.
According to Letourneau, Vaperma’s dewatering systems use as much as 50% less energy than does conventional distillation. Not surprisingly though, when such large amounts of money are at stake, a handshake and a promise that the process will work are not always good enough to satisfy potential clients. “The customer will want a performance guarantee,” admits Letourneau. “We will only be fully paid when their plant is up and running.”
According to Letourneau, EDC’s backing will be crucial to ensure that the deal goes through. “They will play a key role in helping us export these systems,” said Letourneau.
“In addition to help with performance guarantees, they will also provide us with working capital solutions to help bridge the gap between when expenses are incurred and when we finally get paid.”
According to EDC’s Mallory, Vaperma’s challenges are common, but well worth supporting. “When you are getting into a new market, sometimes the initial steps are not too easy,” said Mallory. “But what’s different about the environmental sector, is that many of the technologies being developed have strong export potential because demand is growing in so many markets.”
As for Smartsoil Energy’s Boulanger, she remains optimistic despite her busy schedule. In addition to the two new Mexico facilities that the company is currently negotiating, the company is also making plans to further penetrate the U.S. market.
“The opportunities in this field are great, both on a professional basis and personally, because I am a big believer in environmentally friendly solutions,” says the spirited Quebecer. Of course that’s easy for her to say now. But the real test will be how happy she is when the work begins to pile even higher and the phone calls star coming even faster.
Sidebar #1: EDC’s clean energy equity initiatives
One big believer in the potential of Canadian companies to do well in the coming green environment is Jennifer Brooy, vice president (equity) at EDC. “There is a lot of leading edge clean technology that is born in Canada,” says Brooy. “And the companies that are doing that development are increasingly ready to grow their presence in export markets, at a time in our history when pollution is now a global issue.”
Brooy has been a big believer in the strategic potential of EDC buying or holding positions in funds that invest in companies whose fate is tied to environmental concerns. One such fund is Enertech Capital, a cross border venture that has stakes in both Canadian and U.S. companies. “There are few pure clean energy players here in Canada,” says Brooy. “So this is a good way to throw our weight behind them” Another EDC position, in the European Clean Energy Fund, was taken in the hopes that the companies being backed will purchase technology and products from Canadian firms.
Brooy is especially hopeful about her department’s latest project, a new investment in the China Environment Fund, which received board approval from EDC last month. “This is a really good story,” says the veteran investment specialist. “The fund is looking at countries like Canada that have specialised in the environment or in clean technology and then they want to bring that technology into China. This could generate major opportunities for Canadian businesses.”
Sidebar #2: Canadian CleanTech niches
· Bioenergy/biofuels: Bio-energy and bio-fuels are made through combustion of biological matter found agricultural, forest, municipal and food procession waste. Experts say that Canada is well positioned in this sector, particularly the Prairie Provinces. For example earlier this year a large Renewable Diesel Demonstration plant began operations in Alberta.
· Waste management: Several Canadian companies have developed technologies that can be used to capture gasses from landfill sites, which can then be converted into clean energy. Waste-to-energy initiatives, involving gasification, pyrolysis and plasma technologies have significant potential going forward.
· Ocean energy. Canada’s long ocean coastlines and its resulting industry expertise, position the country well as a player in this field. The harnessing potential of ocean and tidal water movements are drawing increased interest from industry, academia and government, which have banded together to form the Ocean Renewable Energy Group (OREG).
· Clean coal technology: Coal is a key energy resource for Canada. Yet coal use creates vast pollution challenges the world over. As a result, there is substantial incentive for sector stakeholders here to come up with new processes to reduce or eliminate carbon dioxide emissions from coal fired plants. Several coal fired producers have formed the Canadian Clean Power Coalition (CPPC) to research, develop and demonstrate commercially viable clean coal technology.
· Green building: Reducing and when possible eliminating the impacts of new buildings on the environment and human health are key challenges going forward. Several Canadian firms have developed design and production solutions in this area.
Peter Diekmeyer is a Montreal-based freelance business writer.
|© 2008 Peter Diekmeyer Communications Inc.|