Canadian Cleantech and the Chinese Market

Posted by david on Jan 9, 2013 in Blog | 0 comments

In contrast to US clean technology which is “fizzling” according to one newspaper, the Canadian industry is bustling and within a few years could outpace other Canadian high-tech sectors, concluded the 2013 Canadian Clean Technology Industry Report by consultancy Analytica-Advisors.  But, for the Canadian industry to keep on surging, its companies must start learning Mandarin and find the right partners to sell in the world’s biggest cleantech market, added an Israeli newspaper. 

Globally, the clean technology industry is massive, estimated to be US$1 trillion in 2010.  Based on a 11% compound annual growth rate (CAGR), within a decade the industry is expected to expand three times to $3 trillion.  Roland Berger Strategy Consultants suggests the industry could be as large as $5.7 trillion by 2025. 

Outpacing global growth rates, the Canadian industry grew by 19% CAGR from 2008 to 2010 to top $9 billion.  Currently, about 700 technology SMEs across Canada employ more than 44,400 people with jobs growing at 8% a year.  Moreover, Canadian clean technology companies are export-oriented, deriving 53% of their revenues from world markets, well above Canadian averages.  Canadian companies also invest heavily in innovation, plowing nearly $1 billion into R & D.  This compares very favourably with established industries such as oil and gas ($760 million) and pharmaceuticals ($649 million). 

Celine Bak, President of Analytica-Advisors, cited in a news.thomasnet.com article, has said that given current growth rates, Canadian cleantech including bio-energy, wastewater, and energy efficiency “will become a $26 billion industry in the next five years, employing over 100,000”. By comparison, the Montreal Gazette reported the Canadian aerospace industry lead by Bombardier experienced a slump in 2012 that will drive revenues down to below $15 billion.  With improved outlooks for 2005 and beyond, industry sales should rebound and reach $18.5 billion by 2017.

The Harretz newspaper says Western cleantech companies are spending big bucks to develop ties with Chinese governments for a foothold in the enormous and quickly expanding market.  “The (Chinese) government invests no less than $9 billion per month in renewable energy and is expected to become the world’s largest solar panel and wind energy market by 2016.  Altogether, 50% of today’s investments in green energy are made outside of the US and Europe”. 

In fact, the central government has just unveiled major plans for renewable energy installations in 2013 that already renders Harretz’s forecast inaccurate.  A statement on the website of the National Energy Development Reform Commission (NEDRC), a division of China’s chief planning agency the National Development Reform Commission (NDRC), announced the country will add 49 gigawatts of renewable energy capacity this year, involving 21 gigawatts of hydro, 10 gigawatts of solar, and 18 gigawatts of wind.  

The announcement also exceeds other Western press forecasts for Chinese wind and solar installations.  A November report by Bloomberg New Energy Finance, for instance, projected China would add only 5.39 gigawatts of photovoltaic panels this year, although that alone would have pushed China past Germany as the largest solar market.  Bloomberg was also short in its prediction of 16.3 gigawatts for new land-based wind capacity. 

Thus, for Canadian cleantech companies, China is THE market to focus on over the long haul.