The state of Canadian climate innovation

The Corporate Innovation team at MaRS works with large private and public companies to help them adopt the latest Canadian technologies. This is an excerpt from a special report that breaks down emerging trends in climate solutions and explores the potential impact they can have in helping us reach net zero.

The time for change is now. Earlier this year, the Intergovernmental Panel on Climate Change issued an unequivocal call to action: If there is any hope of meeting the goal set by the 2015 Paris Agreement — that is, of preventing the Earth’s temperature from rising more than 1.5 degrees Celsius above the pre-industrial average, a benchmark for sustained human survival — it is imperative that we as a global community take immediate, significant steps to change the status quo.

If those terms seem abstract, the urgency can be felt in the messages conveyed by nature itself. The effects of climate change are evident all around us: torrential floods, protracted droughts, decimated crops, uncontrollable wildfires. In addition to causing environmental and human devastation, these disasters have significant economic impacts. When the derecho swept through the Quebec-Windsor corridor in the spring of 2022, it left $1 billion in insured damages in its wake; Hurricane Fiona, which hit Atlantic and Eastern Canada a few months later, wreaked havoc to the tune of more than $846 million. And the thick smoke that cloaked a large portion of the continent during the summer of 2023 disrupted air travel and had marked effects on productivity. According to a report from the Canadian Climate Institute, by 2025, climate-related repercussions could cause the country’s economic growth to lag by $25 billion (or half of the projected annual GDP) per year.

Add to that the growing concerns about energy security amid the on-going war in Ukraine and the worries about affordability, and the need to scale up promising solutions is clear.

Fortunately, this country is home to brilliant, forward-thinking innovators who are dedicating time and resources to developing new technologies that benefit the planet. For each of the past five years, at least 10 Canadian companies have appeared on the annual top Global Cleantech 100 companies list — including 12 different ventures in 2023, second only to the United States. And while these novel ideas are a key first step, funding and scalability are crucial to ensure they are implemented in meaningful ways. Which, in a global landscape, requires a different kind of collaboration, as Ana Gonzalez Guerrero, the senior manager of climate and cities at MaRS, points out: “We’re seeing more of a commitment to transferring and shifting the power structure so that those that are most impacted are at the forefront of the solutions.”

 

The investment landscape

While Canada is strong on research and development, we have a ways to go when it comes to widespread adoption of new climate innovations. Compared to other countries and regions, local business and capital communities are relatively risk averse. That said, the good news is that investment in climate tech is on an upward trajectory: Last year, $82 billion was invested, a 19.4 percent year-over-year increase. While the overall deals are down, mega-rounds totalled $53 billion in 2002, indicating a growing maturity of the ecosystem.

  • Debt financing was up 60 percent
  • Grant financing grew 128 percent
  • Equity investment grew 11 percent
  • Mega-rounds totalled $53 billion

Source: BCG

 

Emerging trends in climate solutions

Carbon dioxide emissions continue to rise. In 2022, emissions increased 0.9 percent, releasing 36.8 gigatonnes into the atmosphere. At 419 parts per million, the carbon levels in the Earth’s atmosphere is higher than any time in the last 800,000 years, and a whopping 150 percent higher than at the beginning of the industrial age.

Canadian atmospheric scientist Katharine Hayhoe puts it bluntly: “We need solutions at every single level, because what is at stake, is quite literally us — us humans, and many of the other living things that share this home with us.”

Here is a snapshot of some of the promising technologies.

Energy:

  • Energy storage will play an essential role in doubling or tripling our supply by 2050, ensuring reliable service that can mitigate the intermittent power generation of renewables.
  • Decentralized power sources offer flexibility in remote and rural areas, and can provide options for managing industrial energy needs in house.
  • Solar energy is becoming more efficient and effective through the development of bi-facial panels and the use of solar ink.
  • Small modular nuclear reactors offer consistent sources of clean energy. And scientists are moving closer to realizing the promise of nuclear fusion.
  • Hydrogen’s potential to provide clean energy is being explored in three key areas: aviation, marine shipping and steel production.

Transportation:

  • Fleet management is helping companies lower their emissions through predictive maintenance and optimization.
  • Next-generation mass transit options are ramping up.
  • Innovators are finessing the range, efficiency and charging speed of electric batteries, and coming up with novel ways to maximize their resources through second-life applications.

Carbon solutions:

  • New innovations could make direct air capture cheaper and less energy intensive.
  • Industry players are exploring new ways of transforming carbon dioxide into rock, sequestering it in the ocean and creating more sustainable building materials.
  • As the carbon market matures, there is a growing demand for technology that monitors and measures both emissions and sequestration.

Sustainable cities:

  • More municipalities are relying on data collection and analysis to help inform policy. Notably, digital twins are helping planners prepare for everything from increased electrical demand to climate emergencies.
  • Smart tools, like AI platforms involved in optimizing HVACs or prioritizing retrofits, help building managers reduce carbon emissions.
  • Planners are boosting resilience in communities through tree canopy management and designing urban infrastructure that can absorb and withstand climate impacts.

Sustainable materials:

  • Biochar is emerging as a way to help the steel industry decarbonize.
  • Cement that is infused with carbon dioxide presents a double benefit: it effectively sequesters the gas and results in concrete that is 40 percent stronger.
  • Plant-based plastics offer industry players a plug-and-play alternative to petrochemicals.
  • Animal-free leather and plant-based foam are garnering attention as a more sustainable material for vehicle upholstery.

Sustainable mining:

  • Entrepreneurs are developing new approaches to extract lithium using a fraction of the resources involved in conventional processes.
  • Mine tailings are being transformed into carbon sinks.
  • Digital solutions are helping the mining industry decarbonize, whether through data collection for more efficient extraction or automation to reduce energy consumption.

AgTech:

  • Precision agriculture helps increase crop yields with fewer inputs.
  • Food producers are looking to scale up alternate forms of protein — from insect farming to cell-based agriculture.
  • Innovations along the supply chain are working to reduce the amount of food waste produced.

Clean water and oceans:

  • New companies are working to extract value from the ocean while also preserving the health of the marine ecosystem.
  • Digital sensors, drone vessels and trackers in the ocean are being used to optimize shipping routes, protect coastlines and monitor marine life.
  • Technologies that improve the efficiency of waste water treatments plants are attracting large investments.

 
MaRS Cleantech Trends Report

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