Clean tech programs losing steam
Jan 19, 2009 04:30 AM
Support for clean technologies and energy in Ontario appears to have gone down, not up, despite rhetoric suggesting the contrary.
This isn't to say there haven't been well-meaning announcements of what the province intends to do, or programs that will be launched, or studies and reviews that will take place to analyze the opportunity in front of us.
In fact, we've got an announcement surplus in this province. Problem is, when it comes to spurring the local development and deployment of green technologies, we've got an action deficit. It's easy to get the feeling the wheels are spinning but not taking us anywhere – at least not fast enough.
Take the following examples:
• Just last week Premier Dalton McGuinty announced a partnership with a California-based company called Better Place that ultimately intends to electrify Ontario's transportation infrastructure to accelerate the manufacture and adoption of electric cars. It's a good "first step," as McGuinty put it, but before any investments or policy changes happen the government will take the next few months to study the opportunity.
It makes for a nice press release, but in the meantime the auto industry continues to bleed jobs. This should have been studied more than a year ago and we should be seeing some concrete action now. Magna International says it is building an electric car with Ford for the North American market. An announcement that those cars, their components, and their batteries will be built in Ontario is what we really need to hear.
The government last year put a freeze on its standard offer program, which pays a premium for electricity that's generated from small-scale renewable energy projects. The program was progressive by North American standards and attracted a flood of applications that were "approved" by the Ontario Power Authority. The agency took this wild success as a reason to halt and refine the program.
But few of those approved contracts have actually resulted in built projects, and dozens of applications remain frozen in the pipeline. Remember when U.S. President George W. Bush stood on an aircraft carrier claiming victory in the war against Iraq? Well, that didn't reflect reality on the ground. The same thing applies to Ontario's standard offer program, which after two years hasn't lived up to its claim of success.
Meanwhile, the power authority limps along with a similar program that's supposed to support small-scale clean energy projects. Tick. Tick. Tick.
• After two studies, more than two years of public pressure, and much foot-dragging, the Ministry of Transportation indicated in December it would let properly equipped low-speed vehicles be driven on public roads "under rules to be released this winter." Of course, this means nothing until we know the rules, and while on the surface it might seem favourable for electric car maker ZENN Motor Co., don't bet on it. McGuinty clarified this week that ZENN would need to add more safety features, and even then, would be of "limited use" in Ontario. Nice way to support a local company that sells into dozens of U.S. states and two Canadian provinces.
• Back in November 2007 the Ministry of Research and Innovation hailed the creation of an "Ontario Venture Capital Fund" that would use public/private capital to support budding companies in the province, including cleantech start-ups.
"It has been established to address the lack of investment funding in Ontario for innovative, high-potential companies," the ministry stated. "Without access to long-term investment capital and support, these companies cannot grow and create jobs in Ontario."
Terrific idea. By June 2008 the government proclaimed that the $205-million fund – $90 million from the province – was open for business, and that TD Capital Private Equity Investors had been chosen to manage it.
So how's the fund doing?
"The fund is still in the very early days of implementing its investment strategy and is currently evaluating a number of potential investment opportunities," said TD spokesperson Julia Deanne Koene, adding that "actual investment pace for 2009 is difficult to predict as it is entirely based on the fundraising cycles of the underlying fund managers, which are also difficult to predict."
Nic Morgan, director of business development with Toronto-based solar start-up Morgan Solar, has experienced first hand the waiting game involved with government programs run by a committed but rule-bound bureaucracy.
"There's a risk aversion here that runs deep and far. Governments like to talk about all the programs they launch, but they're long on process and short on results," he said. This isn't just an Ontario thing. It's a federal thing, a Toronto thing – apparently a Canadian thing. It makes one wonder if the maple leaf emblazoned on our national flag is made of red tape.
In the area of investment and financing, the private sector hasn't been much better in supporting up-and-coming innovators that represent future jobs in this province.
It was disappointing to read earlier this month that venture capital investments in Canadian greentech companies fell 56 per cent in 2008 to $159 million (U.S.), according to tracking data released by The Cleantech Group. Canada performed the worst out of all the countries mentioned in the report and was one of only three that saw investments fall.
American companies saw a 56-per-cent jump in investment, China was up 22 per cent, and Germany and Israel were up 217 per cent and 224 per cent, respectively.
Within Canada, how did Ontario do?
It had eight deals totalling $88.1 million, down 49 per cent compared to 2007.
There's something seriously wrong with this picture. Sources assure that good news is on the way – the introduction of a Green Energy Act, for example, which would create an attractive market with policies that are supportive of renewable energy and the deployment of locally developed clean technologies. Let's hope it lives up to expectations.
If I'm getting impatient, one can only imagine the impatience of auto workers who have lost their job, promising cleantech start-ups that can't afford to commercialize their prototype and must seek funds from south of the border, or renewable energy developers who must cancel their projects because government pussyfooting has scared away investors.
And don't forget the Riverdale grandmother who wants to get rid of her gas-guzzling Oldsmobile Cutlass Supreme for an all-electric, emission-free city car from ZENN.
It's always good to be cautious. This is public money. But when being cautious makes someone cripplingly slow, maybe it's time to loosen up and just get on with it.