Climate Tech Canada - Issue #6

Hi there,

Welcome to issue #6 of Climate Tech Canada! I’m Justin, and every two weeks I share a round-up of what’s happening in Canadian climate tech. 

Before we get into it, let me just say what a wild few weeks it’s been here in Ottawa. It seems like overnight we went from vague rumours about a handful of trucks to three weeks of disarray. One thing that’s been stuck in my mind throughout this ordeal is the need to resist the urge for simple, easy narratives. Particularly ones that reinforce our existing beliefs or emotional responses. We need to get better at holding the tensions between our values, and unpacking the real trade offs that we are (and aren’t) willing to make.  

We can tie this back to climate too, because it’s all around us. One of the most common conflicts is when our values of environmental conservation come into conflict with the existential threat of emissions. We see this in the controversy around the development of hydro-electric transmission lines from Quebec to Maine, the social and environmental impacts of lithium mining, or the risks and fears of nuclear power. 

Staying with this tension and wrestling with it will give us more room to explore solutions together, keep doors open that otherwise might be closed, and create far better outcomes. 

In this issue, we look at Canada’s carbon pricing system, funding and growth news from a ton of companies, an opportunity to develop clean solutions for mining, and some great podcast episodes featuring Canadian founders. Let’s get into it!

Canada’s carbon pricing system

This past week, the federal government launched a fund to support projects for reducing industrial emissions - the Output-Based Pricing System Proceeds Fund (snappy name, eh?). You might not know it from the name, but this new fund is a core part of our carbon pricing system, using the funds paid by emitters to drive emissions reductions. 

The more I looked into this, the more I realized how little I know about how our carbon pricing system works. So let’s check it out.

Canada’s approach to carbon pricing has two parts: 

1. A charge on fossil fuels (e.g. natural gas, gasoline) 

2. Emissions charges for industry (which also includes options for trading / buying offsets)

Both of these are set up so that they’re not simply government revenue. A portion of the federal fuel charge is returned as a tax rebate for residents of participating provinces. The industrial program uses the funds paid under the program to help reduce future emissions by funding the development and acceleration of clean technology and energy.

The industrial fund launched with approximately $161M available for the provinces that have paid into it in 2019. This includes Manitoba, New Brunswick, Ontario, and Saskatchewan, and includes two main streams: funding projects to decarbonize industry, and development of clean energy. Hopefully we’ll see this funding deployed quickly.

Despite being a government of Canada program, it doesn’t blanket apply across the country. Canada is a federal system which aims to strike a balance between a degree of provincial self-determination, and consistency and control from the overarching  federal government. We can see this tension in the various constitutional challenges to the carbon pricing system launched by Saskatchewan, Ontario and Alberta. 

because of this, Canada’s system is fairly flexible and uses the federal pricing system as a “backstop”. This allows provinces to develop their own systems, with the federal system filling in any gaps. And many provinces have rolled their own - New Brunswick will be excluded from the OBSP after Jan 2021, and Ontario after Jan 2022 as both provinces have established their own systems. You can see the various systems in place in each province below:

Source

This approach adds some complexity, particularly for businesses operating across the country, but it limits the impact of lagging provinces and avoids dramatic relocation of industry from one province to another in order to pursue more favourable tax structures. It also allows provinces to do more, like Quebec’s cap-and-trade approach or B.C.’s higher per-tonne pricing. It’ll be interesting to see what the launch of the OBPS fund does for funding innovation and new projects, and even more so as the price per tonne increases in the years ahead.

Funding and growth

Potential Motors (Fredericton, NS) raised $4M in seed funding to hire more employees and continue development of their AI-powered vehicle control software for off-road vehicles. The company is betting on greater EV adoption in the off-road category as people want to get the benefits of EVs without sacrificing the fun of off-roading.

RideCo (Waterloo, ON) has raised $20M in Series A funding to accelerate product engineering and customer support. RideCo is one of a growing number of on-demand transit providers enabling municipalities, transportation agencies and fleet operators to offer on-demand transit services. 

Canadian Resource Innovation Network announced over $30M in funding across four projects aimed at reducing the carbon intensity of oil and gas, with a number of big industry players involved, including Suncor, Chevron, and Cenovus. The projects include:

• Pilot deployment of Ekona Power’s methane pyrolyzer solution for hydrogen production

• Exploring the use of Enerkem's technology to create fuel from biomass to help decarbonize heavy transportation.

• Scaling up and de-risking KWI Polymers Solutions’ technology to turn natural gas into hydrogen and solid carbon.

• A demonstration project of FuelCell Energy’s carbon capture technology, which does double duty generating electricity. 

SDTC announced a range of investments to the tune of $52.3M across 16 companies in agtech, energy, waste, built environment and transportation. Some notable funding recipients include:

• Chinova Bioworks (Fredericton, NB) produces a natural food preservative derived from mushrooms, extending the shelf life of food products and preventing food waste.

• Intelligent City (Vancouver, BC) offers turn-key mixed use housing, bringing together prefabricated mass-timber, passive house design, and robotic technologies. They aim to deliver more sustainable and livable housing that is faster and less expensive to build, with higher quality than traditional housing developments. 

Growth

Canada’s Ocean Supercluster announced a project to develop renewable diesel from agricultural and forestry by-products for marine applications.

Nova Scotia-based Sustane Technologies is expanding to Ontario with a facility in Renfrew County that’s expected to divert 90% of waste from landfills

MustGrow signed an exclusive agreement with Bayer to evaluate the commercial potential of their bioherbicides and food preservation technology. Bayer will fund and drive the lab and regulatory work needed for commercialization.

Delta CleanTech signed a deal with the National Research Council to develop a performance and cost database for CO2 capture to help evaluate CCUS technologies. 

Here & there

• Polling from KPMG shows 71% of Canadians would consider an EV for their next car

• Toronto will be home to the largest solar wall in North America

• Canada Pension Plan Investment Board committed to net-zero GHGs by 2050 - but divestment isn’t part of the plan.

• Looking to make the move into climate tech? This mind-map from Yin Lu is a great visual guide to help match your background to the right area.

• Several key Conservative Party insiders launched “Conservatives for Clean Growth”, a group aiming to support party leadership candidates who have a credible climate plan.

Opportunities

The Mining Innovation Commercialization Accelerator (MICA) launched a call for proposals for clean technology for the mining industry. The group is looking for submissions related to increasing production, reducing mining energy consumption and emissions, implementing autonomous mining systems, and reducing environmental risk. Deadline for submissions is March 7th.

Fun Stuff

I’ve been on a podcast roll lately and have two great episodes I’d recommend.

First up, this interview with Moment Energy on the MCJ podcast. Based in Port Coquitlam, Moment Energy re-purposes retired EV batteries to create off-grid energy storage systems. This is a great episode to hear from a Canadian founder, how they’re finding their niche in a busy space, and all kinds of insight into the dynamics at play with batteries.

I also really enjoyed this episode of Cleantech Forward, where Mike Kelland, CEO of Planetary Hydrogen, pitches his business to a panel of investors. It’s a great window into the pitch process and how investors are thinking about carbon removal and hydrogen.

As always, thanks for reading and if you’re enjoying the newsletter, considering forwarding to a friend!

Stay safe,

Justin