Talking Back to the Open Canada Report

A more progressive study would have discussed cleantech, honest support for science, and a price on carbon.

"Canada is falling behind on investment and innovation, and even that old stalwart, trade. In a world of unrelenting competition, those who adapt and adapt again – and then again – inherit the Earth. Unfortunately, Canada ranks below the OECD average on research and development, a leading indicator of the economy of tomorrow." – from "Prosperity: A Gold Medal Nation," Open Canada: A Global Positioning Strategy for a Networked Age

Minor caveats aside, it’s hard to disagree with the central points of Prosperity, A Gold Medal Nation, the fourth chapter in Open Canada.

Goals like increased R&D spending, support of scientific excellence in our universities, an expanded influx of global talent, a clear effort to position Canada as a target of international investment, a reduction in tariffs and non-tariff barriers, continued efforts to build economic bridges – these are all building blocks of a knowledge-based economy.

That these points still need to be made, however, shows a lack of direction in our federal government. We ought to prod the feds into taking science seriously, and committing to scientific innovation as a cornerstone of economic development. Ominously, recent federal stimulus efforts included new university buildings, but gutted some of the strongest research budgets that support what happens in those buildings.

That said, there are nuances to innovation not contained in the report that bear emphasis.

First, Canada does have a successful model for “matching its science discovery to firms that can exploit it for commercial advantage.” That model is MaRS. At MaRS we work closely with entrepreneurs and universities to accelerate commercial deployment of promising intellectual property. We bring financial rigour, an entrepreneurial spirit and venture-capital thinking to science-based innovation. The MaRS model is to act as a catalyst, bringing together the financial, scientific, and entrepreneurial sectors. The MaRS model can, and should, be duplicated across Canada.

On a related note, it is not from large corporate R&D that the next generation of high-tech giants often come. It is small, highly-innovative startups that will drive much of Canada’s innovation-based economic growth. These startups should be singularly supported – we need more risk, seed, and venture capital to compete with places like Silicon Valley.

But most importantly, we are entering a new phase of human economic development that changes the way innovation, markets and the physical world interact. In the past, technological innovation – be it farming, mining, energy, or the telecom sector – created markets and shaped our environment. Now, that process will largely, but not universally, reverse. Nature will force market innovations that drive technological development.

Specifically, climate change demands the global economy de-couple from carbon emissions, and mitigate its effects.

That means the new kid on the block is cleantech – technology that enables a sustainable relationship with the natural world. It will be the single largest, sustained global market in human history. Cleantech today is like silicon in 1970. Countries that find innovative ways to seed that market will prosper, those that don’t will suffer. Unfortunately, the Canadian government is nowhere to be seen on this issue and we stand to miss out on what Angela Merkel has called the “third industrial revolution.”

We don’t know which technologies will win, of course – solar, geothermal, wind, smart grid enablers, storage, tidal, etc. – but we can say that the sector as a whole will grow.

To react to this opportunity, countries around the world are creating market conditions to enter the market. Feed-in tariffs, renewable portfolio standards, green stimulus spending – these are not ends in themselves, but attempts to prime the pump of local cleantech industry.

Canada needs to create market “push” in the sector, and drive innovation. I suggest more early-stage seed capital, an expansion and extension of Sustainable Development Technology Canada, and a technology-neutral feed-in tariff to attract innovative grid-scale prototype development. But further, we need to create market “pull,” demand for Canadian technology. I suggest the issuance of Green Bonds to supply the sector with low-cost debt, issued by the government but managed by the private sector.

We need to have an honest discussion about the tar sands. Those lakes of tar-soaked sand may be a source of short-term revenue, but they are also a distraction. By committing to them our capital, expertise, and national government’s attention, we miss more central and long-term opportunities of global markets. Canada’s evolution surely cannot be from hewers of water to melters of tar. We have more foresight than that.

Most of all, we need a price on carbon. Canada must be at the negotiating table, in good faith, to ensure our national interests are reflected in upcoming international agreements. Our absence is not just a moral failure, but an betrayal of our long-term economic interests.