The global clean technology sector is growing rapidly, and is expected to reach a total of $2.5 trillion in annual revenues by the end of 2022. Between 2020 and 2021, over $87.5 billion were invested in clean technologies worldwide, representing a year-over-year growth of 210%.  According to PwC, there are over 3,000 cleantech startups worldwide with a focus on climate technology (also known as ‘climate tech’ or ‘carbon tech’), and over 6,000 unique investors operating in this space. In this study, climate tech is defined as technological applications falling into three distinct categories: technologies that mitigate or remove emissions, help us adapt to the impacts of climate change, or enhance our understanding of the climate system. 

The Canadian cleantech market is also expanding quickly. According to Statistics Canada, the combined environmental and clean technology sector contributed $70.5 billion to Canada’s economy in 2019, representing approximately 341,000 jobs and 3% of GDP. Canada ranks #1 in the world for cleantech innovation, according to the Global Cleantech Innovation Index, and ranks #16 in the world for cleantech commercialization. The growth of the cleantech sector is a vital area of economic expansion for Canada, given that the Canadian economy is highly vulnerable to the clean energy transition, which will reduce demand for many carbon-intensive goods that Canada produces, as demonstrated in the ‘Sink or Swim’ report by the Canadian Climate Institute. The total capital raised by cleantech and renewable companies listed on the TSX reached $3.3 billion in 2021, representing 65% growth compared to the previous year. Canada’s 2021 budget included $17.6 billion earmarked for investment in clean technologies, and the federal government has a goal of tripling the current value of Canada’s cleantech exports to $20 billion annually by 2025, making it one of Canada’s top five export industries. To accelerate the clean transition in Canada, the government has a goal of reducing annual emissions by 40-45% below 2005 levels by 2030, with plans to ban internal combustion engines by 2035. In order to meet these goals, it is estimated that the government will need to invest $128 billion over the next ten years. To learn more about Canada’s cleantech sector, see this report about Canada’s commitments to cleantech development, as well as this report which describes regional cleantech innovation clusters within the Canadian market. 

The cleantech sector is diverse and contains many types of firms working on a wide variety of solutions. In Canada, the market continues to be dominated by the sale of energy efficiency and clean energy technologies and services, followed by site remediation and environmental emergency services, environmental consulting services, bioenergy, the production of biofuels, biomaterials, and biochemicals, transportation technologies, and precision agriculture technologies. The Canadian cleantech sector can be segmented into the following industries (by percentage of total firms): 

• Renewable Power Generation (39%)
• Hydrogen/Fuel Cells (12%)
• Energy Storage (11%)
• Energy Consumption and Management (10%)
• Nuclear Power Generation (8%)
• Emissions Management (7%)
• Smart Grid (5%)
• Other (8%)

Globally, cleantech activities are mostly concentrated within the following segments:

• The sustainable management of natural resources
• Renewable and alternative energies
• Energy efficiency and green building development
• Sustainable transportation
• Waste reduction and lifecycle management
• Sustainable agriculture technologies 
• Pollution control, environmental protection and conservation
• Other support services such as R&D, education, program administration, and consulting.

The remainder of this sectoral guide focuses on clean technologies apart from clean energy. To learn more about the decarbonization of energy systems and the growth of renewable power, see our guide on clean energy. We are also developing sectoral guides on other cleantech sectors, such as environmental consulting, green buildings, circular economy, and other areas.

For all definitions related to clean energy sources, electricity systems, and renewable fuels, please see our sectoral guide on Clean Energy and the Just Transition. 

Carbon Capture and Storage: Carbon capture and storage (CCS), also known as carbon capture, utilization, and storage (CCUS), is a form of technology designed to capture carbon directly at the source of its emission for either storage or alternative uses. Carbon capture technologies currently capture at least 40 million tonnes of carbon dioxide annually from power and industrial facilities, while another 100 new projects for carbon capture facilities were announced in 2021. Carbon capture is an important tool for reducing carbon emissions in hard-to-abate sectors, such as heavy industry. However, CCS should only be used instead of abatement actions in circumstances where technological alternatives and low-carbon business models are not yet proven or readily available. CCS currently suffers from considerable technological challenges, and CCS technologies do not yet exist at a scale that would allow large emitters to feasibly trap and sequester the majority of their emissions. In fact, some carbon capture plants emit more carbon than they capture; a literature review of 200 research papers on carbon capture and industrial carbon removal found them to result in net CO2 additions, not reductions. There is also the paradoxical issue that many CCS facilities are currently used to create pressurized CO2 which is then used for ‘enhanced oil recovery’, wherein the CO2 is injected into existing oil and gas reservoirs to extract even more energy. Enhanced oil recovery is currently the only industrial use of CO2 that has reached any real commercial scale, and it serves merely to reinforce fossil fuel dependence. In this manner, calls for a ‘circular carbon economy’ (where carbon is emitted and captured in a continuous cycle) should be viewed with a high degree of skepticism. Most importantly, carbon capture technologies must not be used by oil and gas firms as a way to avoid transforming their businesses into clean energy companies. 

Carbon Offsets: Carbon offsets are a way to use carbon removal or negative emissions technologies to remove greenhouse gases from the atmosphere to create credits which can then be sold to corporations that cannot otherwise reduce their GHG emissions. Carbon offsets have been heavily criticized by many actors, with the Intergovernmental Panel on Climate Change warning that they face “multiple feasibility and sustainability concerns.” Science-based targets cannot make use of carbon offsets in lieu of genuine low-carbon transition plans, or can only use independently verified carbon offsets when no technological alternative is readily available. Credible carbon offsets must be additional, in that they account for emissions reductions which would not have otherwise occurred without the offset purchase. For more information about credible carbon offsets, see the Oxford Principles for Net-Zero Aligned Carbon Offsetting. 

Negative Emissions Technologies: Negative emissions technologies (NETs), also known as carbon dioxide removal (CDR) technologies, are the technological solutions which allow for the removal and sequestration of greenhouse gases from the atmosphere and thus facilitate the creation of carbon offsets. The World Resources Institute identifies several main types of carbon removal technologies: nature-based solutions (including soil carbon and reforestation or afforestation), carbon mineralization, bioenergy with carbon capture and storage (BECCS) or direct air capture (DAC), as well as various ocean-based concepts (such as iron fertilization). BECCS involves industrial-scale reforestation as a form of carbon sequestration, producing trees which are then harvested and burned for use as bioenergy (with carbon emissions being captured and stored at source). Direct air capture involves the creation of new technologies to capture ambient carbon dioxide directly from the atmosphere. BECCS and DAC, two of the most commonly proposed NETS, both face “multiple feasibility and sustainability concerns” when deployed on a large scale, according to the IPCC. BECCS has never been proven on a commercial scale, and offsetting only a third of today’s fossil fuel emissions through BECCS would require using half of the world’s total crop-growing area, which raises significant concerns about biodiversity loss and competition for land. Shell’s low carbon plans have been criticized for relying on the creation of an artificial forest the size of Brazil. To become feasible, direct air capture would require a carbon price far above what current carbon markets have delivered, and would also require roughly 10 gigawatts of power, or three times the capacity of the largest nuclear plant in the United States. It is anticipated that both negative emissions technologies, if deployed at scale, would have minimum estimated costs of $89-535 trillion this century, making them a highly uncertain gamble with large feasibility concerns. Many scholars believe that negative emissions technologies are a dangerous distraction that serve as a deterrence to genuine mitigation efforts. For a list of known carbon dioxide removal purchases, see this spreadsheet. 

Biomaterials and Biochemicals: Biomaterials and biochemicals include all materials and chemicals that are produced from biological materials (rather than petroleum or other non-renewable sources). Bioplastics, one of the most commonly cited biomaterials, refers to two types of material: bio-based plastics (i.e. plastics made from biological matter), and biodegradable plastics (i.e. plastics that can be decomposed by microbes within a reasonable timeframe). There are many promising biomaterials in development, such as AirCarbon, a biopolymer that’s produced by bacteria in the ocean and can be used to make all kinds of durable but flexible materials. However, the sustainability of biomaterials and biochemicals, when considered from a whole life-cycle perspective, is a complicated question. Many bioplastics are not biodegradable, or degrade only under very specific (and lab-controlled) conditions, while they can also be just as toxic as regular plastics. While biomaterials and biochemicals typically have a lower emissions intensity than conventional materials, they also lead to other environmental impacts from bio-feedstock production (particularly by aggravating pressures on land use). To learn more about challenges and solutions related to bioplastics, see this article. 

Green and Blue Hydrogen: The combustion of hydrogen creates heat and water without any associated greenhouse gas emissions, leading to claims that hydrogen can be used as a low-carbon fuel source. Because not all sectors can be electrified, green hydrogen can be an important part of decarbonizing industrial processes and heavy transport (although it faces numerous safety concerns, namely flammability). The emissions intensity of hydrogen as a fuel is determined by the hydrogen production process; conventional hydrogen (also known as grey hydrogen) is hydrogen that is produced from natural gas. Green hydrogen (or electrolytic hydrogen), whereas, occurs when renewable electricity is used to split water into hydrogen and oxygen through electrolysis. Green hydrogen production is currently prohibitively expensive. Blue hydrogen, by contrast, is produced in a manner that is identical to the production of grey hydrogen, except that the associated carbon emissions are captured and stored at source. Blue hydrogen faces numerous sustainability concerns; it requires a significant amount of natural gas (even more so than for heat production), and natural gas creates fugitive methane emissions, a potent greenhouse gas, as a byproduct of its production. One study found that the amount of methane released by blue hydrogen production actually makes the fuel 20% worse for the climate than regular natural gas.  

Hydrogen Fuel Cells: Hydrogen fuel cells are a way to produce clean electricity electrochemically by reacting hydrogen and oxygen to create heat, water, and electricity. If hydrogen fuel cells are fueled by zero-emission green or blue hydrogen, they could be considered a source of green energy. 

Bioenergy and Biofuels: Bioenergy, including biofuels, refers to all energy sources that come from the combustion of plant or plant-derived matter. Renewable fuels for transportation and other uses can be created from biomass being converted into liquid fuels such as ethanol and biodiesel. Since the feedstock material for renewable fuels can be replenished naturally, it is considered a renewable source of energy. Ethanol is an alcohol which can be used as a blending agent in traditional natural gas. Biodiesel is produced from renewable sources, preferably waste vegetable oils and animal fats, and can replace petroleum-based diesel fuel. Similarly, renewable hydrocarbon fuels can be thermochemically or biologically processed from biomass to replace petroleum fuels such as gasoline, diesel, and jet fuel. In an ideal world all biomass used for biofuel production would come from waste materials, cellulosic biomass (which is the vast majority of plant matter), or algae-based resources. However, most ethanol production is currently made from plant starches and sugars, which raises equity and sustainability concerns about land use, biodiversity loss, and the displacement of food production. Research about the emissions intensity of biofuels is often quite conflicting, although it is acknowledged that second generation biofuels (i.e. biofuels from waste biomass) have the potential to reduce emissions. Most importantly, naturally growing forests should under no circumstances be harvested to create biofuels. Bioenergy with carbon capture and storage (BECCS) has numerous feasibility and sustainability concerns; it has never been proven on a commercial scale, and offsetting only a third of today’s fossil fuel emissions through BECCS would require using half of the world’s total crop-growing area. Accordingly, BECCS should not be relied on as a negative emissions technology. For more information about the challenge of developing truly sustainable biofuels, see this short documentary. 

Precision Agriculture: Precision agriculture, also known as ‘smart’ farming, is a practice that uses automated data-gathering technologies to guide targeted farm management activities and improve the sustainability, efficiency, and productivity of agricultural operations.

Environmental Remediation: Environmental remediation is the removal of pollution and contaminants from water and soil, with the goal of improving contaminated sites to their natural ecological state. Some remediation processes use solidification techniques which introduce materials to a site that bind to contaminants, making them less hazardous or easier to remove, or use oxidation technologies to help break down chemicals. Other techniques include soil vapor extraction and bioremediation (i.e. the use of plants to naturally sequester and remove pollutants). To learn more about remediation technologies, see this link. 

Water Technologies: Water treatment and wastewater remediation technologies are a way to remove contaminants from polluted water. Emerging water technologies that appear promising include nanotechnology in filtration, membrane chemistry, smart monitoring, seawater desalination, and more. Axine Water Technologies is a Canadian Global 100 Cleantech firm that has developed an electrolytic oxidation technology to treat high concentrations of toxic, non-biodegradable pollutants. For more information about Canada’s water technology sector, see these articles from Water Canada and Invest in Ontario.

Although Canada ranks #1 in the world for cleantech innovation, it is far behind in cleantech commercialization. This is because many small- and medium-sized enterprises in the sector–which comprise the majority of firms–struggle to gain market acceptance for their products, attract funds for growth, or become cash flow positive. As a result, there is a lot of innovative research that never makes it off the ground. Firms face difficulty in scaling, worsened by stiff international competition. In Analytica Advisor’s 2017 Canadian Clean Technology Industry Report, cleantech firms reported that the lack of high-quality business development talent to help raise capital is one of their top barriers for success.

Global cleantech investment is currently disproportionately directed towards technologies with a lower total emissions reduction potential (ERP), while high ERP areas, with technologies that are lower in maturity, remain underfunded. This problem is largely a result of the difficulty of attracting funds to sectors where potential gains are uncertain or risky–which is often the case for breakthrough technologies. To deliver these solutions, patient capital (i.e. capital with longer-term investment horizons and required payback periods) is needed, alongside long-term strategic plans and targeted policy interventions by governments. There is a need to avoid duplicating the situation which occurred in 2012, when a bubble of cleantech investment concentrated in Silicon Valley burst after investments failed to produce the returns that investors wanted in the time that they demanded. The collapse of the cleantech bubble led to a sharp decline in private investment, which is a failure that we cannot afford to duplicate. As such, research suggests that venture capital alone is a poor model for innovation in cleantech, and there is a great need for increased government funding of basic research and investment in innovation, coupled with a supportive policy environment enabled through the use of tax credits and other incentives. 

Most importantly, the cleantech space should not be dominated by firms hoping to produce negative emissions technologies for carbon dioxide removal that are designed to produce carbon offsets. The dangers of relying on carbon offsets for emissions mitigation are well-documented and elaborated on in the above section on Key Concepts. Research and development should be oriented towards investment in a genuine zero-carbon energy transition, with the overriding principle of keeping fossil fuels in the ground.

For more information about the cleantech industry in Canada, see these guides from Invest Canada and Invest Ontario. 

To browse a list of organizations working on climate solutions, see Climatescape. To get further involved with climate startups, see Climate Draft. For a list of global cleantech firms, with a focus on the United States, see this spreadsheet of climate tech companies, as well as this list from Stanford University.

For information about the cleantech industry, follow Clean Edge and the Cleantech Group. The following media sources are also useful for keeping updated with industry trends:

• CleanTechnica
• GreenTech Media
• GreenBiz 
• ArsTechnica

See the following Canadian and international organizations with a focus on cleantech:

• International Cleantech Network
• CleanTech Alliance
• Global Cleantech Innovation Program 
• CleantechNorth
• Ontario Clean Technology Industry Association
• Ontario Environment Industry Association
• Écotech Québec
• Alberta Clean Technology Industry Alliance
• Carbon Management Canada
• GreenCentre Canada
• Ontario Water Consortium
• Canadian Water Network 
• Hydrogen Business Council
• Canadian Hydrogen and Fuel Cell Association
• Bioindustrial Innovation Canada