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Canadian CEOs want governments to invest in clean-tech innovation

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C-Suite Survey: A majority of Canada’s business leaders believe governments need to invest in clean-technology research to spur breakthroughs that could result in the elimination of fossil-fuel use over the coming decades.

The latest quarterly C-Suite survey of corporate executives shows that almost three-quarters of respondents support government backing for research and development that leads to a reduced reliance on fossil fuels. The support for public involvement is weakest in Alberta, but, even there, 55 per cent agreed this is an important role for government.

How fast Canada can move away from fossil fuels, though, is a question that divides executives. Only 14 per cent said the country could completely eliminate the use of fossil fuels by 2050, while 38 per cent said that point will come in the 2051-2100 time frame. Thirty-one per cent said Canada will never completely eliminate the use of fossil fuels.

The survey was conducted before last week’s federal budget, which contained a wide range of measures for environmental protection and clean-tech innovation.

Not surprisingly, it is the executives in the clean-tech sector who see the feasibility of a complete shift to renewables by 2050.

“I firmly believe it is possible, and I don’t think I am a lunatic-fringe kind of person,” said John Simmons, chief executive officer of Victoria, B.C.-based solar lighting firm Carmanah Technologies Corp. “I can’t imagine why other clear-thinkers can’t see it as being possible.”

Mr. Simmons noted that the cost of solar panels is dropping just as the efficiency of sunlight-to-electricity conversion technology is improving. “The technology works, it is getting better, and all the cost curves are heading in the right direction,” he said.

At the same time, he noted, executives are being pushed by the millennial generation to take into account environmental and social issues while striving to be profitable – thus increasing the momentum toward a clean-tech revolution.

The view from the oil patch, on the other hand, is more cautious. “The world demand for energy is growing at an incredible pace.” said Kevin Stashin, CEO of Calgary-based NAL Resources Ltd., a private oil-and-gas company with production in Alberta and Saskatchewan. “What you are going to need in the future is a myriad of different energy sources, from fossil fuels to renewables. It is not a question of either-or; it is a question of needing it all.”

Many renewable sources of power are still intermittent, so in the foreseeable future they will not be able to replace all the energy needed in Canada, even in the electrical sector, said Mr. Stashin, who added that the Canadian economy continues to be driven by fossil fuels.

But the government does need to support research into renewables, he said, even if the transition to them takes a long time. “Fossil fuel is a finite resource, and as it becomes more scarce in the future, the costs to explore for it and develop it will go up. You are going to need an alternative source of energy … so why not be on the forefront of it?”

A significant number of executives – 43 per cent – said it would be worthwhile to at least set a goal of eliminating fossil fuel use by 2050. However, only 22 per cent think this target is realistic.

Harry Taylor, chief financial officer at Westjet Airlines Ltd., said he thinks fossil fuels can be completely eliminated – even for aircraft – some time before 2100, but “2050 feels a little tight, given the amount of research that needs to be done and proven.”

“But if we haven’t figured this out by 2100, then we just haven’t invested enough intellectual capital and financial capital,” he said. “There has got to be something that we can develop. It is going to be hard work, and I’m sure [there will be] a lot of false starts, but I have faith that we will find something.”

In the airline industry, it is really up to engine-makers and airframe manufacturers to solve the problem, Mr. Taylor said, but research is already under way. In the meantime, airlines such as Westjet “are always looking for opportunities to reduce our fuel consumption and our carbon footprint.” This is “enlightened self-interest,” he said, because cutting fuel use saves money at the same time that it trims carbon dioxide emissions.

Mr. Taylor said he believes governments do have roles in supporting clean-technology research, even though they “have a propensity to be wasteful, and chase after things.” They should help create the conditions for the success of new industries “rather than propping up old-technology industries,” he said. Partnerships are a good means of doing this, he added: “Co-investing rather than just giving money away seems to make sense to me.”

Bill Murphy, national leader for sustainable services at KPMG Canada, said Canadian executives have shifted their thinking about clean technology. This is partly driven by a change in the political environment – both internationally and in Canada – and by technological advances, which show a low-carbon economy is now “in the realm of the possible.”

Still, he said he doesn’t see the end of fossil fuels in the medium term: “Some of the cleaner-burning fossil fuels are still going to be with us for some time.”

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C-Suite Survey at a Glance

The latest C-Suite Survey reveals how Canada’s top executives are feeling about plunging oil prices, the lower dollar, the federal Liberals’ platform, and much more. Here are some of the highlights:

65% say the drop in commodity prices is likely to have a negative impact on their business

74% in Alberta say recent economic conditions have led their company to change strategic plans over the next three-five years

37% say they have cut jobs to manage recent volatility, lower dollar, and commodity prices

9% say they strongly support deficits over the next three years

74% say they support measures to reduce reliance on fossil fuels

14% say Canada could eliminate use of fossil fuels by 2050

79% say the low dollar will put Canadian companies at higher risk of a takeover in the next 12 months

54% say the Bank of Canada’s mandate should include some emphasis on protecting the dollar’s value

65% say depreciation of the dollar over the last year is having a positive impact on their business

Methodology: 161 executives from ROB1000 companies were surveyed between February 18 and March 14, 2016.

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