Building cleantech bridges to Europe

Markham interviews ClimateDoor’s CEO Chad Rickaby about the state of cleantech finance in Canada and the new Low Carbon and Circular Economy Business Action Canada initiative in Vancouver.

What is Energi Talks?

Journalist Markham Hislop interviews leading energy experts from around the world about the energy transition and climate change.

Markham: 00:04

Welcome to episode 361 of the Energy Talks podcast. I'm energy journalist, Marcum Hislop. On September 12th, cleantech venture capital firm ClimateDoor hosted the official kickoff of the low carbon and circular economy business action Canada initiative in Vancouver. Funded by the European Union, the program is designed to accelerate Canada's decarbonization efforts by connecting Canadian businesses with leading European cleantech innovators. I'll be talking to ClimateDor's CEO Chad Rickaby, about the state of, CleanTech Finance in Canada and the new initiative.

Markham: 00:43

So welcome to the interview, Chad.

Chad: 00:46

Awesome. Thanks for having me, Mark. I'm looking forward to it.

Markham: 00:48

Well, I'm interested in this because, here at Energy Media, we do a lot of energy transition reporting. And and, one of the fundamental concepts in that drives us is the idea that this energy transition is different than any other any energy transition in the past. If you read Vaclav Smil's 50 books about energy transitions, you will not understand this energy transition. This one is not commodity led. It's not, you know, wood and dung and steam and coal and natural gas and and oil.

Markham: 01:31

It's technology. It's technology led. And once once you begin manufacturing your energy technology, your sources of energy in a factory, it behaves entirely differently than if you're extracting oil or gas from the ground and processing it and shipping it and combusting it. You get lower different pricing. You get different efficiencies.

Markham: 01:54

It's a different ball game. And part of that worldview is that China leads in everything when it comes to clean energy, but Europe is is is a competitive second place. There's a lot going on in Europe. And so I'm very curious about the state of cleantech in Europe and what it might offer, an economy like Canada. So maybe it just if we could address the broad strokes of why this and how this initiative came about and why it's a good thing for Canadian clean tech companies.

Chad: 02:37

Yeah. No. That that I I think, you know, in terms of the state of of Europe's, clean tech ecosystem, it is certainly certainly further ahead than than Canada's. And I I think there's a few reasons for that. I mean, some of it being, you know, more recent industrial policy and and lots of funding support and and and some of the the things that we're seeing coming coming from that.

Chad: 03:02

And I think also it's important to know that historically, you know, they're they've been constricted with the they're restricted by the amount of land they have, the amount of water and resources they have. And so they've they've naturally needed to be a little bit more innovative and and think about things like this. Whereas in Canada, we're we're blessed with with lots of resources and and an abundance of land and water. And so I think that there's there's a couple pieces there where they've been thinking about about, you know, water management, energy management, food security for for a long time in Europe. And and through that, have have maintained, a sort of, ethos of of innovation and and prioritize these types of things.

Chad: 03:44

And and then more recently, you know, keeping up with with some of the the industrial policy out of out of US and China, there is an abundance of of funding and and, Horizons Europe as as one example is a is a huge pot of money. So, yeah. I think that's sort of the state of of of Europe in a minute or less, and and what that means for for Canada is is the opportunity to solve some of our our challenges with with leading technology that that may not exist here. And so the way we think about it is is bringing that technology to Canada, to fill gaps or or solve problems that that might exist in our agriculture system, that might exist in oil and gas, that big corporates might be be looking to fill to reach net zero. And then also the opportunity for those leading edge technologies to to partner with Canadian, you know, Canadian ventures that are are building cleantech solutions of their own where they sort of can come together and develop what we call a a third product where, through systems integration and and, you know, different partnerships, they they might be able to to solve new new problems.

Chad: 04:50

And we'd be happy to unpack some of that if that's useful.

Markham: 04:53

Yeah. We'll get, we'll get to that in a moment. Canada has always had a problem financing, startups and scaling them. I mean, it's a it's a joke in Canada about how, you know, we're we're basically an incubator for the for the United States. And we were if you if you start up some kind of a a tech company, whether it's clean tech, fintech, whatever it is, the odds are at some point you're gonna go get your money in the United States.

Markham: 05:23

And, a friend of mine, in from Calgary started up a very, very innovative, direct lithium extraction company. And they, coincidentally, she went to a a venture capital company that, an expert that I interviewed all the time, James Frith from used to be the head of batteries at Bloomberg NEF, and he happened to have joined the company. So I got to interview him, and he gave me the the sort of the venture capitalist view of that Calgary company. And so they got their, a round of financing through from that from, Fritz company, and now they're having trouble getting the b round. And she's talking very publicly about how they're in the valley of death.

Markham: 06:16

You know? That they've got it out into demonstration, and they need to scale up, and they can't get any capital inside inside Canada. This is just I mean, you're in that you're in the business, right, of of financing. Is this a common problem that you see all the time?

Chad: 06:34

Yeah. Yeah. I think that it it certainly is, and and I think, as you said, Canada has a sort of scale up or or commercialization problem. We're we're actually quite good and quite competitive at funding research and early stage, innovation, you know, between IRAP and SRED, and we've got good universities. It's it's a pretty competitive space.

Chad: 06:56

And so, you know, not only do we lose Canadian companies to Americans though, we even have Americans that come here, start the companies, use all of those resources, shred, etcetera, and then go back when they're when they're ready for their for their Airbnb rounds. And so it certainly is a a problem. It's it's well documented. I mean, Boston Consulting has an interesting, report out on on the valley of death in Canadian cleantech. And, you know, I think there's a few different reasons for it.

Chad: 07:23

I mean, part of it, I think, is is almost sort of a cultural sort of risk aversion that exists in in Canada and in that that, you know, I even historically thinking about an economy that's built on a sort of extraction model, right, where where, you know, historically many people are given land for very little and they take things out of it and and and sell it. And and, you know, trying to think about IP based or knowledge based economies where you're taking risk is is not something that that Canada was sort of built on. And so I think there's some interesting things to tease out there. And then I think, you know, some of the more well documented pieces around the size of the market obviously is small. So the the Canadian venture capitalists often want to see the American venture capitalists in the round anyway so that they can they can access the American market.

Chad: 08:17

There's just there's just not a ton of capital flowing around in Canada. A lot of it goes into, real estate, especially here on the West Coast in Vancouver. Right? You you know, you think about if you're a family office or something like that, why would you invest in venture when you could just buy a condo and let it appreciate it 10% a year for for very little risk? So I I think those are some of the things that that we think about, but it it certainly is a a problem pretty pretty well documented.

Chad: 08:46

I I think we're trying to improve things. I think BC has got a a some interesting venture that's doing some more follow on, series a, series b work, and things in Canada like in BC that the the, venture capital sort of arm of the the the Crown Corp that they formed a few years ago. So I think we're we're recognizing and making making steps, but, it certainly is a challenge.

Markham: 09:11

Yeah. Like you say, it's it's been a, it's a we have a long history of it. And the I I'm seeing now, a pushback, from some think tanks like McDonald's, the Laurier Institute, out of the east, saying we should be proud of our resource based, past, that we should be doing more of it. We should be in l a LNG, and we should be, and, I my problem with that argument is that if you take my point of view where the energy transition is technology led, it's not just wind and solar and batteries and EVs and heat pumps and electrolyzers. There's a whole amazing slate of new technologies, enabling technologies behind those technologies, the clean tech.

Markham: 10:03

You know, AI, materials, software, I mean, on and on and on. It just it it's not my area of expertise, so I I I know some of them, but not not all all of them by any stretch. And this is like the industrial revolution of the 18th century. It just doesn't come along very often. Right?

Markham: 10:25

And Asia gets it. China gets it. You know, little countries like smaller countries like Vietnam, Malaysia, Indonesia, they get it. We don't get it. We're just not tapped into what's going on at that global level.

Markham: 10:39

We're very much inward looking, and and that leads to be a problem. That's why I I find your initiative so interesting because what you've done, essentially, is built a bridge to Europe for Canadian innovators. So tell us about the initiative and and what happened at the, at the event.

Chad: 11:00

Yeah. So this was the the kickoff of phase 2, and and, and and so the the event itself, we we sort of recapped phase 1 and and some of the interesting matches that that we made and and and with those sort of different pathways that I explained earlier. And and, it was really about sort of convening a group of people that that were interested in learning more, and and would be interesting, allies as we move forward. And so, this included a a range of of indigenous stakeholders and including government stakeholders, investors, and then a lot of different innovators that that were interested in in technologies coming from Europe. And and so the the opportunity that the the program provides really is is sort of, you know, helping companies from both sides of the pond navigate those relationships.

Chad: 11:47

And especially when you're when you're thinking about complicated things, you know, like like, you know, sort of systems integration and and and mixing different products together, or even if, you know, if it's just a sale, thinking about procurement and and where these might be, sales that a a large organization have never really thought about. All of these things require a bit of sort of navigation hand holding, if you will. And and so that's what the program, provides is is, really sort of trying to facilitate those relationships and then and then have the resources to enable them to to, advance and and move to, commercialization or or move to to to partnerships that that really make a difference and and move the needle.

Markham: 12:32

Now you mentioned the, indigenous groups are very interested in this and involved in your initiative, and you provided an example of the Tisladag carrier nation, which is in Central BC, partnered with a European cleantech firm that could convert unusable wet feedstock, and I assume that that's forestry feedstock. There's a lot of waste that's left on the the forest floor that company's been looking for a use for for a long time, converted into biofuel. Can you tell us about that project?

Chad: 13:05

Yeah. So this is a fascinating project where it's it's both that the sort of waste fiber that's that's left behind from from forestry, but Tchislata actually has a unique story where their traditional lands were were flooded by a a, a reservoir for a hydro dam in 1952. And I guess at that point, trees were basically free because they couldn't even be bothered to cut them down. And And so this this lake, this giant reservoir is actually sitting on top of, 10,000,000 cubic meters of of wood. And and so that's a lot of wood.

Chad: 13:41

And, they they've been trying to think about sort of underwater logging and and what they can do with it. And they've been been exploring biogas solutions for a long time, but none of the economics ever worked by the time you would dry it and then run it through. It just it never made sense, but but this biogas kiln out of Finland actually is specifically, designed to handle wet wet woody biomass. And so, it's really an exciting opportunity for, for them to sort of unlock that that resource that they had that was previously unusable and and turn that into energy that can can power the community, can power industry, and help them with sort of economic development and and investment attraction. And so that's a perfect example of a technology that that didn't really exist in Canada or certainly hadn't been have been found before, that that is, you know, on the market in Europe and and was able to provide a significant impact for for Chestlada.

Markham: 14:41

Now I understand, that, you know, Vancouver is growing, in importance as a hub for clean tech innovation. And, when I think of clean tech, I very you seldom use that term actually because Alberta is also a home for a lot of clean tech companies, but they're tied into the oil and gas industry. And so I think of clean tech companies as being being connected to one of Canada's traditional industries, oil and gas, forestry, mining, and helping them to lower emissions or become more sustainable, that sort of thing. And that's a very distinct, in my mind, a distinct value proposition from being a clean energy technology company. So the groups that are interested in your initiative, are they clean tech in the sense that I understand it, or are they clean energy technologies or a combination of the 2?

Chad: 15:48

Yeah. It's actually even broader than that. So we we sort of play around with the taxonomy, if you will, and it it comes up more formally all the all the time, the the the taxonomy of clean tech versus climate tech versus sustainability technology. But the way we think about it as as a firm and and it's reflected in the program as well is we we think about, the energy vertical. So any any sort of clean energy products, agri technologies as well, sort of anything that's decarbonizing or or increasing the the resilience of our food systems, water technology, and then nature based solutions.

Chad: 16:27

And so those that's sort of how we how we think about, this this sort of ecosystem of of the types of technology that that we work with. And and and the the sort of applicability on the Canadian side is really anybody that has a a sort of sustainability or net zero challenge that that they wanna solve. And so either organizations that, that, you know, might be looking at at solving a specific challenge in a building, for example, looking at a very, very sustainable building right now, but lots of them are not, you know, something to help them decarbonize a fleet. So, you know, anything anything like this, and so in the phase one, we worked with big big corporates. We worked with telecoms companies, worked with transit companies, Crown Corps, and then also, you know, working with municipalities is big opportunity.

Chad: 17:15

They have lots of water. They have lots of waste. So waste to energy is a big opportunity. First Nations, looking at at both the sustainability, but also economic development part of it. And then on the on the Canadian side, any any company, that's sort of in a in the cleantech ecosystem that might be, you know, looking for a piece of the puzzle.

Chad: 17:34

And as an example, that we used at the event that I I think helped illustrate the sort of third product idea is is we were working with a company that was, turning waste into into carbon, and and so instead of it it it going to landfills, they were they were turning it into energy and and had carbon, that was that was then sort of product that they they could sell the carbon, but the value of of the carbon wasn't wasn't quite enough that that the business model made sense. So we actually partnered them with a an EU company that turns carbon into polyester inputs for clothing, in particular in Vancouver yoga pants. And so, that's that, you know, that helped piece them piece these two things together, helped sort of change the business model where the the offtakes were were then more valuable than than just selling sort of carbon as a as a commodity for agriculture or other other use cases. So that's a good example. Another one we worked with, was a a company that had submetering hardware, and they were doing very well with that, but they didn't have the software to to make predictive, analytics.

Chad: 18:43

And and so we we partnered them with an AI, predictive company out of out of Europe, and so they now have a sort of more end to end solution. So that's a sort of example of the the third products. And then otherwise, it's it's really just companies that can help solve sustainability challenges for a variety of of stakeholders.

Markham: 19:01

Earlier on in one of your answers, you mentioned industrial policy. And it's very clear to me that the, China has had a very sophisticated, very, robust, clean energy industrial policy for 20 years. That's how they wound up with all of the capacity they do for making solar panels and and all the rest of it. Europe has had industrial policy, wasn't quite as aggressive. Then the Americans come along with the bipartisan infrastructure act, the chips act, the inflation reduction act, and blow Europe out of the water.

Markham: 19:42

I mean, that was a a a big moment 2 years ago for for Europe to see the Americans embrace it like they did. Canada says they have industrial policy, and I've interviewed minister Jonathan Wilkinson who said it comes in 3 parts, carbon taxes, regulations, and subsidies. I'm sure Jigar Shah laughs as, you know, every time he he hears that. I mean, that's a and it's the typical Canadian industrial policy where it's very passive. It's like, okay.

Markham: 20:11

Here's a pot of money. Put an put an application together, and we'll consider it. Whereas Jigger Shaw goes around, and he's he's one of many. He goes around, and he helps organize hydrogen hubs, and he he promotes virtual power plants. And, I mean, the the Americans are taking a in their own way, a very aggressive approach to building out their clean energy industries.

Markham: 20:35

We're not. And I I don't think Canadians I don't think Canadian governments, not the BC government, not the Canadian government, understand robust modern industrial policy, and you certainly don't understand it the way the Europeans understand it. Is that a from your point of view, on the front lines, is that a fair argument?

Chad: 20:59

Yeah. I mean, you know, I think I think there are some some big steps being made, but, you know, it it is it is hard to compare to the scale of the United States for sure. It it it is, yeah, it we we certainly are seem to be falling behind for sure. I mean, I mean, some of the the subsidies in the in the states are are pretty remarkable. And and, you know, where I think where I think the opportunity for Canada with industrial policy because we won't be able to do it at that at that scale, you know, is to is to, you know, have more targeted attacks and and sort of play to our strengths where where we have some leading edge technology or or where we have access to sort of unique characteristics like our our resources and and our our workforce, our universities.

Chad: 21:50

And I, you know, I think we've we've done some interesting we've made some interesting moves and established ourselves in the EV battery supply chain as as one of the leaders, in in that space. And so, you know, I think perhaps exploring ways to replicate that in in other sectors that that might make sense for Canada to lead in is is one way where, you know, we might not be able to compete at scale, but but we compete in in targeted sort of subsectors of the of the transition?

Markham: 22:21

Yeah. I and this gets back to Europe. I've argued for a long time that, by that I mean, 2, 3 years because, you know, this has really only been on our radar, in a big way into last since the pandemic, for sure. And what I what I, what I argue is that it's clear that the Americans are, for geopolitical and national security reasons, have said, we're going to build our own clean energy industries so that we're not dependent on Chinese supply chains. We're not vulnerable.

Markham: 22:55

It's clear that the Europeans are going to compete with China and the United States, So we got 3 big blocks, that are building clean energy industries. All of them have supply chains. And if Canada was smart, it would say, okay. This is terrific. What a what a great opportunity for us to, plug Canadian companies into those supply chains in a big way.

Chad: 23:21

Exactly.

Markham: 23:22

And and just like you're doing with Europe. And but not to do it piecemeal, which is the way Canada always does things. We always muddle through. We never we never seize opportunity by the throat and throttle it. We always shake hands and we're polite, and we give Alfred a coffee, and then maybe we let it walk out the door early.

Markham: 23:41

And and and it's such a it's so frustrating to watch it. And the biggest thing, and this is why I was so interested in your press release, it's leadership. You are taking leadership in this field in a way that there aren't many others in Canada doing it. And certainly, on our political and business community leadership, we're not doing it. Again, now that's a criticism from my point of view.

Markham: 24:07

Would you agree with that?

Chad: 24:09

Yeah. No. I I think I I think more leadership is is required and and, yeah, bold moves, long term thinking. So not not thinking about just the election cycle. All of these things are are long developing pieces that that at times can be polarizing and and in particular in places like Alberta and and Saskatchewan.

Chad: 24:31

So, yeah, I I I agree. I think there is lot a lot more sort of long term strategic thinking that is that is needed, and and thinking about where we have advantages to to play on, how we fit in into supply chains, how we compete where we think we can, or or play nice where it where we where we where we can't compete. You know, I think I think a a lot of that is is is certainly missing for sure.

Markham: 24:56

Well, Chad, this has been a very interesting conversation, and I think I'm gonna have you back because we've only scratched the surface. I I think this is a a conversation that Canada needs to have, is not having. And if we don't have it soon, we're going to miss out on probably the biggest economic opportunity in the last 100 years. And, we there's some hearts and minds need to change. So thank you very much for this.

Markham: 25:21

Really appreciate it.

Chad: 25:22

Yeah. Thank you very much for for having me on, and, really appreciate the opportunity.