2021 Year in Review: Cleantech
Set against the backdrop of COP26, 2021 was an interesting year for the Canadian cleantech industry, with continued progress and growth in relation to funding and Intellectual Property (IP) initiatives. Here, we review the year’s key developments with respect to 1) Canadian financing of cleantech; 2) use of Canadian cleantech IP; and 3) the Canadian Intellectual Property Office’s (CIPO) Green Program.
Canadian Financing of Cleantech in 2021
Government investment into cleantech was one of the many initiatives at the forefront of COP26. It spurred the launch of the Global Energy Alliance for People and Planet (GEAPP) to accelerate investments into green energy transitions and renewable power solutions, which includes $10 billion USD backing. Additionally, the Canadian federal government recently invested just over $55 million to spur investments and jobs in the cleantech sector.
However, according to the International Energy Agency’s World Energy Outlook 2021, the world “requires a surge in annual investment in clean energy projects and infrastructure to nearly USD 4 trillion by 2030”. This comes in tandem with the tacit consensus at COP26 that private investors will need to step in to make up the shortfall. Private capital will need to be at the frontline of cleantech investment if we are to act fast enough to avert the worst of the climate crisis, regardless of the concerted efforts of the public sector. For Canadian cleantech companies, this means ensuring that they can compete at the “forefront of finance” by using all the tools required and expected in this arena, including commercially focused intellectual property rights.
Increasingly, private capital appears to be eclipsing government funding, with Canadian cleantech firms having raised $407 million from domestic VCs in 2019, which is up significantly from $133 million in 2015. Then, as Australia suffered from devastating wildfires and the novel coronavirus forced millions of people to stay home, resulting in a measurable increase in air quality in many highly populated areas around the world, interest in reducing the effects of climate change again started to take flight. As a result, $40 billion of venture capital was invested into climate tech companies from January 2020 to August 2021 alone.
Notwithstanding these increases in private capital funding, it is clear that the Canadian government is also putting in efforts to support cleantech companies through many investments and funding opportunities presented in 2021.
Among Canadian government initiatives are funding opportunities, such as Sustainable Development Technology Canada (SDTC), the Innovation Asset Collective (IAC), the Net Zero Accelerator Initiative, and the Smart Renewables and Electrification Pathways Program (to name only a few). SDTC boasts an investment of over $1.38 billion CAD in 460 Canadian companies since they launched in 2001 with an average contribution of $3 million CAD. The Net Zero Accelerator Initiative provides up to $8 billion CAD in support of projects that will enable Canada to reduce its domestic greenhouse gas emissions.
Use of Canadian cleantech IP in 2021
Along with significant increases in private and public cleantech financing, 2021 also saw the ramp-up of the Innovation Asset Collective (“IAC”). The IAC officially launched on December 9, 2020, and is a membership-based, federally funded, patent collective – the first of its kind in Canada. With $30M CAD in federal support spread over the next four years, its mandate is to help Canadian small and medium-sized enterprises (SMEs) in the data-driven clean technology sector make better use of their innovations.
According to CIPO, small-to-medium-sized enterprises (SMEs) that own IP are 60% more likely to be high-growth SMEs and four times more likely to export. However, according to the IAC, Canadian cleantech companies own less than 0.7% of global patents in the industry sector. That is, while Canadian cleantech companies are generally R&D-driven, many are not effectively leveraging their intellectual property. This discrepancy can impact long-term growth and the ability to scale within a global marketplace.
The IAC provides its members with four key programs: 1) Education Platform & Services; 2) IP Patent Generation; 3) Freedom to Operate; and 4) IP Intelligence and Prior Art. Members can apply for grants that are awarded quarterly to cover costs associated with patent filings, keeping existing patents alive, and/or expanding coverage to match other IP-related activities.
In a global economy driven by IP and data, the IAC aims to provide Canadian cleantech companies with a much-needed push in the right direction. The $30M CAD in federal funding is indicative of a larger national IP strategy and evidence of the government’s support and commitment to foster IP growth for Canadian companies.
CIPO’s Green Program in 2021
CIPO provided a significant advantage for Canadian cleantech companies in 2021 through its ongoing Green Technologies Program (the “Green Program”). The Green Program offers expedited examination for green technologies without any associated government fees. CIPO indicates that a first Office Action can be expected within three months from the time a request for advanced examination for green technology is processed. However, some applicants receive a first Office Action even sooner – in many cases, as early as 2 to 4 weeks from the processing of the request.
One would think that CIPO would be overrun with accelerated examination requests for green technologies, given how much cleantech innovation is generated in Canada. CIPO’s records, however, indicate a surprisingly low use rate since the Green Program’s inception back in 2011. The highest number of applications requesting accelerated examination for green technology was observed in 2014 (77 applications accorded). Between 2018 and 2021 the yearly average hovers around 50 applications. Consider that of the 37,164 patent applications filed in Canada in 2020, only 49 took advantage of accelerated examination for green technology (a use rate of only 0.13%).
The low use is even more confounding considering the high rate of allowance for applications accorded into the Green Program. The Green Program has seen an overall grant rate of 85.5% in the last decade – a rate that is misleading because it includes many recently filed applications (which may yet be granted). When applications filed in 2020 and 2021 are excluded, the grant rate jumps to a striking 95%. In fact, only 26 of the 487 applications filed under the Green Program between 2011 and 2019 failed to grant.
Not only is accelerated examination for green technologies highly successful, but it is also quick – 11 of the 58 applications accorded in 2021 were granted before the year was over! Receiving patent rights within those timeframes could go a long way to helping Canadian cleantech companies secure some of the increasing amounts of private capital funding being directed into cleantech.
It could certainly be argued that 2021 saw the emergence of an exciting nexus in Canada. We saw public and private financing for cleantech come together in a manner never seen before. We saw the Canadian government’s commitment to supporting the growth of Canadian-owned cleantech IP through a wide variety of financial grants, initiatives, and federally funded assistance programs geared directly to cleantech companies. Finally, CIPO’s Green Program continues to provide a mechanism for cleantech companies to generate patent rights quickly and cost-effectively. If that is indeed what is happening – who knows, we might all one day look back at 2021 as the dawn of a golden age for Canadian cleantech companies.