BDC commits another $400-million for clean tech in Canada

The Business Development Bank of Canada has launched a $400-million clean-technology fund to help scale up the commercialization of the low-carbon technologies that will be key to meeting the country’s greenhouse-gas-emission reduction targets.

The cash bumps BDC’s investments in the clean-tech and climate-tech sectors to $1-billion, building on a $600-million fund it launched in 2018. The fund partners with global institutional investors and government-funding programs to support promising firms, and currently has 50 companies in its portfolio.

Isabelle Hudon, BDC’s president and chief executive officer, said the new Climate Tech Fund reflects Canada’s broader ambition to build a clean, low-carbon, circular economy, with a goal of hitting net-zero greenhouse gas emissions by 2050.

“Canada has set aggressive emission-reduction goals by 2030 and 2050, and we feel that innovation and technologies are going to be a key contributor to us being able to hit those targets,” Ms. Hudon said in an interview.

Canada has “the creativity, the will and the capacity to develop those technologies,” she said, which presents “a huge opportunity” for the economy.

The country’s robust supports for early stage companies in the sector have helped propel Canada from seventh in the 2014 Global Cleantech Innovation Index to second last year, behind the United States.

But with the world’s clean-tech market expected to double in value by 2026 – reaching more than US$400-billion – Canada needs to up its game when it comes to big investment dollars, said Susan Rohac, the managing partner of BDC’s Climate Tech Fund .

“Where Canada is not keeping up with Europe and the United States is in the larger-scale investments at the later stage,” she said.

“That’s where we come in. We are trying to support these companies along the entire lifecycle. So we will come in as an early investor, but then follow them along as they continue to need multiple rounds as they commercialize and scale.”

Mrs. Hudon said BDC launched the first round of funding to meet the pressing need for more capital investment in Canadian companies. The demand was so great, it decided to launch the new fund.

Every dollar that BDC brings to the table attracts another $6 in private-sector funding, according to the bank, yet Canada lags behind other countries when it comes to the percentage of venture capital that flows into the clean-tech sector. That’s particularly pronounced in Europe, Ms. Hudon said, where clean tech has been top-of-mind for a longer period of time.

Fifty companies snapped up the first tranche of the clean-tech fund. They came from a wide range of sectors, including agrifood, biofuels, solar and geothermal power, hydrogen, carbon capture and electrification.

One of the companies that accessed that round of funding was Eavor Technologies Inc., a geothermal energy firm based in Calgary. Its Eavor-loop system harvests heat from deep in the earth to be used for commercial heating applications, such as greenhouses or for generating electricity.

Part of the attraction of BDC capital for Eavor was the bank’s role as a “patient investor” whose own goals align with those of the company, said Paul Cairns, Eavor’s chief business development officer.

“Other investors may have national interests or commercial goals that conflict with ours as a small Canadian tech startup … or have artificial timetables that block some of the patient capital that we need,” he said.

“But it all feels more like a support system than an investor just looking for a return when you’re working with BDC,” because the bank provides guidance and support, he said.

The capital also came during the early days of Eavor, when the company faced greater risks and more uncertainty.

“They make a decision to put some of their resources – their time and energy and dollars – in our direction,” Mr. Cairns said.

“It speaks loudly towards the caliber of company that we must be for them to be involved with us, and we get to leverage off of that.”