C HAPTER 7: C REATING I NVESTMENT O PPORTUNITIES T HROUGH T HE SDTC
ENERGY AND ENVIRONMENT IS A GROWTH SECTOR In the past, there has often been a difference between environmental responsibility and economic performance. However, progressive companies today are beginning to see that the “environmental dividend” is helping to make them more competitive, while improving their image with shareholders and the public. While the energy and environment sector has traditionally been a small market for private investors, there is growing evidence that this is changing. Private investments in the life
sciences, IT and traditional sectors have all declined dramatically since the year 2000 (Fig. 4). Investments in the IT sector alone dropped by $2.1 billion between 2000 and 2002 (Ref 8 ). The dotted line in Figure 4 conservatively assumes there is no further decline in the major sectors in 2003. The only sector gaining ground is energy and environment, which is poised for substantial growth over the next five years (Fig. 5). The February 2003 federal budget earmarked $2 billion for the environment and an additional $1 billion for municipalities, of which a large portion is for improvements to the environment. This is within the context of a global market for environmental products, which is estimated to be worth $800 billion per year. Analysts predict that it is expected to exceed $1 trillion when climate change and urban infrastructure improvements come on
line. By contrast, the Canadian environmental market is currently about $30 billion, or 2.2 per cent of the Canadian GDP, of which about $12 billion is for technology products and services. This is 1.5 per cent of the current global market (Ref 9 ). This small market share, combined with the government imperative to improve the environment, indicates that there are substantial growth opportunities for this sector. This could provide sufficient inducement for private Canadian investors to take advantage of the new opportunities. To appreciate the potential for this sector, simply consider that if only 20 per cent of the 2003 environment budget, which is $2 billion over five years, were to be applied to technology development for environmental products, this would translate into an additional $80 million per year for development. This is reasonable given the fact that this budget increased SDTC funds from $100 million to an additional $250 million over five years or by $50 million per year. If private investors fund at roughly the same level as government, there would be an additional $80 million in market activity above existing investment levels (dotted line in Figure 5). 8 MacDonald and Associates. Project files. February 26, 2003. 9 Hi-Technology: The Heart of Canadian Innovation . Canadian Advanced Technology Alliance. Special supplement, Globe and Mail, November 8, 2002.
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