The Role of Government for Cleantech Innovation

The role of government in driving climate change initiatives is a hot topic in mainstream media today. A handful of articles on climate change and Cap and Trade policies have been recently published in the Globe and Mail taking various perspectives on the contentious issue. While some applaud the government for taking control of the issue, others have felt that initiatives like BC’s Carbon Tax are mere drops in the bucket and are not having any actual impact. What is not up for contention however is the role that government regulations play in the advancement of clean technologies that are helping to provide climate change solutions, and allowing Canada to move beyond carbon trading as a solution.

This contention is nothing new to Canadians or North Americans. One of government’s main roles it to protect its people and its land, making the tough decisions when no one else wants to, or is willing to do so. In some respects, government regulations for climate control is no different than government law protecting society from other things that put them at danger, for instance drinking and driving. Some believe that Canadians, as wonderful as we are, still need government to protect us from ourselves from time to time. Drinking and driving laws exist because some people still do not understand the dangers, thus putting others at risk. Despite the plethora of evidence that says climate change is happening, that our natural resources are depleting, and that we should start making fundamental changes to the way we operate our businesses and behave in our daily lives, there are still businesses and individuals who are unconvinced. For others it is not about being oblivious at all, it comes down to cold hard cash. Government regulations like the BC Carbon Tax mean that those with a proven carbon footprint need to cough up some money to offset their emissions. Despite the fact that the government returns all the tax revenue back to tax payers, many still do not see the value-add of the tax. One success story however is that of the Richmond Plywood Corp., a company that used the new carbon laws to create even more value for their shareholders.

In The Globe and Mail article entitled: “B.C. finds success with controversial carbon tax”, published July 3, David Ebner and Shawn McCarthy share the story of Richmond Plywood Corp who, driven by the BC Carbon Tax, decided to find an alternative energy source that would allow them to bypass the tax. As such they sourced “a new energy system that burns the company’s own waste [which] has slashed natural gas costs – almost completely insulating the firm from British Columbia’s carbon tax”. So not only are they reducing their greenhouse gases, and thus avoiding the tax, they are reusing their waste and lowering their overall carbon footprint – which is great for business. These are the types of success stories that such government regulations hope to stimulate.

Another success story highlighted in a separate Globe and Mail article, “Three years on, only BC has a carbon tax“, Dirk Meissner quotes Matt Horne, a climate expert at the Pembina Institute, who said “some businesses are starting to use the carbon tax to their advantage… The University of British Columbia, The University of Northern B.C. and the resort community of Whistler, BC have all embarked on efficiency projects that have cut their energy costs.” So if at the end of the day complying with the tax can actually reduce costs why is this so hard for some to grasp? Is it because investment in clean technologies is viewed as expensive? Is the current investment too large of a barrier regardless of the future savings? Are the technologies still to young? Do these technologies still have a long way to go until they are considered as reliable options? Or is it just lack of awareness to all the possibilities?

So how does this impact GreenAngel Energy? Obviously any push towards enforcing greener solutions is good for cleantech investors and their investee companies. Unfortunately clean technology is still very expensive and despite the proven success of some systems (like Richmond Plywood Corp) it is often difficult for many to find the necessary capital to implement such technologies without the added incentive of saving tax dollars. What this means for cleantech is that as governments change parties it is important that these policies be handed down and remain intact otherwise it will take that much longer to get to where we need to be for a viable future.

Weigh in on the subject! Let us know what you think about the government’s commitment to climate change. Is it the role of government to step in and take control if they believe no one else will or should the markets be driving innovations in green technology? Do you think regulations like the BC Carbon Tax are making a difference, whether it be tangible or symbolic? Share your thoughts below.