Lara Abrams Communications

Toronto Part II

Thursday, July 31st, 2008

A couple of weeks ago, I wrote a blog about the clean tech media tour of Toronto I had the privilege of attending several weeks ago, under the auspices of the Ontario Ministry of Economic Development & Trade. I’d mentioned that I had more to share in subsequent posts, offering further insights into Ontario’s cleantech endeavors. So here we are…post #2.

In between the two posts, the State of California offered to Tesla a tax break to incent the company to maintain operations here. And that brings me to the point of this blog post. It’s interesting to see what other parts of the world are doing to incent companies, municipalities, and people to speed the way to a cleaner, greener tomorrow…There’s a lot going on and a lot to still be done. And since clearly the purpose of our tour of Toronto and the surrounds by the Ontario Ministry of Economic Development & Trade was one that very pointedly wanted to emphasize all the Province is doing to make green and cleantech happen for its economy and population, I’d like to take the time on the blog post to highlight those things being done. Clearly Canada – and the government of Ontario clearly wants a piece of cleantech business – and they should. Everybody has to step up to the plate and do something significant. Not surprisingly, the Province’s incentives for companies considering relocation were pointed out to us, and from what I can see, Ontario is doing all it can to make it very attractive for cleantech companies to relocate their operations to its geography.

That being the case, I have to admit that I knew nothing of Toronto, really, before going on this tour, except to say that I have this blanket view that all Canadians are The Nicest People In the World, (which they all were while I was there in Toronto) and that Toronto had and has a famous hockey museum -The Hockey Hall of Fame. I wouldn’t have even known that little fact about Toronto, except for the fact that soon after we got married, post-honeymoon, I mentioned to Jon that I wanted to find time in the year to go work on my tan somewhere warm, and his top 2 choices for vacation spots were Toronto and Alaska (the former for the Museum, I soon discovered, and the latter for all the obvious reasons one would want to go to Alaska, which I don’t think I need to go into. My husband loves hockey, so this should not have come as a surprise to me, (though it did), this mention of two very cold places where you have to get very, very high up to get a good tan. But it did point out my lack of awareness of all things Toronto. I’ve been since spending time getting up to speed.

However – let’s assume that, like me, several of you reading also didn’t or don’t know a lot about Toronto. Forgive me if this isn’t the case; and even if you know quite a bit, here are some fun facts that might interest you, as well as some background information for those of you ready to move to Canada, should the elections not go as you would like them to, and wanting a bit of a “what-to-know-before you-go-guide-for-clean-techies”:

-Ontario is a province that, by 2020, has set itself a goal of reducing greenhouse gas emissions to 15 per cent below 1990 levels - a reduction of 99 megatonnes relative to business-as-usual, and by 2050, their target to reduce greenhouse gas emissions is set at 80 per cent below 1990 levels. The province announced its GHG reduction targets in June and is continuing to deliver on commitments such as closing coal-fired plants by 2014, phasing out inefficient light bulbs by 2012 and investing to increase renewable energy to reduce the province’s GHG emissions, both in the short and long-term.

-Ontario has three international airports.

-It ranks sixth in terms of Fortune Global 500 cities. In fact, as a province, Ontario is the ninth largest jurisdiction in North America, by GDP.

-Ontario serves as headquarters for six of Canada’s top ten insurers who manage more than 90 percent of the industry’s assets, and headquarters for Canada’s five largest banks. And it is ranked fourth in North America in competitiveness ratings of global financial center. It is home to just under 40 percent of all head offices and 59 percent of foreign-controlled head offices in Canada.

-The Great Lakes St. Lawrence Seaway is accessed via 40 provincial and interstate highways and nearly 30 railway companies, as well as ocean-going vessels. The province shares 15 border crossings, all integrated with the U.S., facilitating just-in-time delivery; daily total two-way goods trade between Ontario-USA is valued over C$800 million.

-During the past ten years, foreign direct investment in Ontario has climbed as multinational companies have begun to recognize the advantages of doing business in Ontario.

-KPMG studies have shown that Canada maintains an advantage over other developed countries with regard to core business costs in the auto, chemical, and advanced manufacturing industry sectors. An overall business costs index shows that the overall cost of doing business in Ontario is higher only than the cost of doing business in Mexico. Employee health costs, for example, are more than 50% lower than the cost of employee health benefits in the US. Equally attractive are provincial and federal tax credits that can cut the after-tax cost of a US$100 research and development expenditure to less than US $41.

-And corporate taxes are relatively low. Just Monday, The Toronto Star reported that companies doing business in Canada face the third lowest tax burden among 10 countries surveyed by leading accounting firm KPMG. The corporate income tax is slated to edge lower and lower, up into 2012. And there’s an R&D after tax cost advantage companies can take advantage of too - for those that do their R&D at eligible Ontario Research Institutes. Such support is what keeps companies operating where they’re at, or moving to operate where it’s more economically viable for the long haul.

-$300 million in new investment and tax incentives is going to support the startup and growth of innovative firms under the Next Generation of Jobs Fund, and that includes a 10-year Ontario income tax exemption for new corporations that commercialize intellectual property developed by qualifying Canadian universities, colleges or research institutes. Included are enhancements to the Ontario Innovation Tax Credit as well as $250 million, which is going to the Ontario Research Fund for investment in research infrastructure at Ontario institutions over the next five years, and $42.5 million, which is being put in strategic investments to boost innovation in Ontario’s economy.

-In 2004, Mayor Miller gave a speech entitled, “Toronto the Beautiful: Revitalizing our Waterfront” at Arcadian Court, mentioning the Toronto Waterfront Revitalization Corporation , highlighting the city’s vision for sustainable 21st century green communities - ones that would showcase cutting-edge technologies like deep lake water cooling, district heating, solar and wind power, and green roof initiatives, public transit, diversity in land-use, population, and housing forms, community and recreational facilities. Also in 2004 - the Ontario government set two renewable energy targets: to obtain an additional 5 per cent (1,350 megawatts) of our overall generating capacity from renewable sources by 2007 and 10 per cent (2,700 megawatts) by 2010. In April 2004, the government began initiating a series of renewable energy Requests for Proposals (RFPs).

-By the end of 2005, the government had contracted for over 1,300 megawatts of clean renewable energy from wind, water, landfill gas and biogas projects. Current renewable energy projects include 12 wind projects, 3 hydro projects, 2 landfill gas projects and one biogas project.

-In 2005, Toronto signed a communique put together under the Clinton Climate Leadership Group (http://www.c40cities.org/about/), which recognized the need for cities to take action and to cooperate on reducing climate emissions. Toronto was one of the signing cities that promised a number of action points, including most notably the creation of procurement policies and alliances to accelerate the uptake of climate-friendly technologies and influence the market place. Toronto Mayor Miller challenged his fellow mayors at the C40 summit to adopt the Zerofootprint model in their own cities. ["Cities are where change is happening the fastest and we must seize the opportunities we have been presented with to make that change significant and permanent," said Mayor Miller.

-In 2007, The Cleantech Group held a Cleantech Forum in Toronto. Companies presenting included

* HY9, developer of membrane-based technology for hydrogen purification for industrial, cleantech and fuel cell applications
* Environmental Operating Solutions, using liquid carbon to remove nitrogen in wastewater
* Aldis, developer of hardware and software for transportation logistics
* Prism Solar, maker of photovoltaic solar cells
* Diversified Energy, maker of biofuel, gasification, and algae production systems
* SeQuential Biofuels, a retailer of biofuels
* Synodon, developer of gas detection technology for the airborne hydrocarbon detection industry
* Simbol Mining Co., extractor of valuable commodity minerals and metals from geothermal brines
* Benefuel, producer of biodiesel microrefineries
* Novazone, producer of organic products that kill food-and water-borne pathogens such as E. coli and Salmonella
* Performance Plants, developer of crop development and gene discovery for biofuels production
* 6N Silicon, producer of solar grade silicon for solar cells
* Global ID, food tracking and certification
* CarbonFlow, carbon credit monetization, and
* SyncWave Energy, developer of technology to harness ocean wave energy

Cleantech investment is clearly on the rise in the Province; one look at the websites for the Canadian GeoExchange Coalition, Canadian Geothermal Energy Association, Canadian Renewable Fuels Association, Canadian Solar Industries Association, Canadian Wind Energy Association – and you get a picture of how much activity is going on. You can even see it in the number of cleantech/sustainability-oriented mutual funds popping up for investors, most of which are so new they don’t publish figures on year-over-year performance yet.

And the news about Canadian cleantech continues to build. In May, Ottawa-based Menova Engineering began manufacturing a system that combines solar power, heating and lighting in a single product. Wal-Mart plans to test the system atop one of its stores. And Solar PV maker Arise Technologies is building a solar silicon pilot plant near its headquarters in Waterloo, with construction planned for the fall. The aim, by 2010, is to expand it to a full commercial plant. Their Germany-based cell plant is now manufacturing 24/7. Last year’s winner’s of Canada’s Top 10 Competition in the cleantech category were almost all from Ontario, in case you missed it, and Ottawa-based Iogen, and Conserval Engineering have made the news, too. Iogen, which specializes in cellulosic ethanol, just announced a commercial alliance with Shell, and Conserval will benefit from being under the intense spotlight of the Olympics, as written about by Tyler Hamilton in The Star last month: “A new rooftop solar-energy system installed recently in Beijing Olympic Village didn't come from some hot new Silicon Valley start-up, or an established player in Germany's world-leading solar industry.... It came from the Toronto area, baby!” Conserval Engineering has been making a solar heating product — currently called SolarWall — for nearly three decades. More recently, the company has added power-producing solar photovoltaic panels to the system so customers can get both heat and electricity.

And just last week, I got a press release from the Ministry that the province of Ontario was announcing funding for 6N Silicon, the first recipient of a NGoJF investment. The Ministry is intent on creating new jobs in green industries by supporting innovators in cleantech – in this case, an innovator in solar power energy, with the Province investing nearly $8 million in 6N Silicon. 6N Silicon is a company that’s drawn interest for using a manufacturing process that turns low-grade silicon into the form needed to produce solar cells. The company is opening a new manufacturing plant in Vaughan, Ontario, and creating 84 news jobs; so the investment on the part of the government is intended in part to create jobs for skilled workers, while also supporting 6N’s $50 million expansion plans. The investment itself, btw, for those of you interested, comes from the government’s Next Generation of Jobs Fund [NGoJF], which supports Ontario-based companies looking to invest in clean cars, fuels, technologies and products. The fund is part of a broader plan to retool workers and stimulate Ontario’s change economy.

About The Next Generation of Jobs Fund [NGoJF]:

This is a fund $1.15b in size, aimed specifically at supporting companies whose products reduce pollution, save energy, make transportation more efficient, or help the environment in other ways over the next 5 years. The program specifically supports Ontario’s Go Green Plan, [http://www.gogreenontario.ca/home.php], a five point action plan that the Ontario government is building on of action fighting climate change with an ambitious plan for the province to reduce its greenhouse gas emissions. The five points of the plan include:

-MoveOntario 2020, the largest transit investment in Canadian history. A $17.5 billion plan, it includes 52 rapid transit projects in the GTA and Hamilton, the country’s largest urban area. It calls for 902 kilometres of new or improved rapid transit, creating 175,000 jobs during construction.

The Next Generation of Jobs Fund program to secure the next generation of high-paying jobs for Ontarians by supporting businesses’ commercial development, use and sale of clean and green technologies and businesses in Ontario.

-Green Power - A $150 million investment will help Ontario homeowners fight climate change, conserve energy and adopt green technologies. In addition to a world leading standard offer for renewable energy, the Province has set long-term targets to double the amount of electricity from renewable sources by 2025. In the short term Ontario has gone from 10 to nearly 700 windmills, in place or planned. It now has a standard offer for clean energy to enable power users to improve their efficiency through cogeneration (combined heat and power electricity production), and the Ministry is working to remove barriers that prevent more widespread use of cogeneration.

-Green Targets - As per the Ministry’s website, “From phasing out inefficient light bulbs to rebates for energy audits to provincial sales tax breaks for energy efficient products, there are new programs and incentives for Ontario consumers, businesses, and municipalities to get green.”

-Grow Green - In addition to the Greenbelt Act, which ensures there will always be nature and open spaces around Ontario’s most populated areas, 50 million new trees will be planted in southern Ontario by 2020. Under the Places to Grow Act, the province is growing more sustainable, energy-efficient, transit-friendly communities and bringing in new programs to promote locally grown Ontario food.

Ontario is providing $2.6 million to support 24 community-based greenhouse gas (GHG) reduction projects across the province. The support is from the Community Go Green Fund, a new, four year $6.6 million funding program. Successful recipients vary across the province from community groups and small municipalities to environmental groups. Every project is tailored to meet the local needs of the community to help residents switch to a lower carbon lifestyle and reduce their climate change impact.

Other organizations you should know about:

OCETA
OCETA is an interesting organization. When OCETA’s CEO spoke to us on tour, I felt like I was talking to someone from Silicon Valley…these guys work with a lot of entrepreneurs, one can just tell. OCETA’s got the challenge of engaging SME manufacturers to adopt innovative practices that will improve their environmental performance and competitiveness, by providing technical and financial assistance as well as site-specific opportunity assessments. It was established in 1994 as one of three Canadian environmental technology advancement centers focused on the private sector as a not for profit organization. Core funding support comes from Environment Canada at a federal level and more recently, in 2006, the Ontario Ministry of Research and Innovation provided funding to OCETA so the organization could deliver a program to drive the use and adoption of green technologies throughout the Province, targeting SMEs - which dominate the sector, with the majority having fewer than 50 (more like 10 on average) employees. OCETA includes approximately 2500 clean tech oriented companies, while Ontario’s clean tech industry employs roughly 63,000, with annual revenues of approximately $7B. OCETA is the intermediary between developers and users of clean tech, and as such, sees a litany of opportunities for growth, from greenhouse gas emission reduction to air polluction emission reduction, alternative energy, bioplastics, fuels and other bio products, small scale sewage treatment, remediation and reclamation, green buildings, and advanced municipal waste management. Clients include environmental technology developers, end users, and governments, local authorities, and associations. OCETA Programs of note include the Toronto Region Sustainability Program; The Region of Waterloo Business Water Quality Program; The Ontario Wine Industry Energy Benchmarketing and Best Practices; The SW Onario Business Air Quality Program; and Ontario’s Industrial Energy Efficiency Programs. The organization is also working on one global project that addresses arsenic contamination in drinking water.

The Toronto Region Sustainability Program (TRSP) presents an opportunity for small-to-medium sized manufacturers located in the Greater Toronto Area (GTA) to conduct a pollution prevention (P2) assessment and to develop a pollution prevention action plan that will address priority environmental issues (i.e. toxics, sewer discharges, smog precursors, greenhouse gases, and hazardous wastes) targeted by three orders of government— Environment Canada, the Ontario Ministry of Environment (MOE), and the municipalities. The program is aimed at fostering sustainable behavior among SME manufacturers by providing technical and financial assistance to enhance their environmental performance while improving competitiveness. Program funders include: Ontario Ministry of the Environment (MOE), Environment Canada, Toronto and Region Conservation (TRCA), Ontario Trillium Foundation (OTF), the Regional Municipality of Durham, the City of Vaughan, and the City of Toronto. Manufacturers with fewer than 500 employees at any one facility are eligible to have a multi-media pollution prevention assessment undertaken by a pre-qualified pollution prevention consultant from OCETA’s roster. The consultant will identify the root causes of priority pollutants and wastes, and recommend improvements in technology, processes and the operating practices for the facility. Participants receive a funding incentive of up to 50 per cent (maximum $5,000) to help offset the costs of a pollution prevention assessment conducted by a pre-qualified pollution prevention consultant.

Canada’s Top 10 Competition
And for those companies looking for a way in, check out Canada’s Top 10 Competition. Eligibility requirements are pretty straightforward:

* Must be a Cleantech (see definition of Cleantech) company incorporated in Canada with head office in Canada .
* Must be either a private company or a public company with a market capitalization no more than $150 million.
* Must be actively seeking financing (equity or debt) between $2 million and $50 million and/or strategic alliances.
* Must submit a complete application including business plan summary and financial information.

That seems to me to be a lot of information for one day, and since I don’t want any eyes glazing over, and the sun is shining, I’ll sign off here by saying stay tuned for more on Ontario cleantech next week. This should be enough info to get you going, if you’re interested in Ontario and cleantech. Stay tuned for more very soon.

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To contact Lara, please email her at lara@laraabrams.com or call 415 613 1704.