Feds announce $155 million to help natural resources sector address climate change

Mark Henderson
December 6, 2017

The federal government has announced a $155-million program to help the natural resources sectors address climate change by developing and deploying clean technologies that will lower their notoriously high greenhouse gas emissions. The funding under the new Clean Growth Program (CGP) is aimed at the energy, mining and forestry sectors for pre-commercial projects between technology readiness levels 3 to 9.

Natural Resources Canada says the fund - announced in the 2017 Budget - requires collaboration and co-funding from the provinces and territories to support the sectors in reducing greenhouse gas emissions and “improve environmental outcomes” to help Canada meet its international commitments. The provincial/territorial contributions will effectively double the modestly-funded program and increase its overall impact.

The program has five focus areas (see table).

Five focus areas of the Clean Growth Program

  • Reducing greenhouse gas and air emissions from natural resource operations;
  • Minimizing landscape disturbances and improving waste management in natural resource operations;
  • The production and use of advanced materials and bioproducts in natural resource operations;
  • Efficient energy use and productivity in natural resource operations; and,
  • Reducing water use and impacts on aquatic ecosystems from natural resource operations.

Source: Natural Resources Canada

An additional $45 million has been earmarked for the agriculture & food and fisheries sectors through Agriculture and Agri-Food Canada and Fisheries and Oceans Canada.

Natural resources sector representatives and industry analysts welcomed the funding opportunity and the fact that the government recognized that they are partners with these sectors in finding solutions to address climate change. These sectors have been working towards clean technologies and renewable energy solutions for decades, the industry groups say, but funding support from the government could help them accelerate and de-risk their efforts.

Company opportunities 

While the funding is open to a variety of entities – for-profit, not-for-profit, federal researchers, academia, labs and indigenous groups -- cleantech analysts say they expect firms to grab the funding opportunity.

“This program should be taken up by private companies,” says Celine Bak, president of Analytica Advisors, a global advisory firm focused on clean technologies. “It’s really targeted at the private sector to pull through innovation from academics and innovators.”

Tom Rand, managing partner at the privately-backed ArcTern Ventures and cleantech senior advisor at the MaRS Discovery District agrees. “What they (government) are trying to do is encourage conservative, big, old, ancient industries to start to undergo the shift to a low-carbon economy. I don’t think Canadian businesses in traditional sectors are even remotely prepared for the kind of … changes that need to happen, and this program is designed to at least kick start that change, and take the risks out of early steps,” he says.

Rand adds that the transformations that the sectors need to go through are unlike what any economy has seen before, so any effort will be a drop in the bucket compared to what the sectors need. “So, all efforts are welcome,” he says, adding that government funding would limit the risks for companies.

Just this week, the Alberta government announced $1.4 billion in grants and loan guarantees from its Climate Change Leadership Plan targeting the oil sands and broader energy sector to help companies lower carbon emissions through innovation and energy efficiency measures.

The forest products players already have a transformation strategy in place to help firms adopt cleantech. Immediately after the CPG announcement on November 20, FPInnovations and the Forest Products Association of Canada (FPAC) embraced the new collaborative program.

Robert Larocque, FPAC senior VP, tells RE$EARCH MONEY the program is in line with the association’s transformation strategy to address climate change.  The sector has already been working on its 30 by 30 Climate Change Challenge in which the industry commits to remove 30 metric tons of CO2 annually by 2030. The industry group says this is more than 13% of the target set by the Canadian government.

“This (CGP) is a program that accelerates us to meet our targets of 30 by 30,” says Larocque. “Instead of projects taking a bit longer time to evaluate and getting financing … because the government is supporting us with funds, it makes the decision easier for companies, and it will accelerate their transformation.”

The mining sector is also ahead of the game.

“Our members over the last two decades, have been focused on how to become more energy-efficient,” says Jessica Draker, director of communications for the Mining Association of Canada. “In terms of carbon pricing and climate change, we’ve been on it for more than two decades. It’s not something that’s new to us and something that we continually enhance.”

Still, the association has been pushing the government for additional support in clean technologies to help mining companies further expand on current initiatives, and they welcome the CGP opportunity.

“We’re happy to see the government see the opportunities … that they see a role for themselves in becoming partners with (mining) companies in communities where they operate to make this happen more quickly,” says Draker.

Draker adds that mining projects trying to address climate change don’t come with small price tags so public and private sector partnerships, and partnerships with the community where mining firms operate, are important.

According to CGP program guidelines, projects will be capped anywhere from $5 million to $10 million with co-funding from provincial or territorial governments required in either cash or in-kind. Projects to be funded would fall under either one of the program streams: R&D projects, from applied R&D to pilot projects; or demonstration projects up to first commercial installations.

The program guidelines state the ideal projects should be able to meet the objectives of the program, which specify clear metrics (see chart below).

“I think this is a good approach in that it’s going to provide an opportunity for leading resources companies, who are already working with GHG reduction goals, for them to advance quickly -- to trial and pilot technologies which they need before they can deploy more broadly,” says Bak.

Economic opportunities

FPAC’s Larocque says the program will help diversify the forest products sector – a long-standing challenge that has been confronted with only limited success.

“We will be able to make traditional lumber, traditional engineered wood, traditional pulp and paper, but we can also make energy as our product — biofuels and biomaterials. Ten years from now, the forestry sector will be in a better position to weather storms related to commodity price, like lumber or pulp, because we have diversified our markets,” says Larocque. He adds that the program will sustain jobs and lead to more jobs through different value chains. “We’re going to be manufacturers of energy systems. It will sustain mill jobs now but will lead to indirect jobs in the supply chain,” he says.

Another sector that sees an economic opportunity from the CGP is the mining sector. In a report published in June, think tank Clean Energy Canada notes that the mining sector is producing the metals and minerals needed to manufacture clean technologies.

“When you think about how the clean energy transitions would look like in the future with solar panels, electric vehicles, wind turbines, and metal casings around batteries -- all require minerals (and) many of them come from Canada -- there’s a real opportunity for the sector to provide the resources to meet the global need,” says Sarah Petrevan, senior policy advisor at Clean Energy Canada.

For example, the report, titled Mining for Clean Energy 2017, notes that 14 of the 19 metals and minerals used in making solar panels, including copper, silver and tellurium, are found in Canada, making the country one of the key suppliers. Copper is also used in wind technologies and electric cars. “Canada has the world’s 10th-largest copper reserves, at 11-million tons, and was the world’s eighth-largest producer in 2016,” the report adds.

R$

Expected Environmental and Economic Outcomes of CPG Program

  • A net increase in employment (800 direct and indirect jobs annually during the period of funding, excluding the ramp up year).
  • GHG emission reductions of 0.3 to 0.7 megatons per year by 2026*
  • Water use reduced by 100,000 m3 to 2,000,000 m3 per year by 2026*
  • Waste decreased by 20,000 tons to 30,000 tons per year by 2026*
  • RD&D projects move emerging technologies closer to commercial readiness

*Dependent on projects received, success of projects, and on-going operation capacity by 2026

Source: Natural Resources Canada Clean Growth Program Applicants' Guide


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