There seems to be a view that Canada can’t compete in a global low-carbon economy. After all, who will want Canada’s fossil fuels or internal combustion engines as the world transitions towards net zero by mid-century? The problem with this view is that it ignores the significant diversity that exists in Canada’s exports. It also ignores the fact that Canada’s export performance is full of clean-energy “gazelles” – products that are swiftly outperforming the broader export trend. Simply put, Canada is already competing and winning when it comes to clean energy.
To reveal the performance of Canada’s clean-energy exports, I compiled a list of 138 clean-energy export product groups in 49 economic sectors. This list includes goods that are classified as clean energy themselves or are important components of the supply chain of clean-energy products such as hydroelectric turbines. The clean-energy export list was developed initially from a World Bank list of 43 clean-energy export categories and then expanded to 138 clean-energy categories.
For the basket of clean energy exports, I then tracked the historical performance for the last five years of export data using Canada’s Trade Data Online. The results are impressive.
In 2014, clean-energy exports totalled $13 billion (all values are in 2019 dollars) across the clean-energy product groups. This total represented about four per cent of all Canadian product exports. By 2019, the same basket of clean-energy export products totaled almost $21 billion, representing 5.5 per cent of all of Canada’s product exports (figure 1). The basket of clean-energy products grew at an annual rate of 9.7 per cent, three times faster than all product exports over the same period (figure 2).
Of the total clean-energy product groups, 78 had annual growth rates that were 10 times higher than annual growth rate for all Canadian goods exported. The total value of these clean-energy export gazelles was $14.8 billion in 2019 or 62 per cent of the total value of the basket of clean-energy exports.
To summarize the results, I aggregated the clean energy products into six categories.
1. Clean fuels include products such as ethanol, biodiesel, and biomass.
Clean fuels made up about four per cent of the total clean-energy exports totalling $516 million in 2014 and $872 million in 2019. The annual growth rate for the period was slightly more than 13 per cent or four times faster than the export product average of 3.3 per cent. In 2014, biomass dominated exports at 68 percent but fell to 65 percent as clean liquid fuels grew more over the period.
2. Mined clean energy materials include rare-earth metals such as lithium and cobalt and are used in products such as batteries and photovoltaic cells.
Overall, the sector grew at 4.1 per cent, or about 30 per cent more than all Canadian product exports to total $1.9 billion in 2019 or nine per cent of clean energy exports. Uranium made up 96 per cent of the $1.7 billion in exports in 2014, which was the third largest clean-energy product exported. Titanium dioxide, a substance used to improve the efficiency of solar cells, has grown at an annul rate of 89 per cent year-over-year since 2014.
3. Clean electricity and power equipment include electricity exports, renewable technologies such as photovoltaics and their components, non-fossil-based generators, batteries not used in transportation and components of turbines such as steel towers. Also included is power-handling equipment including transformers.
In 2014, clean electricity made up the largest share of total clean energy exports at 54 percent or $7.7 billion. By 2019, the clean electricity and power equipment total grew to almost $9 billion at an annual rate of 5.1 percent. Of the clean-electricity total, 38 percent was for electricity exports, with the rest made up of equipment exports to help with renewable production as well as distribution and power-handling equipment. The share of electricity in the export group dropped to 33 percent in 2019, indicating significant expansion in other clean-electricity power products.
4. Clean industry includes non-residential heat exchangers, heat treatment systems, steam or vapour generating boilers and electric furnaces, to name just a few major products. Most of the products in this category are related to electrifying industry and decarbonizing heat and steam processes.
Equipment designed to help decarbonize industry had a total export value of $923 million in 2014 or about six per cent of the clean-energy export basket. Year-over-year growth was about six per cent between 2014 and 2019 with exports climbing to $1.1 billion. The clean industry subset grew slower than the overall clean-energy average and as a result, its share of total clean-energy exports fell to five per cent in 2019. It still outperformed all exports by a factor of two.
5. Clean transport includes electric and hybrid heavy-duty and light-duty vehicles as well as electric trains.
Clean transport equipment expanded almost 90 per cent year-over-year after 2014 to climb to total $3.1 billion in 2019. This represents a growth rate that is 28 times faster than all product exports. Leading the pack of products includes hybrid light-duty vehicles but also electrified rail, work trucks and transit vehicles. Clean transport’s share of clean-energy exports grew from one per cent in 2014 to 15 percent in 2019.
6. Energy efficiency includes a wide range of manufactured products including thermostats, LED bulbs, heat pumps for buildings, installation of miscellaneous high-efficiency electrical equipment.
Energy efficiency exports made up 25 per cent of the clean-energy basket in 2014, totalling $3.3 billion. In 2019, the total value climbed to $4.7 billion with an annual growth rate of 9.2 per cent. This subgroup is by far the most diverse category with 37 separate products ranging from lighting, commercial and residential heating and insulation.
Canada’s clean-energy exports are significantly outperforming the broader export trend. This trend will only deepen as global demand for clean-energy products rises with global efforts to move toward clean energy. While the global trend towards a low-carbon future poses risks for some Canadian industry, the export data indicate Canada is already competing and winning in an increasingly carbon-constrained world.
As the world transitions towards net zero by mid-century, Canada must reframe carbon competitiveness to focus more on this opportunity.