Doctor Vicky Sharpe isn’t really keen on the term
“environmental technology.” This might strike one as odd, considering she is the president and chief executive officer of Sustainable Development Technology Canada (SDTC), an Ottawa-based not-for-profit foundation that helps Canadian entrepreneurs commercialize new technologies which address issues such as climate change and air, water and soil quality.

The problem, in Sharpe’s opinion, is that “environmental technology” implies solutions to remediate or clean up environmental problems, and she said that doesn’t get to the root of the issue. “Our focus is on the other end, which is, why don’t we do things differently in the first place?” she said. “It’s much more effective and far cheaper.”

Therefore, SDTC invests in what’s known as clean tech: solutions that improve a company’s operational performance, productivity or efficiency by reducing costs, inputs, energy consumption or waste. The federal government established SDTC in 2001 with a $550-million investment fund. Since then, the organization has completed nine funding rounds, allocating $241 million to 109 projects, including $30 million for 13 projects announced in December. SDTC’s Web site, www.sdtc.ca, reports that projects in which it invested have secured an additional $617 million from other partners, for a total project value of $858 million.

SDTC funding—awarded to consortia that involve researchers, product developers, manufacturers, distributors, retailers and end users—is designed to help move ideas off the laboratory bench and onto the road to a market- ready solution.

Skirting the Valley of Death
“There’s an area in development and demonstration— particularly in the demonstration area, which is expensive—that is not funded,” Sharpe said. “Companies get to this precommercialization funding gap—often called the Valley of Death—and they cannot make it through because the risk and the amounts
of money are too high for the venture capital industry. [Meantime], angel investors are not positioned to make the size of investment in demonstrations that SDTC does because companies haven’t proved the technology, and the ability to understand the company’s future profitability doesn’t exist. That’s the
gap that SDTC bridges.”

Two of the 13 recent funding beneficiaries are Montréal-based Biothermica Technologies and Magenn Power of Ottawa.

SDTC provided approximately $2.5 million to Biothermica and its partners as part of a $7.5-million project to develop, build and operate a pilot plant that will convert wood waste from construction and demolition projects into a clean synthetic gas. This gas will be combined with landfill biogas and used to power Biothermica’s 25-megawatt Gazmont power plant in Montréal.

“This will be a practical demonstration of what can be done with this type of debris to produce a valuable source of energy,” said Biothermica president Guy Drouin. “Eventually we want to apply a similar technology for a similar project in the pulp and paper industry, or in the food industry: everywhere there is some form of waste coming from industry.”

Magenn’s SDTC funding—approximately $950,000—will enable the company and its partners to build a lighter-than-air tethered wind turbine capable of generating 50 kilowatts. The Magenn Air Rotor Systems (MARS) will be deployed at between 60 and 300 metres in the air to take advantage of strong winds, and the company said MARS units require less infrastructure and are cheaper to deploy than conventional wind turbine solutions.

Magenn chief executive officer Mac Brown said his company’s 50-kilowatt demonstration turbine will measure approximately 10 by 30 metres. “That’s a pretty big building, actually. If you picture an inflatable tennis court, it’s the size of one of those, so it’ll have its challenges,” he said, adding SDTC’s funding is essential to getting this demonstration project off the ground. “This allows us to do research and development that normally wouldn’t get done, or get funded. We’re still looking for funding, and this will help us raise funds, too.”

Due diligence
Sharpe said SDTC conducts rigorous due diligence before approving any funding application it receives, and this is now becoming recognized by the venture capital industry. “What we’re finding is that quite a few companies will get VC money into the company—not into the project—predicated on passing project milestones for SDTC’s funded work,” she said. “We’re really beginning to make the market in Canada, and we’d like to see more of that.”

Brown noted the application process itself was valuable, because SDTC works with the projects it funds to strengthen their business plans. “What they’ve actually helped us do is a work plan and look at in-depth details for our whole project,” he said. “Just by going through the application process with them, and working with them, we’ve really fine-tuned the whole R&D process. It’s a great exercise to work with SDTC on that.”

Drouin at Biothermica agreed. “The push from SDTC is essential,” he said. “The fact that the process is very rigorous forced us to be rigorous in defining the details of our project.”

“It’s unique in Canada to have such a group of people who can really help us in defining exactly the way to do the project, the way to structure the project in terms of financial structure as well as technology, and scheduling, and so on,” Drouin said. “It’s a long process, but it’s worthwhile to take that time to define the project and make a good plan for it, because we save a lot of money after that by avoiding a lot of mistakes.”

Market knowledge needed
What sort of mistakes? Sharpe said weakness in applications rarely involves the technology itself. “We feel very privileged in working with these entrepreneurs, who often dedicate their lives to what they’re trying to do.”

She stressed, though, that applicants would benefit from more knowledge about their international competition. “It’s no use being the best in one province. They have to be able to sell their product at least through North America, so they need to understand their competition in that zone,” she said, adding other areas where applicants need to focus include defining initial and flown markets, determining the best path to market, and developing partnerships, “because we fund only consortia, not individual companies.”

Understanding the market opportunities will pay off for Canadian researchers, Sharpe said, because they stand to benefit from a growing domestic market for clean tech. “If we see industry adopting these technologies, we find they become more productive and therefore more profitable and more competitive,” she said, adding that European and American businesses are already implementing these solutions. “They’re moving this way because it makes good business sense; it’s not necessarily because they particularly care about the environment. So if we want our own domestic businesses to be competitive on a global basis, then we must also adopt these technologies.”

Foreign markets also represent good opportunities for clean tech, Sharpe said, especially developing economies in Asia and South America. “These places are looking to increase their economic strength (and) they will have a much bigger impact on the environment than developed countries have to date,” she said. “We can take superior technologies and market them to these countries, bolstering our export revenues but also contributing to reducing environmental impacts—which for greenhouse gases is a global issue.”

And that, she said, means Canada wins in two ways. “It’s an economic driver, and it’s a health and environmental issue for Canadians.”