Process underway for deciding how to spend climate change technology funding

Budget 2003

Decisions on how the S&T portion of the Budget’s climate change funding will be spent are expected this spring as the government launches an internal process to decide how it will be partitioned. At least $200 million of the $1.7 billion announced last month for climate change over the next five years will be dedicated to longer-term technologies, and with its leveraging capacity could generate $500 million.

Using the National Implementation Strategy for climate change as its guide, a reference group of ministers is preparing a Treasury Board submission to support the process of implementation. Chaired by a nominally neutral party (Agriculture and Agri-Food minister Lyle Vanclief), the ministers for Industry Canada, Natural Resources Canada (NRCan) and Environment Canada (EC) will jointly determine who among the many suitors lining up will receive funding.

The implementation strategy calls for the use of risk-management in part to provide flexibility in responding to scientific and international developments as a series of business plans are developed for individual actions and those taken jointly with the provinces. The Budget addresses the initial phase of the strategy

“The only time there was ever anything vaguely resembling this was the Green Plan which was announced in 1990 and that was nothing as significant as this,” says Dr Robert Slater, outgoing senior ADM at Environment Canada. “It may not be specified but the broad structure or architecture is there. The detailing and the specifications are to be designed.”

The bulk of the money is slated for expenditure during the last three years of the five-year period, with $200 million tagged for each of the first two years. Industry is expected to be the main beneficiary of the funding, which will ultimately combine federal and provincial resources with those of the private sector.

“Most of the money will be for companies, research institutes and universities and not necessarily for federal laboratories,” says Dr Frank Campbell, director of NRCan’s CANMET Energy Technology Centre. “Further budgets may have even more because there are some very expensive items being proposed such as the clean coal demonstration project.”

Clarity is also lacking for the climate change funding that has been specifically allocated. The largest single item is $250 million for Sustainable Development Technology Canada (SDTC), following an initial $100 million investment in 2001.

SDTC’s mandate is to love emissions reduction technologies and processes into the marketplace by focusing on pre-venture capital proposals. The Fund is not limited to any specific sector and as such has had a huge response to the two calls of interest it has issued to date, receiving proposals valued at more than $800 million.

Of the initial funding, only $6.1 million has been awarded and even less of that has been delivered. With the new funding, it’s expected the scope and pace of SDTC’s activity will be greatly accelerated.

“We can play a significant role in the private sector by investing in the (pre-venture capital) market segment and prove that a technology can be done and is commercially viable,” says Greg Graham, SDTC’s VP operations. “With the new funding, we hope we will be allowed to spend more money to get these projects to market.”

SDTC is negotiating a funding agreement with the government through the two departments it reports to: NRCan and EC. In the meantime, the process for determining the winners of its second round competition is nearing completion.

“We fund consortia and marry the right partners to bring technology through to the marketplace and tie in venture capital or institutional funding,” says Graham. “The second round business plans have been short listed and are undergoing due diligence by our investment committee. They will make recommendations to the board which meets at the end of May to make the final decisions.”

In addition to funding consortia, Graham says SDTC is also “out evangelizing and promoting” the fund — a process that includes educating venture capitalists.

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