Home : Innovation : Environmental Technologies : Report On The Environmental Technology Sector In Western Canada - November 2003
Findings by Region
Alberta 4
The environmental business sector in Alberta has experienced strong growth over the past two decades, with revenues growing from roughly $650 Million in 1992 to $3.2 billion a decade later. It is comprised of over 800 Small to Medium-sized Enterprises (SMEs), with roughly half these firms having less than 15 employees. Over 80% of Alberta’s environmental firms provide services as their primary business; just over 15% are in the equipment and supply business, primarily developing and marketing technology-based products. Although the majority of the industry’s sales are in the Canadian market, the equipment and supply companies are more export market oriented, taking advantage of niche opportunities and their technical expertise.
STRENGTHS:
The roots of Alberta’s environmental industry are in the province’s significant endowment of natural resources, its concentration of technical expertise and its entrepreneurial culture. Environmental issues traditionally have been seen as a cost to users; therefore, a strong regulatory framework has been and continues to be essential to the development of the environmental industry in the province.
EMERGING OPPORTUNITIES:
The environmental industry’s access to a thriving energy sector has provided opportunities for the SMEs to develop innovative solutions to local environmental problems. The combination of market access, strong technical skills and risk-taking culture has enabled the industry to strengthen its competitive capabilities and to transfer this expertise to international markets and to other sectors such as petrochemical, agriculture, urban and transportation sectors.
The further development of Alberta’s natural resources (e.g. oil sands, coal) combined with the strong intellectual assets in the province will continue to provide opportunities for environmental SMEs to create innovative local solutions and to apply these to other sectors such as the urban water management and agriculture wastes sectors. Nevertheless the major growth opportunities will be in export markets and these are considerably more difficult and costly to penetrate.
Substantial growth for environmental services companies is expected to come from sales to markets outside of Canada in specific niches where Alberta companies possess specialized competitive advantages. The opportunity is to create a world-class environmental technology industry in Alberta. The province’s resource endowments, entrepreneurial culture and technical skills provide a necessary but not sufficient foundation for growth in a highly competitive global environment.
IMPEDIMENTS TO OVERCOME:
While Alberta’s environmental SME’s compete well at home, in the international marketplace they face very strong competition against better capitalized and larger corporations with sophisticated marketing and business capabilities and considerable support from their governments. In Alberta, while government programs for launching new technologies in the environmental sector are available, they are not competitive with programs available in other countries. The programs available are also viewed by many as cumbersome, bureaucratic and, in some instances, counterproductive.
The future growth and success of Alberta’s environmental industry cannot be taken for granted. Even after competencies in local markets are earned, the very small size of most SME’s, the long distances to export markets and the competitive market conditions in international markets, make entry very costly and at a risk level that these companies cannot tolerate on their own.
Alberta’s strong technical expertise and entrepreneurial culture are increasingly being applied to other sectors than the energy sector, both locally and globally.
However, substantial growth in the environmental technology industry will only be achieved with stronger and more effective government programs and incentives for business skills development and for private capital investment than are currently available to the small companies in the environmental sector.
While Alberta is a relatively rich province with significant private capital, only in very exceptional cases is this capital accessible to fledgling companies in the environmental sector to support their innovation, development and commercialization activities. The smaller SME’s in the services sector are particularly challenged in capturing significant global market share since they are much more limited in terms of resources for acquiring market intelligence, carrying out marketing activities, managing growth, and securing the capital necessary to support marketing and growth initiatives. There is a need for a stronger technology commercialization infrastructure. This involves access to market research, business strategy development, management, access to capital and networking with peers and experienced business professionals.
4 An Assessment of Alberta’s Environmental Technologies Industry: Final Report, Prepared for Western Economic Diversification Canada by CETAC-West, November, 2003