Market Snapshot: Investment in Canadian clean energy technology research and development is increasing

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Release date: 2023-10-11

Of the $22.6 billionFootnote 1 spent on in-houseDefinition* research and development (R&D)Definition* by industry in Canada in 2020, 7.5%, or $1.7 billion, was energy-related.Footnote 2 Fossil fuels made up the largest share of energy R&D at 32%, despite R&D spending in this category decreasing for eight consecutive years. This gradual decrease occurred during relatively low oil prices between 2015 and 2020 and increased uncertainty and price volatility in oil and gas markets.Footnote 3

During the same five-year period, R&D investments in energy efficiency, electric power, and other clean technologies have increased. These changes in R&D spending show increasing diversity in the energy industry, with growing investments in efficiency and low-carbon energy. Figure 1 shows Canada’s total public and private energy R&D expenditure.

Figure 1: Energy research and development expenditures in Canada 2014 – 2020

Source and Description

Source: Statistics Canada – Characteristics of research and development in Canadian industry.

Description: This chart shows energy-related R&D expenditures in Canada from 2014 to 2020 in millions of dollars. R&D related to fossil fuels declined from $1.3 billion in 2014 to $558 million in 2020. R&D in energy efficiency increased from $124 million in 2014 to $397 million in 2020. R&D in electric power increased from $79 million in 2014 to $240 million in 2020. R&D in nuclear fission and fusion decreased from $319 million in 2014 to $233 million in 2020.

Government funding for energy R&D

The increase in spending on non-fossil fuel R&D is partly due to record-high funding from the federal government.Footnote 4 In 2020, $138 million of government funding was allocated to R&D, with 43% directed toward energy efficiency, as shown in Figure 2.Footnote 5

Figure 2: Share of government funding for energy R&D by area in 2020

Source and Description

Source: Statistics Canada - Energy-related research and development expenditures

Description: This chart shows the share of government funding for energy R&D by area in 2020. The share by area is as follows:

  • 43% energy efficiency
  • 16% fossil fuels
  • 12% nuclear fission and fusion
  • 11% other energy-related R&D, including carbon capture, utilization, and storage
  • 10% renewable energy resources
  • 6% electric power
  • 2% hydrogen and fuel cells

R&D, capital, and the low-carbon energy transition

The Government of Canada has committed to achieving net-zero greenhouse gas emissions by 2050. This goal is legislated in the Canadian Net-Zero Accountability Act and will require significant investments in R&D and capital. Canada’s Major Projects Inventory lists 470 major projects with a capital value estimated at $520 billion planned or under construction over the next 10 years. Of these, 183 projects will utilize clean technology, representing potential investments of $116 billion.

Investing in energy-related R&D can improve technology and increase economic opportunities in Canada as it transitions to a low-carbon economy. R&D drives long-term economic productivity and competitiveness by promoting innovation and improving products and processes.

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