Look to China and India for a Green Revolution

The world’s fastest-growing economies are going green out of necessity. Canada should get in on the act.

Driven by domestic demand and a vibrant entrepreneurial class, India and China have become the global leaders in cleantech. Still a relatively new term, “cleantech” is used to describe the use of innovative technology to create resource efficiency, with minimal environmental impact. It includes solar energy, biofuels, water remediation, and renewable power generation.

Earlier this week in Toronto, the Canada China Business Council and the Canada-India Business Council hosted the China-India Cleantech Forum to create opportunities for companies from Canada to network and discuss investment in clean technologies with representatives from India and China.

The significance of the event goes beyond business opportunities. It also represents the chance to bring about a much-needed mind-shift on two key points.

The first is a call for government and business to alter the usual frame of the discussion. Too often, the opportunity from India and China is falsely presented as an either-or situation, making it seem as though a decision between the two is required. Instead, it is time for Canada to see itself as part of trade triangles and quads between countries like India and China. This requires an appreciation for the growing relationship between high-growth economies that increasingly bypass the West entirely.

China’s role in Africa and Latin America is now well-known, and Indian companies have also come alive to the benefits of investing in other growing markets. Companies and governments in both India and China are more interested in each other and in countries like Brazil, Turkey, and South Africa than in France, Germany, and yes, even us. Importantly, in the past few years alone, trade between China and India has gone from being almost non-existent to approximately $50 billion and growing.

The relationship between these two giants – predicted to be the first- and third-largest economies in the world by 2030 – is arguably the single-most transformative bilateral relationship in the 21st century, and not just in trade but in geopolitics. Amidst this shift, it is time to position Canada as not just a resource economy but as a resourceful economy. As much as anything, we need to be seen as a linking economy that applies intelligence, services, and creativity to enable trade investment between growing countries.

The second is the understanding that it is India and China, both driven by demographics and domestic demand, that are becoming the global incubators for cleantech entrepreneurship in waste, water management, conservation, and clean power. Both countries are on the front lines of the wicked problems of our time, including meeting the demand for sustainable growth in food, water, energy, education, and urban infrastructure. For these countries, bottom-up, distributed, low-cost clean technologies are not optional; they are urgent needs to which their best scientific and entrepreneurial talents, in addition to government support, will be applied for the rest of our lifetimes.

The planet has a stake in their success. The solutions they come up with will transform the economics of industries, from food to power, for the rest of us. Canadian companies need to be there to be part of this growth and, most importantly, to learn alongside these markets.

Even now, China now leads the United States and other G20 members in cleantech investments, with $34.6 billion invested in 2009 – nearly double the U.S. figure. That same year, in the midst of a global downturn, Indian cleantech attracted $2.3 billion in private investment, placing it 10th in the G20’s investment ranking.

A recent report by The Climate Group found that the rate of increase of India’s private investment in clean energy will be 736 per cent over the next 10 years, three times that of the U.S. or China.

The threat of shortages has prompted both the Indian and Chinese governments to strongly push the cleantech agenda. Consider that 80 per cent of the India of 2030 has not yet been built and the country needs to add about 500 megawatts of power generation per week for the next 25 years to meet demand. As part of India’s National Action Plan on Climate Change, the 2010-2011 budget included a 61 per cent increase for the Ministry of New and Renewable Energy. In 2009, the government also launched the Nehru National Solar Mission, dedicating $932 million to expanding solar power infrastructure. These are just the first steps, with more to come.

For Canada, these numbers represent a chance to strategically insert our skills and technology into industries as they are being developed. We have the knowledge and technology resources. In Ontario alone, there are more than 2,800 environmental industry companies that generate about $7 billion in revenue and employ more than 65,000 people. Our universities produce world-beating research in a number of cleantech areas, including water, agriculture, and conservation technologies.

The Toronto Stock Exchange, long the world’s leading resource exchange, is also now the top exchange, by volume of companies, for cleantech businesses – many of them from China. We need to push this story. If Indian companies want to raise money for resource or cleantech ventures in Brazil, they should look to Canada for smart partnerships both in technology and, where required, capital.

That said, the challenge of playing a meaningful role in these growing markets is complex and requires patience, investment, and persistence. But the upside of making these investments in resources and time is we’re doing something good for the balance sheet and for the planet.

The Mark