Canada has a relatively strong performance in generating green start-ups, with the fourth highest number of green start-ups in the OECD and the highest number per capita outside of Europe. Approximately one in twenty Canadian start-ups are green start-ups (i.e. belonging to sectors where reducing environmental impacts is a core consideration and feature of the goods or services being developed), while 64% of early-stage entrepreneurs in 2024 reported taking steps to minimise the environmental impact of their business. The share of women founders in Canada’s green start-ups is also among the highest in the OECD, while green entrepreneurship activity is more geographically dispersed in Canada than in other countries.
Green entrepreneurial activity in Canada is aided by strong public supports for green entrepreneurship, particularly for early-stage start-ups. Policy has excelled in supplementing the provision of funding with non-financial assistance in the form of advisory services, most notably through the Industrial Technology Advisors of the longstanding National Research Council of Canada’s Industrial Research Assistance Program (NRC IRAP). Many of the major funding programmes for start-ups have dedicated cleantech teams or divisions, ensuring that green start-ups can receive tailor-made support. However, temporary disruptions to programming through the dissolution of Sustainable Development Technology Canada (SDTC) in late 2023 and early 2024 were widely seen to have left a critical gap and have left uncertainty in the early-stage green entrepreneurship support system. In 2024, SDTC’s programming mandate was transitioned to NRC IRAP, which now manages IRAP Clean Technology programming to support the growth of Canadian clean technology companies.
A hallmark of Canada’s green entrepreneurial ecosystem is the abundance of private and non-governmental support organisations, which are often partially or fully funded by government entities. Coupled with the extensive federal and provincial programmes available, this creates a dense and complex support landscape, making it important for green start-ups to receive guidance in navigating it effectively. Here, Canada’s Clean Growth Hub plays a vital role, helping green start-ups to find available and relevant supports and acting as a whole-of-government focal point for the clean technology sector. There are also co-ordinating entities for green entrepreneurial ecosystems at the provincial level.
A priority for policy going forward is enriching support for the scaling up of more advanced green start-ups. While the Canada Growth Fund and Business Development Bank of Canada (BDC) Capital’s green funds play an important role in boosting equity financing opportunities – both through direct investment and by catalysing private investment – Canada could consider whether additional mechanisms to fund the demonstration and deployment of green technologies at commercial scale are needed. For example, the United States Department of Energy’s Office of Clean Energy Demonstrations (OCED) and the Australian Renewable Energy Agency have proven transformative in expanding opportunities for cleantech in their respective countries. Both entities principally deliver non-dilutive funding but have introduced a variety of mechanisms to safeguard and maximise the benefits of the public investment, including milestone-based funding, knowledge sharing requirements, and recoupment rights in the event of subsequent commercial success.
A further barrier to scale-up is the difficulty green start-ups encounter in accessing customers within the Canadian domestic market. This is potentially driven by a range of possible factors including a lack of procurement of Canadian cleantech from large corporate buyers and public authorities and an overall weaker demand for green products and services compared with other countries. Through the Trade Commissioner Service and Export Development Canada, the public authorities provide effective support in helping Canadian start-ups to connect with overseas buyers, but there is a lack of nationwide programmes focusing on initiating and supporting commercial partnerships between green start-ups and domestic buyers.
Public procurement is another area where more can be done to support green start-ups in finding a reference first customer. While not specific to clean technology, Innovative Solutions Canada has had success as a Canadian government-wide procurement-based programme that connects federal departments to innovative Canadian companies, leveraging government purchasing power to stimulate technology research, development and commercialisation of Canadian technologies. Denmark’s Green Procurement Partnership Model, through which public entities commit to ambitious green procurement targets on a voluntary basis, could have promise in the Canadian context. This can also be supplemented by mandatory requirements for the purchasing of environmentally friendly or eco-labelled products for certain types of goods and services, as has been pursued both in Portugal and in Denmark.
