Driving the Growth of Green Start‑ups in Canada

3. Direct support for green start-ups

Abstract

This chapter assesses the direct public supports for green start-ups in Canada, including financial assistance through grants, loans or equity and non-financial assistance such as mentoring, advice and exporting supports. The chapter then presents lessons from international policy experiences in Australia, Denmark, Portugal, and the United States.

Overview of policy approaches internationally

Governments across the OECD provide an array of direct supports for green start-ups to help them to develop and grow (OECD, 2025[1]). These play a crucial role in helping green entrepreneurs in overcoming the development bottlenecks described in Chapter 1 of this report. Direct supports for green start-ups can broadly be broken down into those based on financial assistance and those based on non-financial assistance, as described below.

Financial assistance

As discussed in Chapter 1, access to finance is a key challenge faced by green start-ups internationally. Accordingly, one of the most widespread approaches governments take to supporting green entrepreneurship is launching programmes that provide direct funding to green start-ups. Governments have long been active in providing funding – often in the form of non-repayable grants – for applied research or technology demonstration projects (OECD, 2025[2]). These schemes are often structured around competitive funding calls issued by government agencies or departments for the development of technologies or solutions in prescribed fields.

Public development banks and investment funds also play an important role in delivering financial assistance to green start-ups (OECD, 2025[2]). This typically is in the form of loans in the case of the former and equity investment in the case of the latter. In some instances, this support is delivered through generic public financial institutions. In others, governments have established dedicated financing entities or funds within public entities with a mandate to invest directly in green start-ups and technologies. Such entities also help to capitalise relevant private funds, reflecting a “fund-of-funds” approach to boosting green start-ups’ financing opportunities.

A common objective of these public financing initiatives is to crowd in investment from the private sector by derisking green entrepreneurial projects, with matching private funding often a condition attached to the receipt of public funding. In recognition of the extremely high capital demands of many later stage cleantech projects at the commercialisation stage, governments in some countries have started to commit larger volumes of funding – both through grants and equity – over an extended time period in order to help beneficiaries navigate through the “valley of death”. This funding is often milestone-based, in order to manage the risks of the public investment.

Non-financial assistance

Governments also deliver non-financial assistance to green start-ups through training, mentoring and advisory services. The topics covered can be wide ranging, with common themes including business model development, investor readiness training, market exploration and technical advice on the development of new technologies. While these initiatives can be delivered through standalone programmes, it is becoming increasingly common for governments to take a more integrated approach, with aspects of mentoring or advice embedded within funding programmes for green entrepreneurs and start-ups. Many countries have also created centralised hubs or one-stop-shops that provide dedicated information for green entrepreneurs on relevant regulations, programmes, or other support or development opportunities.

Another way that governments can support green start-ups is by creating networks or organising events to convene different entrepreneurial ecosystem actors including investors, researchers, business support organisations, and potential customers and suppliers. There are also public matchmaking programmes that help to identify and initiate commercial partnerships between green start-ups and large buyers (OECD, 2025[2]). These address the key development bottleneck that many entrepreneurs face with respect to finding first customers. The programmes typically place a focus on identifying start-ups that can offer relevant solutions to specific challenges faced by the buyers, drawing from large networks of customers and young firms.

There is also a trend towards providing more supports to aid the internationalisation of start-ups. Public agencies – for example export development or credit agencies – often provide training and advice to green start-ups to help them to learn about foreign markets, assess their market readiness, identify appropriate markets to target, and develop internationalisation strategies. These supports often leverage large networks of overseas experts with relevant local knowledge and contacts. In some cases, governments also provide immersive soft-landing programmes, which fund small cohorts of green start-ups to spend a period of time in global hubs in order to establish contacts and learn about the targeted market.

Assessment of Canada’s policy approach

The Canadian authorities – at both the federal and local level – deliver an array of policies and programmes that are important in promoting the development of green start-ups in Canada. This section reviews and assesses the direct public supports available to green entrepreneurs in Canada, examining the strengths and weaknesses of the current policy framework as well as opportunities for improvement.

Canada has excelled in nurturing green start-ups at the early stages

Canada has historically done well in supporting new green entrepreneurial ventures to get off the ground, as evidenced by the relatively high number and density of green start-ups in the country. There are numerous public funding opportunities to help green entrepreneurs to develop their products. Most prominent perhaps, is the longstanding National Research Council Canada’s Industrial Research Assistance Program (NRC IRAP). With an annual budget of CAD 515 million in 2025-26 and more than 275 Industrial Technology Advisors (ITAs), NRC IRAP is a key source of support for innovative companies in Canada. Its approach combines advisory services, strategic connections, and targeted funding, tailored to meet the specific needs of SMEs at each stage of their technology development and business growth. Funding is deployed at critical moments to de-risk technology development, accelerate firm growth, and connect SMEs with valuable relationships across the innovation ecosystem. A distinguishing feature and success factor that sets NRC IRAP apart from other innovation organisations is the combined advisory and technical support delivered through the ITAs, which by most accounts is highly effective. ITAs have both lived entrepreneurial experience and technical and business expertise and tailor support to each client’s growth stage and innovation goals. Another strength of IRAP is its ability to quickly make funding decisions and disburse funds, with funding often issued to beneficiaries within just a few weeks depending on the funding level. While NRC IRAP as a whole is sector agnostic, it does provide tailored assistance through its cleantech sector team – one of nine specialised sector teams operating within NRC IRAP. The team comprises experts in the cleantech field, who provide targeted and in-depth advisory services to address specific technological or business challenges that green companies are facing. The sector team also serves a matchmaking function, proposing partners, facilitating connections, and advising on relevant sources of support.

Sustainable Development Technology Canada (SDTC) was a not-for-profit entity functioning at arm’s length from the federal government, launched in 2001 to support early-stage clean technology innovation in Canada. Between 2001 and 2024, it provided over CAD 1.8 billion in contribution funding to emerging cleantech companies. In 2024, its programming mandate was transitioned to NRC IRAP, which now manages IRAP Clean Technology programming. Stakeholders noted that the temporary suspension of funding activities during this transition created a gap in Canada’s support system for early-stage green enterprises. The new IRAP Clean Technology programming addresses this gap while operating under NRC IRAP’s own processes and governance. Ensuring strong support for early-stage Canadian cleantech through IRAP Clean Technology programming and other initiatives remains a priority for Canada’s green entrepreneurship policy, although it is too soon to determine the effects of the shift on the early-stage support landscape.

Canadian SMEs can also apply for funding from Innovative Solutions Canada (ISC), which is a government-wide programme that supports the development and commercialisation of innovative technologies, including clean technologies. By leveraging federal procurement, ISC connects departments with Canadian SMEs to help them develop, test, and adopt innovative technologies. The programme aims to accelerate the adoption of home-grown Canadian solutions, increasing procurement opportunities for Canadian industry and strengthening Canada’s technology sectors and economic resilience. Programme data show that participating companies see increases in job growth, revenue, and exports. Several departments have leveraged ISC to support their implementation of the Greening Government Strategy and related environmental commitments. Examples include challenges to develop battery materials, low carbon building materials, and solutions to aid the destruction of per- and polyfluoroalkyl substances (PFAS) in contaminated environments. ISC has also supported testing calls in areas such as energy generation, storage and infrastructure, bio-products, bio-chemicals and waste reduction, low carbon and zero emissions mobility technologies, and technologies to assess and adapt to the impacts of climate change. These initiatives illustrate how federal procurement can drive the development and early adoption of clean technologies across government operations. While an important part of the support landscape, ISC appears to be smaller in scale to that of similar programmes in other OECD countries. For example, USD 4.1 billion (approximately CAD 5.6 billion) was allocated through the United States’ Small Business Innovation Research (SBIR) programme in the 2022 financial year.

Impact Canada, based within the Impact and Innovation Unit of the government’s Privy Council Office also has relevant challenges and prizes for green entrepreneurs. An example is the recent CAD 20 million Food Waste Reduction Challenge, which funded several projects to develop prototypes and demonstrate new technologies that can reduce food waste.

Natural Resources Canada (NRCan) is also an important federal player in Canada’s green entrepreneurial ecosystem. Through its Energy Innovation Programme (EIP), NRCan provides support for ventures involved in research, development, and demonstration projects in the energy space. The EIP is structured around periodic funding calls for projects in specific fields, with recent examples being the calls for proposals on Clean Fuels, Mining Decarbonization Demonstration, and National Energy Systems modelling. The Clean Fuels Call in particular stands out for its substantial size and the support delivered to a combination of early-stage and later-stage projects. A range of different types of organisations receive funding through the EIP, which is delivered in the form of grants. Start-ups account for approximately a third of the programme’s portfolio, with an estimated 90 cleantech start-ups having been supported over the past five years. The amount of funding per project tends to range from CAD 1 to 5 million, with an annual budget of CAD 70 million in total. It is important to note that, as tends to be a hallmark of Canada’s support programmes for innovative ventures, NRCan supplements the provision of grants by offering access to a deep network of in-house technical experts organised around different science and technology areas. These experts serve an important consulting function, for example in helping companies to navigate the regulatory barriers that are a key challenge in the energy sector.

Canada’s seven Regional Development Agencies (RDAs) are also active in the green entrepreneurship support system. These seven federal agencies are responsible for aiding the economic development of their respective regions. Green start-ups often benefit from funding opportunities through their RDA. One example is the Funding for Businesses in southern Ontario programme of the Federal Economic Development Agency for Southern Ontario (FedDev Ontario), which provides zero-interest, repayable loans ranging in size from CAD 125 000 to 10 million to local businesses to support them in developing and commercialising innovative products, increasing productivity, or entering new markets. Clean economic growth was one of the funding priorities in the autumn 2024 edition of this scheme.

Federal funding initiatives for green start-ups are complemented by schemes administered by public entities at the provincial level. A full review of these local initiatives is beyond the scope of this report, though Box 3.1 describes the case of Quebec, which is an example of a province with a sophisticated support landscape for green start-ups.

Box 3.1. Province-led supports for green entrepreneurship: the case of Quebec

The provincial government of Quebec and other regional public entities support a range of important initiatives for green start-ups, complementing the national-level initiatives delivered by the federal government:

• The INNOV-R programme is financed by Quebec’s Fund for Electrification and Climate Change and administered by the Ministry of Economy and Innovation. It provides funding for collaborative research and development projects (from Technological Readiness Levels 1-6) with potential to contribute towards the fulfilment of Quebec’s greenhouse gas emissions reductions targets. The projects must involve at least one Quebec-based business and one research institution. The grants offered through INNOV-R cover up to 50% of allowable project costs, up to a maximum of CAD 250 000 per year.

• The Technoclimat programme offers financial assistance to Quebec-based businesses and organisations to support technology demonstration projects in the areas of energy and greenhouse gas emissions reduction. As of early 2025, approximately CAD 300 million in grants had been awarded through Technoclimat to around 150 projects, with grant sizes varying from CAD 500 000 to 10 million. The budget for the next five years is CAD 200 million – a sizeable sum for a province with a population of approximately nine million. There are two major funding streams within Technoclimat – one for developing and demonstrating new technology and another for testing an already demonstrated technology, with funding sizes considerable larger for the latter category. A vast majority of Technoclimat’s beneficiaries are relatively new ventures, although large corporates have also participated in the past.

• Since 2017, Technoclimat has also allocated grant funding to the Cycle Momentum cleantech accelerator, which provides matching funding for green start-ups as well as cleantech expertise and connections to potential partners in Canada and internationally. Cycle Momentum works closely with the CAD 30 million Cycle H2O impact fund, which provides equity and quasi-equity investment for companies with technological solutions for the water industry.

• The Centre of Excellence in Energy Efficiency (C3E) is a non-profit organisation founded in 2009 by the aluminium manufacturer Alcan (now Rio Tinto Alcan). C3E is a fund that invests in the commercialisation of innovations in energy efficiency in transportation, with profits recycled for future investment rounds. It can be seen as a next step of support for green start-ups graduating from the Technoclimat programme. The fund became self-financed in 2021, although public funding in the early years was key in helping it to gets off its feet.

A key distinguishing feature of Quebec’s approach is the consistent pipeline of public assistance specifically targeting innovative green ventures, covering each of the different stages of their development, from applied research and development to product development, testing, and commercialisation. It is important to note, however, that the level of provincial support for green start-ups in Quebec is not always replicated in other parts of the country. This means that the extent of support for green entrepreneurs and start-ups is somewhat unbalanced across Canada, creating challenges in some areas.

Funding gaps at the “valley of death” commercialisation stage are a bottleneck

The public initiatives described thus far predominantly focus on relatively early-stage start-ups, providing funding mainly for the development, testing, and demonstration of innovative ideas, products and services. However, in order to successfully emerge from the “valley of death” – the period of a new enterprise’s development between the start of its operations and the generation of revenue – green start-ups must subsequently acquire funding for the commercialisation and large-scale deployment of their products and services. A defining challenge affecting green entrepreneurship development in Canada and many other countries is that the funding volumes required to pass through this critical commercialisation stage are extremely high for green start-ups – in some cases beyond the capacity of venture capital funds. The amount of time it takes to implement these projects is also a deterring factor for conventional private investors.

Positively, there are public investment vehicles in Canada that provide relatively large funding amounts to green start-ups at a more advanced development stage:

• BDC Capital: The Business Development Bank of Canada (BDC) is a key actor in this space, with a strong sustainability focus. BDC is a Crown Corporation that operates at arm’s length from the Canadian government with a high degree of autonomy, reporting to the Minister of Industry. In 2018, BDC Capital launched the CAD 600 million Cleantech Practice, which now has a portfolio of 50 companies (OECD, 2025[2]). The fund has excelled in crowding in private capital. For each CAD 1 invested via the fund, CAD 7.3 has been raised by the companies via private investors, amounting to more than CAD 3.5 billion in private investment. The Cleantech Practice is no longer making new investments, focusing instead on supporting its current portfolio. However, the BDC has also recently launched a separate CAD 500 million Climate Tech Fund, which aims to provide patient capital and support for firms developing technologies that can reduce greenhouse gas emissions. There is also BDC’s CAD 150 million Sustainability Venture Fund, which invests in early-stage businesses developing technologies that contribute to a net-zero economy. The Sustainability Venture Fund focuses on “capital-light” ventures, including software-based business models and hardware-enabled software companies. Meanwhile, the Climate Tech Fund generally invests larger amounts over longer time horizons in more capital-intensive ventures, with a focus on stimulating private investment alongside their commitments. BDC Capital is one of BDC’s three core lines of activity, the other two being focused on SME financing and the delivery of complementary wraparound support on topics such as marketing, sales and international expansion. These non-financial advisory services are provided by a network of consultants across Canada. Complementing these investments, as part of the 2017 Venture Capital Catalyst Initiative, on behalf of the Government of Canada, BDC co-invested CAD 50 million alongside the private sector in three cleantech venture capital fund managers.

• Canada Growth Fund: A very important recent development in Canada’s green entrepreneurship support system is the formation in 2023 of the Canada Growth Fund – an arms-length, CAD 15 billion public investment fund. Green technologies are the CGF’s core focus, with emissions reductions being one of its key strategic objectives towards fulfilling its mandate of supporting the growth of the Canadian economy as it progresses on its path towards becoming greener. Stakeholders report that the fund is making good investments with the types of large cheque sizes needed to facilitate the commercialisation of hardware-based cleantech companies. Since its launch in 2023, it has made a total of 13 investments totalling CAD 2.6 billion, as of May 2025. These are a combination of investments into private funds, established companies, and new cleantech companies. The CGF also seeks to crowd in private investment. One recent example is the USD 55 million investment to accelerate the commercialisation of Montreal-based Dcbel’s electric vehicle charging technology. USD 40 million of this investment was made directly by the CGF, while USD 15 million came from private investors. This illustrates how public entities can play a role in de-risking cleantech investments in a way that encourages the private sector to become involved.

• Strategic Response Fund: The Business Innovation and Growth component of ISED’s Strategic Response Fund (formerly the Strategic Innovation Fund, or SIF) provides repayable (and in special cases, non-repayable) funding for Canadian companies to develop and commercialise innovative products and services. The SRF provides a minimum of CAD 10 million in funding to projects aligned with the fund’s current priorities, among which are clean technologies, critical minerals, and industrial transformation. It should be noted that the SRF is not dedicated to start-up companies, and much of the funding is allocated to established large companies to support their decarbonisation initiatives.

• Low Carbon Economy Fund: The Low Carbon Economy Fund (LCEF) was launched by the Canadian government in 2017 and was recapitalised in 2022-23 via the 2030 Emissions Reduction Plan (ERP) issued under the Canadian Net-Zero Emissions Accountability Act. The LCEF comprised four funding streams. Of particular relevance to green entrepreneurship development were the Challenge Fund – which had an allocation of CAD 170 million to support the deployment of proven, low carbon technologies at Technological Readiness Levels of 8 or above, with funding amounts ranging from CAD 1 to 25 million – and the Implementation Readiness Fund, which tended to focus on projects at a less advanced stage. One of the reported challenges associated with supporting lower TRL projects – particularly for government agencies that operate with annual budgets – is unpredictability in the development timelines, which can lead to delays and the need for funding extensions.

• Innovative Solutions Canada: ISC’s flexible develop-test-procure model includes a later stage technology call for innovative solutions, which focuses on prototype testing by government departments. In 2023, ISC also ran a call for prototypes for solutions in energy generation, storage and infrastructure, bio-products, bio-chemicals and waste reduction, low carbon and zero emissions mobility technologies, and technologies to assess and adapt to the impacts of climate change. Through this call, government departments worked with clean technology companies to test prototypes in real-world settings. Once a technology is successfully tested through ISC and is commercialised, it can be available for purchase through ISC’s Pathway to Commercialization, through which the technology is placed on a source list where government departments can purchase successfully tested innovations for up to three years. As of November 2025, 7 companies with clean technologies are available for purchase through the Pathway to Commercialization initiative, one of which has received a follow-on commercial contract with government.

Despite the important public initiatives described above, stakeholder consultations indicate that Canada continues to face challenges with respect to the provision of patient capital to adequately finance green start-ups and, in particular, scale-ups. Here, patient capital refers to large scale investments – either in the form of debt or equity – that typically have a longer-term outlook, higher risk tolerance, greater flexibility, and less emphasis on quick returns or early exits. Patient capital often entails the provision of sustained advice by the investors alongside the capital injection. While Canada does have specialised green venture capital investors, these tend to focus on less capital-intensive projects. Stakeholders also indicated that blended finance mechanisms and catalytic capital tools used in the United States remain underdeveloped in Canada, and there is also a reported lack of specialised knowledge on the cleantech sector among investors more broadly. This is an important contributing factor to green start-ups’ financing challenges, since the presence of investors with relevant expertise to evaluate and invest in green companies can help to alleviate information asymmetries and thus strengthen investment opportunities for new enterprises (Bocken, 2015[3]).

For these reasons, the “valley of death” that green start-ups encounter as they attempt to transition from prototype to commercial deployment is among the green entrepreneurship development bottlenecks most consistently cited by Canadian stakeholders. A public presence is needed to compensate for the barriers to obtaining private financing for the commercialisation or deployment of green technologies. While Canada provides considerable early-stage support through programmes like IRAP, the mid- to late-stage funding ecosystem is weaker. Interviewed entrepreneurs reported a lack of sustained, co-ordinated support once they reached higher technology readiness levels (TRL 6-9), especially for first-of-a-kind (FOAK) projects. These projects need more financing opportunities, with public support a necessary component due to the scale and risk of the required investments.

Green start-ups can access effective supports to penetrate international markets

Canadian green entrepreneurs are well supported when it comes to entering international markets. Interviewed entrepreneurs highlight the Trade Commissioner Service (TCS) of Global Affairs Canada as having been highly beneficial in streamlining their development and internationalisation. The TCS works with companies with viable products that are ready for export. Its key source of value for entrepreneurs is in helping them to find first customers abroad. This is achieved by leveraging a large network of well-connected experts and advisors – including cleantech specialists – based in the TCS’ six regional offices in Canada and its 160 offices worldwide, often Canadian embassies or consulates. Through this network, the TCS delivers a range of export advisory services to their clients. These include connections with qualified contacts in the target market such as buyers, local experts, support providers or government contacts, and support in preparing for market entry and assessing market readiness. The TCS has a cleantech team for supporting the internationalisation of green companies specifically and dedicated support for cleantech companies is available in approximately 120 of the TCS’ international offices.

In addition to export advisory services, the TCS has a range of funding streams for their clients:

• The CanExport SMEs programme provides funding of up to CAD 50 000 to support companies to enter international markets.

• The CanExport Innovation programme provides funding of up to CAD 75 000 to develop R&D partnerships abroad.

• The Canada International Innovation Programmes provides funding of up to CAD 300 000 for co-innovation projects that are close to commercialisation involving Canadian SMEs and a foreign partner.

Meanwhile, the TCS’ 12 Canadian Technology Accelerators (CTA) provide soft-landing opportunities for high-potential, high-growth Canadian companies to explore market opportunities in 12 locations worldwide. The CTA scheme has programmes dedicated to clean tech companies, which involve training and mentoring on the relevant market, virtual matchmaking, and an in-person placement where participants can hold meetings with potential clients, investors, and partners. These soft-landing programmes are an excellent way of facilitating the internationalisation of Canadian green start-ups and scale-ups.

Another well-regarded player that supports the internationalisation of Canadian companies is Export Development Canada (EDC). EDC serves as both an export credit agency and a provider of loans and equity investment. In addition, EDC provides knowledge services, for example information on trade and market entry. EDC also does an excellent job of connecting its clients with potential customers in other countries – a crucial service in Canada given the relative scarcity of large domestic buyers. While EDC mostly supports more advanced companies with Technological Readiness Levels of 8 or above, it also works with small, scaling companies with minimal or no revenues. This is done through four relationship managers that nurture the companies to help them reach the point where they can access EDC’s other internationalisation supports. Dedicated support for cleantech companies is available through the EDC’s climate tech practice, with approximately 500 companies having been assisted under this umbrella. EDC is one of the largest funders of cleantech in Canada, having deployed more than CAD 50 billion since 2012.

While services such as the TCS provide important supports to assist green entrepreneurs in entering markets across the world, it should be noted that Canada’s cleantech sector is heavily reliant on the United States for export opportunities. In 2023, exports to the United States accounted for 78% of Canada’s cleantech exports, up from 74% in 2014. Meanwhile, other large markets such as Asia and Europe account for a relatively small share of exports. Internationalisation support initiatives going forwards should seek to tap more into export opportunities that exist in markets beyond North America.

The Clean Growth Hub helped start-ups to navigate federal supports

From 2018 to 2026, the Clean Growth Hub (CGH) played a crucial role in helping green start-ups and clean technology innovators to navigate the federal support ecosystem. The CGH was an inter-departmental initiative, made up of 17 federal government departments and agencies that supported cleantech innovation ranging from early-stage research to demonstration and export. It acted as the Government of Canada's co-ordinating centre for federal cleantech activities and a one-stop shop dedicated to providing information about funding and services for cleantech initiatives.

Through its advisory service, a team of officers from across the government offered tailored advice to Canadian organisations undertaking cleantech projects, while also providing access to an online inventory of clean tech-focused programmes, services, opportunities, resources and tools. Given that the CGH was an inter-departmental team, its officers were able to provide extensive and relevant information to their clients on public support opportunities. The CGH also shared information on its clients’ projects, needs and challenges with federal partners, reducing the need for clients to meet with multiple government departments to find and access appropriate support. When companies were not successful in applying for support through a particular programme, the CGH will also made referrals to other departments.

The CGH further supported cleantech innovation by enhancing federal programme co-ordination and supporting data collection and analysis from federal cleantech programmes as part of the federal Clean Technology Data Strategy. Furthermore, the CGH gathered insights on the clean tech sector and disseminated them to relevant partners. In total, the CGH supported approximately 3 300 clients, among which are all nine of the Canadian companies on the 2025 Global Cleantech 100 list.

Lessons from international experience

This section presents lessons from the policy experience of Australia, Denmark, Portugal and the United States in creating direct public supports for green startups.

Delivery of large-scale grants and loans for cleantech development and deployment

As the green transition has become an area of increasing priority for public policy, and in recognition of the very high capital demands and uncertain returns associated with cleantech innovation, countries have created dedicated funding entities and programmes that are starting to provide the required scale of financial support needed to develop and demonstrate these technologies. High-profile examples of this from the United States include the Office of Clean Energy Demonstrations (OCED) and the Loan Programs Office (LPO) within the United States’ Department of Energy (DOE), as well as the Advanced Research Projects Agency-Energy (ARPE-E) and the Greenhouse Gas Reduction Fund (GGRF). OCED was established in 2021 to fund and manage more than USD 25 billion worth of demonstration projects spanning a range of fields including advanced nuclear, clean hydrogen, carbon management, industrial decarbonisation, and long-duration energy storage technologies. The funding is distributed through funding opportunity announcements, which invite candidates to apply for funding to demonstrate a particular type of green technology. The awarded amounts per project often extend beyond USD 10 million. The availability of this scale of public support is transformative in helping green technologies to get off the ground in a way that otherwise may not have been feasible. Another key strength of the OCED’s approach is the consistent pipeline of support it provides to its projects as they progress through different stages of development. For example, the OCED has voucher programmes that provide additional assistance to companies that previously received support from the DOE for research, development, and demonstration, in order to accelerate the commercialisation of their technologies.

In Australia, the government established the Australian Renewable Energy Agency (ARENA) in 2012 to accelerate innovation in renewable energy. ARENA has to date committed more than AUD 2.2 billion in funding for projects that advance technologies like solar energy, battery storage, and hydrogen production. Funding amounts vary from less than AUD 1 million to upwards of AUD 10 million, with large amounts of private capital often crowded in alongside ARENA’s contribution. The continuity and stability of support provided by ARENA over many years has been essential for long-term planning and investment in green technologies in Australia.

In Canada, while the formation of the Canada Growth Fund is a very important step, this entity provides predominantly equity capital and is more oriented towards supporting technologies that are at a more commercially viable stage. Similar entities in other countries include the equity arm of the Export and Investment Fund of Denmark and Australia’s Clean Energy Innovation Fund, housed within the Clean Energy Finance Corporation.

Maximising public benefits from public-backed green innovations

ARENA in Australia and the OCED in the United States divert large sums of public money to supporting the development and deployment of high-risk green technologies. While these allocations are in the most part non-repayable, both entities deploy a variety of interesting approaches in designing and delivering the support to ensure that taxpayers receive value for money from the investments. ARENA adopts an outcome-based approach, aiming to provide the minimum amount of financial assistance needed in order to achieve a desired outcome. The financial assistance is delivered through grants linked to the achievement of milestones or the production of agreed commodities, helping to mitigate risks associated with non-delivery. ARENA also reserves the right to integrate recoupment provisions into the funding agreements, which enable the agency to recover some or all of the grant funding in the event that a project goes on to achieve considerable commercial success. In 2024, AUD 8.2 million was recouped in this manner. This additional revenue stream increases the affordability of the programme and enables it to support more projects for a given budget.

A distinguishing feature of both ARENA and OCED is the focus on maximising the non-financial returns on public investments into green technologies. In Australia, recipients of ARENA funding are required to participate in knowledge sharing to disseminate the knowledge acquired during the implementation of their project to industry peers and the public at large. The aim is to reduce the need for future grants by enabling knowledge gained by early movers to spread throughout the industry. There is a potential tension here between ARENA’s desire to obtain a return on its investment through the dissemination of knowledge to other parties and the project participants’ and sponsors’ wish to retain commercially valuable and/or sensitive information gained through the work. ARENA’s approach to managing this is to define agreed frameworks within which the knowledge sharing takes place, which include the redaction of certain information, time delays in the release of information, and group discussions being held under “Chatham House rules” (Miller, 2018[4]). In the United States, the OCED has established an Engagement Office in order to strengthen programme impacts by facilitating the dissemination of project learnings across a broad range of stakeholders including industrial partners, public entities, non-profit organisations, and other experts. The aim of this engagement is to improve the DOE’s and the market’s understanding of clean energy technologies, to encourage future investment by the public and private sector, and to accelerate the commercialisation and deployment of the supported technologies.

Focusing resources and efforts on specialised sub-sectors

As discussed in Chapter 1 of this report, green entrepreneurship is a broad concept encompassing many different sectors and technology areas, from solar power production to building efficiency or waste management. In order to establish international competitiveness and foster synergies and economies of scale, it can be advantageous for countries in their efforts to stimulate green entrepreneurial activity to concentrate on specific fields where the needs or opportunities are greatest. While Canada has established public entities and programmes that focus on green enterprises, the technology areas that fall within their mandate are sometimes broader than in other countries, which have embraced a more explicitly cluster-based, specialised approach. In Denmark, for example, the 2022 Agreement on Strong and Innovative Companies set aside DKK 1 billion (approximately CAD 210 million) for the formation of eight local business lighthouses. The lighthouses are consortia of private and public actors tasked with future-proofing Danish strengths. Many focus on green technology areas. For instance, “CO₂ Vision” – the business lighthouse for North Jutland – seeks to promote the region’s status as an international leader in the capture, use and storage of CO₂. It is run by a consortium of nine organisations, among which are businesses, educational and research institutions, and network organisations. The lighthouse provides grants of up to EUR 300 000 over a three-year period to support companies in the development of carbon capture and storage technologies in the region. In addition, the lighthouse has a selection of test sites across the region, as well as training programmes for local companies on green and sustainability-related issues.

Another example of Denmark embracing a highly specialised and focused approach to supporting green innovation is Innovation Fund Denmark’s “Innomissions”. These are four mission-driven research and innovation partnerships that bring together Denmark’s leading researchers, businesses and organisations in the fields of i). storage and use of CO2, ii). Power-to-X, iii). climate- and environment-friendly agriculture and food production, and iv). circular economy with a focus on plastics and textiles. The “Innomissions” each issue calls to fund innovative research in their particular fields. The four areas were determined by Denmark’s parliament based on the country’s positions of relative strength.

Australia and the United States have also been strategic in selecting green technology areas to fund. ARENA has five granular investment priority areas: i). “Ultra low cost solar”, ii). “Optimising the transition to renewable electricity”, iii). “Commercialising renewable hydrogen”, iv). “Supporting the transition to low emissions metals”, and v). “Decarbonising transport”. This targeted approach enables programmes, support and resources to be tailored to the needs of companies in specific fields. Similarly, the OCED’s funding calls are highly precise in the types of technologies they will fund, with a strong focus on clean hydrogen, carbon management, industrial demonstration, and advanced nuclear.

Application support

Onerous application and reporting procedures for public programmes are currently an important obstacle for green entrepreneurs in Canada. This is a challenge faced by many countries, as authorities grapple with the sometimes competing goals of appropriately verifying that public funds are being deployed effectively while avoiding placing an undue burden on programme managers and participants, which can undermine the programme benefits and deter applications in the first place. Reducing administrative burdens associated with public support programmes for green start-ups first requires consultation and stakeholder engagement in order to identify the specific pain points. The United States’ Small Business Administration (SBA) has launched a series of “listening sessions” in order to identify administrative bottlenecks associated with their programmes for start-ups and SMEs. At the local level, several state governments also have their own initiatives along these lines. The United States also does well in engaging private third parties to evaluate applications and monitor projects, creating a more streamlined process for programme managers and beneficiaries. In particular, the Valid Eval software tool has been deployed for 511 federal government and Department of Defence programmes. In Australia, public programmes often recruit staff whose role it is to support start-ups through the application process. For example, ARENA has business development managers who work closely with applicants to boost the chances of their projects receiving fundings, thus reducing the risk for the companies and increasing the overall efficiency of the grant process. Australia’s (now discontinued) Incubator Support Programme (ISP) also hired four regional facilitators to support business incubators in applying for funding through the programme.

Integration between state and federal entities

Like in Canada, Australia’s state-level governments play an important role in funding and supporting green start-ups. A positive feature of Australia’s support landscape is the good degree of alignment that exists between state and federal initiatives, with Bertelsmann Stiftung’s international Sustainability Governance Indicators showing that Australia performs well compared to other countries in terms of co-ordination between different layers of government.1 This has been facilitated in part through the National Cabinet, which was established in 2020 and is chaired by the Prime Minister. Local government representatives are invited to meet with the National Cabinet once each year. The National Cabinet thus provides a forum for the alignment of state and federal policies relating to green entrepreneurship and the green transition.

References

[3] Bocken, N. (2015), “Sustainable venture capital - Catalyst for sustainable start-up success?”, Journal of Cleaner Production, Vol. 108, https://doi.org/10.1016/j.jclepro.2015.05.079.

[4] Miller, M. (2018), “Climate Finance and Financial Markets in Australia: The CEFC and ARENA”, Australian Law Journal, Vol. 92/10.

[2] OECD (2025), Scaling Up Public Financial and Non‑Financial Support for SME Sustainability.

[1] OECD (2025), The Green Transition of SMEs and Entrepreneurship in Portugal.

Note

← 1.  For more information on the Bertelsmann Stiftung’s international Sustainability Governance Indicators, see: https://www.sgi-network.org/2024/Australia/Co-ordination