The Short Report: January 15, 2025

GOVERNMENT FUNDING

The Government of Manitoba is investing $17 million in the province’s aerospace sector through Magellan Aerospace Corporation to create highly skilled jobs, increase investment in the province and maximize trade relationships. The $17-million investment includes an $8-million grant and a $9-million loan to be repaid over 12 years. The funds will be used to complete transformational projects including establishing an advanced state-of-the-art machining centre, supporting ongoing collaboration with Red River College Polytech, and establishing a new test environment that will support new space product development. Magellan Aerospace is a global enterprise providing integrated products to the aerospace industry worldwide. Magellan’s two aerospace manufacturing facilities in Winnipeg and Stonewall have 95 years of expertise in the manufacture and assembly of complex aeroengine and aerostructure assemblies for aircraft and engine original equipment manufacturers worldwide. Magellan applies its engineering expertise to the design and development of proprietary products including satellite buses, propulsion products and the wire strike protection system that protects helicopters from accidentally hitting wires while flying. Govt. of Manitoba

Natural Resources Canada (NRCan) announced more than $11 million to support seven projects that will advance the technologies needed to further strengthen Canada’s clean fuels and alternative fuels sectors. Of this funding, $5.5 million was allocated through NRCan’s Energy Innovation Program (EIP), including:

• $2.55 million to Centre technologique des résidus industriels in Quebec. 
• $424,000 to PyroGenesis Inc. in Quebec.
• $1.5 million to CRH Canada Group Inc. in Ontario.
• $1 million to Greenfield Global Inc. in Alberta.

Funding is also allocated for clean energy studies under the Clean Fuels Fund (CFF), including:

• $3.52 million to Atura H2 L.P. in Ontario.
• $2.25 million to Wanagekong-Biiwega’iganan Clean Energy Corporation in Ontario.
• $92,500 to Beausejour Brokenhead Development Corporation in Manitoba.

Projects under the EIP were selected as part of the Clean Fuels and Industrial Fuel Switching call, which targets industrial fuel switching and the production of clean fuels for use in hard-to-abate sectors. CFF projects were selected under the Establishing Biomass Supply Chains, and Building New Domestic Production Capacity calls. The former call aims to ensure that a steady and usable supply of sustainable feedstock is available to clean fuel production facilities across the country. The latter call supports the private sector in building, retrofitting and expanding clean fuel production facilities in Canada. Projects receiving funding will help enable the shift to more affordable, lower-carbon fuels in high-emitting sectors such as biomass collection, transportation and processing. They will also accelerate Canada’s efforts to further develop high-potential alternative energy sources such as hydrogen. NRCan

Canadian Heritage announced $10 million, as well as a matching fund of $10 million, for St. Francis Xavier University in support of its Brian Mulroney Institute of Government. The institute, established in 2018, is a centre for research and analysis in public policy, education and government studies. Its core mission is to provide an innovative and stimulating forum for addressing today’s political challenges and training tomorrow’s public leaders. The institute conducts public outreach and extracurricular activities that stimulate national and international discussions and engage the student body in order to help develop Canada’s next generation of political leaders. This funding, announced in the 2024 Fall Economic Statement, will enable the institute to strengthen its capacity and sustainability. St. Francis Xavier University

The Canada Water Agency launched applications for funding for three Freshwater Ecosystem Initiatives: the Great Lakes, Lake Winnipeg, and the Wolastoq/Saint John River. Investments in these priority watersheds will enable actions to address regional challenges related to freshwater quality. Funding is open to a wide range of eligible applicants from across Canada, including Indigenous communities, local governments, non-profits, academic institutions, conservation groups and businesses to drive meaningful change for Canada’s freshwater ecosystems. Projects will enhance water quality, drive innovation, support community-based monitoring and incorporate Indigenous knowledge into critical decisions and actions, the agency said. For more information on the call for applications, including eligibility criteria and how to apply for funding, visit Funding opportunities. The submission deadline is February 13, 2025 for the Great Lakes, Lake Winnipeg, and the Wolastoq/Saint John River Freshwater Ecosystem Initiatives applications. Further calls for applications under the Freshwater Action Plan – including the Fraser River and the Mackenzie River Freshwater Ecosystem Initiatives, as well as the EcoAction Community Funding Program – will open in the winter of 2025. The Government of Canada is investing $650 million over 10 years in the Freshwater Action Plan to strengthen the protection and restoration of nationally significant bodies of fresh water. Canada Water Agency

Transport Canada announced that a federal government incentive program for Canadians to buy zero-emission vehicles is coming to an end. The Zero-Emission Vehicles (iZEV) program is scheduled to “pause” on March 31, 2025, or once all the available funding has been accessed by Canadians – which may happen sooner rather than later. The iZEV program “has been a huge success,” Ottawa said. More than 546,000 vehicles have been incented through this program since it began in 2019, helping Canada reach a new ZEV market share of 11.7 percent in 2023, a significant increase from 3.1 percent in 2019. New ZEV market share reached 14.2 percent in the first three quarters of 2024, including a new record high of 16.5 percent in the third quarter of 2024. Canadian businesses and organizations purchasing or leasing zero-emission trucks can continue to benefit from the Incentives for Medium- and Heavy-Duty Zero-Emission Vehicles (iMHZEV) program, which continues until March 31, 2026, subject to funding availability.  Transport Canada

RESEARCH, TECH NEWS & COLLABORATION

Polar Knowledge Canada opened a new office in Whitehorse, Yukon, at the Elijah Smith Building at 300 Main Street. This office is the first Northern hub of the Canadian High Arctic Research Station. The office will enable Polar Knowledge Canada to foster stronger relationships with researchers and Indigenous knowledge holders in Yukon. It will also allow Polar Knowledge Canada to recruit staff and build long-term capacity in Whitehorse and across the Yukon. Headquartered at the Canadian High Arctic Research Station in Cambridge Bay, Nunavut, Polar Knowledge Canada employs approximately 100 staff across Canada. Polar Knowledge Canada supports, funds and co-develops collaborative research initiatives across Canada’s North and prioritizes the leadership and participation of Indigenous knowledge holders and residents of Northern Canada in research and knowledge mobilization. Polar Knowledge Canada’s long-term strategy, in close collaboration with other partners, is to advance knowledge of the Canadian Arctic to improve economic opportunities, environmental stewardship and the quality of life of Northerners. Polar Knowledge Canada

Victoria, B.C.-based Centre for Ocean Applied Sustainable Technologies (COAST) – Pacific Canada’s hub for the sustainable blue economy – launched Blue Action Canada, a pilot accelerator to support eight British Columbia-based blue economy startups. Key areas of interest include offshore energy, ocean monitoring and data collection, aquaculture and coastal resilience. The accelerator will provide support to eight founding teams over a four-month program starting this month, with a particular emphasis on operations, product development, technology, customer discovery, commercialization and fundraising. Blue Action Canada will also provide a platform for companies to access a global community of investors and partners, including Blue Action’s growing network of ports and government partners spanning 10 countries, to explore pathways to pilots, testing grounds and commercial partnerships. The Blue Action Canada pilot is a Canadian expansion of the Blue Action Accelerator launched in 2023, a collaboration between London, U.K.-based venture studio Founders Factory and Bahamas-based ocean hub Blue Action. To date, Blue Action’s program has made 11 investments including in DRIFT Energy, Ocean Ledger, Brineworks, ACUA Ocean, and Armada Technologies. Their portfolio has raised a combined $31 million in follow-on funding. B.C.’s blue economy is valued at over $21 billion, encompassing over 25,000 kilometres of shoreline, 40,000 islands and more than 450,000 square kilometres of internal and offshore marine waters. COAST

Vancouver-based Ionomr Innovations is expanding operations by launching a state-of-the-art development and manufacturing facility in Charlestown, Massachusetts. The strategic Hood Park location is at the heart of Metro Boston’s research and innovation scene, according to Ionomr, which develops and manufactures polymer and membrane technologies for next-generation hydrogen applications. The new facility is 22,000 square feet in size and is expected to generate more than 40 jobs over the next three years. Ionomr’s advancements in electrochemistry, rendered as flagship Pemion and Aemion technologies, promise cost, performance and sustainability advantages for fuel cells, hydrogen production and energy storage. Techcouver

Klick Labs in Toronto develops technology to predict chronic high blood pressure using a person’s voice

Researchers at Toronto-based Klick Labs have developed a non-invasive technique that can predict chronic high blood pressure (hypertension) with a high degree of accuracy using just a person's voice.

Their study’s findings, published in the peer-reviewed journal IEEE Access, hold tremendous potential for advancing early detection of chronic high blood pressure and showcase yet another novel way to harness vocal biomarkers for better health outcomes.

The study’s 245 participants were asked to record their voices up to six times daily for two weeks by speaking into a proprietary mobile app, developed by the Klick scientists, which detected high blood pressure with accuracies up to 84 percent for females and 77 percent for males.

The app uses machine learning to analyze hundreds of vocal biomarkers that are indiscernible to the human ear, including the variability in pitch (fundamental frequency), the patterns in speech energy distribution (mel-frequency cepstral coefficients), and the sharpness of sound changes (spectral contrast).

“By leveraging various classifiers and establishing gender-based predictive models, we discovered a more accessible way to detect hypertension, which we hope will lead to earlier intervention for this widespread global health issue. Hypertension can lead to a number of complications, from heart attacks and kidney problems to dementia,” said Yan Fossat, senior vice-president of Klick Labs and principal investigator of the study.

The World Health Organization calls hypertension the ‘‘silent killer,’’ as well as a global public health concern that affects over 25 percent of the global population. Half are unaware of their condition, and more than 75 percent of those diagnosed live in low- or middle-income countries.

Conventional methods of measuring blood pressure (and, accordingly, identifying hypertension) include using an arm cuff (sphygmomanometer) or an automatic blood pressure measurement device. However, these methods may require technical expertise and specialized equipment and may not be readily accessible to people in underserved areas.

This study marks Klick Labs' first venture into using voice technology to identify conditions beyond diabetes, as the company expands its research to assess its AI algorithms’ effectiveness in detecting and managing a broader range of health conditions.

Klick Labs has been collaborating with hospitals, academic institutions and public health authorities worldwide since its research revealed that voice analysis combined with AI can accurately screen for Type 2 diabetes in Mayo Clinic Proceedings: Digital Health in October 2023).

Most recently, Scientific Reports published another Klick Labs study confirming the link between blood glucose levels and voice pitch. Klick Labs

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Canadian robotics technology has been deployed to farms around the world to help automate mushroom harvesting. A robot developed by Salmon Arm, B.C.-based 4AG Robotics – a metal arm attached to a box that slides up and down – delicately plucks mushrooms ready for harvest and places them in a cardboard box where they can be packed and shipped to grocery stores across British Columbia. The company’s suction-cup design was inspired by an octopus’s tentacles. Putnam, Ont.-based Mycionics Inc. has developed a robot that scans mushrooms in a large crate. If they meet the harvesting criteria, a claw picks them up and puts them aside for packaging. People work alongside the robots. Mushroom farms nationally have a job vacancy rate of more than 12 per cent, according to Mushrooms Canada, an organization that represents mushroom growers, processors and other industry players. The mushroom business worldwide was worth around US$50.3 billion in 2021 and was expected to grow at a rate of 9.7 per cent from 2022 to 2030, driven by technological advancements in production and a rise in consumer demand for meat alternatives. Canada is the eighth-largest producer of mushrooms worldwide – Ontario and B.C. growers produce enough mushrooms in a year to top 1.2 billion pizzas. The Globe and Mail

Calgary-based Gradient Thermal has developed the hydrogen-fueled syncFURNACE, a technology that combines space and water heating into a single efficient dual-furnace for residential and small commercial applications. Originally fueled by natural gas, Gradient’s syncFURNACE – manufactured locally in Alberta – has been converted to be fueled by 100-percent hydrogen. Gradient has been advancing research and developing hydrogen innovation since 2021, said Jennifer Doepker, the company’s vice-president. “We’re very proud to have developed North America’s first hydrogen-fueled combined heating appliance in Alberta, showcasing a viable hydrogen value chain,” she said. In addition to environmental advantages (the company promises energy savings up to 30 percent), a benefit of this new system is “endless hot water.” Unlike traditional water heaters that store and heat a limited amount of hot water, a syncFURNACE heats water as it’s needed, which means never running out of flowing hot water. Gradient has five proof-of-concept units currently installed. These pilot units will inform the performance requirements of future prototype designs, Doepker said. Calgary.tech

Toronto-based Cohere launched its AI workspace platform North that connects Cohere’s large language models and search functionality to clients’ other applications. The platform enables users to instantly customize and deploy AI agents that can help them find relevant information across global organizations in multiple languages, conduct research and analysis, and perform complex tasks spanning various lines of business and previously disconnected tools. AI agents created with North can quickly and easily connect to the workplace tools and applications that employees regularly use. Cohere is partnering with RBC to explore the use of North and co-develop North for Banking, a tailored AI solution designed to enhance workforce productivity while meeting the particular security and privacy requirements of the finance industry. Cohere

Canadian-founded D-Wave CEO Alan Baratz said Nvidia’s Jensen Huang is “dead wrong” about quantum computing after comments from the head of the chip manufacturing giant spooked Wall Street last week. Huang was asked about Nvidia’s strategy for quantum computing. He said Nvidia could make conventional chips that are needed alongside quantum computing chips, but that those computers would need 1 million times the number of quantum processing units, called qubits, than they currently have. Getting “very useful quantum computers” to market could take 15 to 30 years, Huang told analysts. Huang’s remarks sent stocks in the nascent industry slumping, with D-Wave plunging 36 percent, quantum company Rigetti Computing plummeting 45 percent and IonQ dropping 39 percent. “The reason he’s wrong is that we at D-Wave are commercial today,” Baratz told CNBC’s Deirdre Bosa on “The Exchange.” Companies including Mastercard and Japan’s NTT Docomo “are using our quantum computers today in production to benefit their business operations,” Baratz said. “Not 30 years from now, not 20 years from now, not 15 years from now. But right now today.” Baratz acknowledged that one approach to quantum computing, called gate-based, may be decades away. While Huang’s “comments may not be totally off-base for gate model quantum computers, well, they are 100- percent off base for annealing quantum computers,” Baratz said. Gate-based quantum computing uses quantum logic gates to perform operations on quantum bits (qubits). This allows for the manipulation of quantum information in quantum circuits. Annealing quantum computing, which D-Wave uses, uses quantum mechanics to find the optimal solution to an optimization problem. CNBC

Two of Canada’s largest banks may follow U.S. banks in quitting the industry’s biggest climate-finance alliance. The Net-Zero Banking Alliance (NZBA) has suffered an exodus in recent weeks, with Goldman Sachs Group Inc., Morgan Stanley, Wells Fargo & Co., Bank of America Corp., Citigroup Inc., and JPMorgan Chase & Co. all leaving. The moves coincide with intensifying Republican attacks on what U.S. conservatives call “woke” capitalism and criticisms that such voluntary alliances haven’t had a meaningful impact on reducing greenhouse gas emissions. The NZBA is part of the broader Glasgow Financial Alliance for Net Zero campaign launched by former central banker Mark Carney in 2021. Two of Canada’s biggest lenders are now showing signs of reconsidering their own membership in NZBA. “Pulling out of NZBA, hypothetically, doesn’t lead to a non-commitment to net zero or climate change,” Royal Bank of Canada chief executive Dave McKay said at an industry conference hosted by his firm in Toronto. “It just means that mechanism, that organization that fostered oversight and policies and rules around what you can and can’t do and how you report, maybe that isn’t the right mechanism to do it.” Speaking at the same event, Bank of Montreal chief executive Darryl White said the bank is still a “member of the alliance. At least we are today.” White said that regardless of the “mechanism,” BMO remains committed to the transition to a low-carbon economy. At the same time, he said the company also has “a commitment, particularly here in Canada, to our legacy energy customers completely. We won’t abandon that.” Bloomberg News

The Net Zero Asset Managers (NZAM) initiative has suspended its activities as it starts a review of the initiative. NZAM also will remove the commitment statement and list of NZAM signatories from its website, as well as the signatories’ targets and case studies. Alliance members had committed to having net-zero portfolios by 2050. NZAM said recent developments in the U.S. and different regulatory and client expectations in investors’ respective jurisdictions have led to NZAM launching a review to ensure NZAM remains fit for purpose in the new global context. Signatories will be consulted throughout the review process and informed of any updates in a timely and transparent fashion, NZAM said. As a voluntary initiative, NZAM has supported investors globally as they have sought to navigate their own individual paths in the energy transition in line with their fiduciary duties and clients’ long-term financial objectives. The coalition is one of several groups within the United Nations-backed Glasgow Financial Alliance for Net Zero, a global climate initiative launched by former Bank of Canada and Bank of England governor Mark Carney. NZAM

Last year was the hottest on record with global warming exceeding 1.5°C above the pre-industrial average (from 1850 to 1900) for the first time, with Canada ranking as one of the hottest places on Earth in 2024. The National Aeronautics and Space Administration (NASA), National Oceanic and Atmospheric Administration, World Meteorological Agency, U.K. Met Office, Japan Meteorological Agency, Copernicus Climate Change Service, and Berkeley Earth – despite the differences in their data sets and analysis methods – all have concluded that 2024 was the hottest year since record-keeping began over a century ago. According to NASA, this new record comes after 15 consecutive months (June 2023 through August 2024) of monthly temperature records – an unprecedented heat streak. In Canada, Manitoba, Nunavut, central and northern Ontario, and most of Quebec all saw temperatures of between 2°C to 3°C above average. Similar temperatures were recorded in central and eastern Europe, in remote regions of Siberia, across the east coast of Japan, and throughout the north Pacific Ocean. However, parts of northern Quebec and the Arctic Archipelago experienced temperatures of 3°C to 4°C above average – higher than anywhere else on the planet. The Weather Network

Meta moves away from fact-checking and is easing content restrictions on its social media platforms

Social media giant Meta’s decision to move away from fact-checking and ease content restrictions on its platforms like Facebook and Instagram could make it easier to interfere in Canada's next federal election and the Liberal leadership race to succeed Justin Trudeau, say experts.

While Meta says replacing third-party fact-checking with "community notes" will roll out first in the United States in the coming months, it says its easing of restrictions on incendiary topics will take effect globally.

"[It] sends users a clear and troubling message: You are on your own,” said Philip Mai, co-director of the Social Media Lab at Toronto Metropolitan University. “Without trained moderators to enforce rules or combat harmful content, Facebook and IG will become an even bigger breeding ground for false narratives, conspiracy theories and divisive rhetoric."

Aengus Bridgman, director of the Montreal-based Media Ecosystem Observatory, said Meta’s announcement raises concerns about whether there will still be adequate monitoring of its platforms and removal of coordinated foreign interference attempts by people outside Canada.

Bridgman is also concerned that it is part of a bigger trend by social media platforms – to reduce or eliminate moderation in the name of free speech. "Platforms are less and less likely to take any degree of responsibility for the content spread on their sites.”

NDP MP Charlie Angus, who served on an international committee of elected officials that studied Facebook in the wake of the Cambridge Analytica scandal, said he has seen a rise in recent months of toxic and violent posts on his Facebook feed, including receiving an AI-generated death threat.

Angus said Cambridge Analytica and Brexit show how Facebook can be used to interfere in votes. He predicts the measures will have an impact on upcoming Canadian campaigns.

"There are dark  [mercenaries], digital mercenaries, who've been using the platform, who've been using [Meta-owned] WhatsApp and other platforms to drive electoral interference," Angus said.

However, federal Minister of Democratic Institutions Ruby Sahota pointed to Facebook and other social media platforms reaching a voluntary agreement with the federal government in the lead-up to the 2019 election to work to protect elections against interference.

Sahota said she expects the platforms to abide by the terms of that agreement, the Canada Declaration on Electoral Integrity Online.

Meta's decision to end its third-party fact-checking program and replace it with notes from community members mirrors a move already adopted by its rival X, previously known as Twitter.

Meta also plans to stop downplaying political posts by users – something it touted before Canada's 2021 federal election as part of its election integrity initiative – and is lifting its restrictions on topics like immigration and gender identity.

At the same time, Meta pledged to focus its automated systems that scan for policy violations "on tackling illegal and high-severity violations, like terrorism, child sexual exploitation, drugs, fraud and scams."

Bridgman and Mai both believe Meta's announcement is a result of Donald Trump winning the U.S. election.

"This decision is a complete surrender to the pressures from Trump and the MAGA movement," said Mai. "By abandoning years of trust and safety initiatives, Meta is rolling back eight years of hard-fought progress in creating a safer and more accountable online environment."

Meta also announced the appointment of Ultimate Fighting Championship CEO and president Dana White, an ally of president-elect Trump, as one of three new company board members. CBC News

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Microsoft to invest US$80 billion in AI data centres, train 2.5 million Americans with AI skills

Microsoft said it’s on track to invest approximately US$80 billion building AI data centres – more than half of them in the U.S. – in fiscal year 2025.

“Not since the invention of electricity has the United States had the opportunity it has today to harness new technology to invigorate the nation’s economy,” Brad Smith, vice-chair and president of Microsoft, said in a blog.

“In many ways, artificial intelligence is the electricity of our age, and the next four years can build a foundation for America’s economic success for the next quarter century.”

The U.S. has a unique opportunity to pursue this vision and build on the foundational ideas set for AI policy during President Donald Trump’s first term, Smith said.

As Microsoft looks into the future, it’s clear that artificial intelligence is poised to become a world-changing general purpose technology, he said.

“AI promises to drive innovation and boost productivity in every sector of the economy. The United States is poised to stand at the forefront of this new technology wave, especially if it doubles down on its strengths and effectively partners internationally.”

AI, like all new technologies, will disrupt the economy and displace some jobs, Smith said. But as Microsoft has worked on skilling initiatives during the past few years, the company’s confidence has grown that AI will create new opportunities that will outweigh many of the challenges ahead, he said.

In 2025 alone, Microsoft is on a path to train 2.5 million American students, workers and community members with the AI skills to land new jobs, pursue new careers and build new businesses. 

The U.S., more than any other country, has mastered the process of moving new ideas quickly from universities to the private sector, Smith noted.

“This success rests on healthy investments in both R and D, recognizing that basic research is often publicly funded and typically in universities, while product development is robustly and privately funded through companies. It’s the combination of the two that makes American R&D so successful.”

If used well, AI will help lower the barriers to entry for many professions, replace rote tasks, and create a foundation for human creativity that builds on AI tools, Smith said.

“AI will create new economic opportunities, allowing entrepreneurs to start new businesses and create new jobs. Along the way, AI can boost productivity in every sector of the economy, adding to the country’s opportunity for economic growth.”

China’s government is interested in replicating its successful telecommunications strategy in the AI sector, Smith noted.

China is starting to offer developing countries subsidized access to scarce chips, and it’s promising to build local AI datacenters, he said. “The Chinese wisely recognize that if a country standardizes on China’s AI platform, it likely will continue to rely on that platform in the future.” 

The best response for the U.S. is not to complain about the competition but to ensure the country wins the race ahead, Smith said. “This will require that we move quickly and effectively to promote American AI as a superior alternative. And it will need the involvement and support of American allies and friends.”  

Smith pointed out that last year, Microsoft announced with national leaders that the company intends to invest more than US$35 billion in 14 countries within three years to build trusted and secure AI and cloud data centre infrastructure.

This is part of a global infrastructure that now reaches 40 countries, including in the Global South, where China has frequently focused so many of its Belt and Road investments.

To enhance Microsoft’s capabilities, the company is partnering with the UAE’s sovereign AI company, G42, to bring AI infrastructure to Kenya.

Microsoft also is working with Blackrock and MGX to create an international investment fund to add up to $100 billion of additional funding for AI infrastructure and the AI supply chain. 

The U.S. cannot afford to slow its own private sector with heavy-handed regulations, Smith warned. Instead, he said, the country needs a pragmatic export control policy that balances strong security protection for AI components in trusted data centres with an ability for U.S. companies to expand rapidly and provide a reliable source of supply to the many countries that are American allies and friends.

“The key to the future is to bring together the best of what we can offer across American society, from across our private sector, educational and non-profit institutions, and government,” Smith said. “Teamwork based on technology collaboration will build the foundation for a golden AI opportunity – and for the next generation of American prosperity.” Microsoft

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 U.S. rolls out final rules for tax credits for companies producing hydrogen

The U.S. Department of the Treasury and Internal Revenue Service released final rules for companies to get tax credits for hydrogen production, under the Inflation Reduction Act.

“The final rules include significant changes and flexibilities that address several key issues to help grow the industry and move projects forward, while adhering to the law’s emissions requirements for qualifying clean hydrogen,” the departments said.

The final rules clarify how producers of hydrogen, including those using electricity from various sources, natural gas with carbon capture, renewable natural gas, and coal mine methane can determine eligibility for the credit. To qualify for the full credit, projects must also meet prevailing wage and apprenticeship standards.

The final regulations also provide rules for determining eligibility of hydrogen produced using methane reforming technologies (like those used in Alberta, Canada’s largest hydrogen producer), including with carbon capture and sequestration (so-called “blue” hydrogen), as well as with the use of natural gas alternatives such as renewable natural gas or coal mine methane.

To qualify as clean hydrogen under the statute, the lifecycle greenhouse gas emissions of the hydrogen production process must be no greater than four kilograms of carbon dioxide equivalent (CO₂e) per kilogram of hydrogen produced.

Qualifying clean hydrogen falls into four credit tiers, with hydrogen produced with the lowest GHG emissions receiving the largest credit (up to US$3 per kilogram of hydrogen). Calculation of the lifecycle GHG analysis for the tax credit requires consideration of direct and significant indirect emissions. 

For hydrogen production using electricity (e.g. “green” hydrogen using renewables and “pink” hydrogen using nuclear), the final rules incorporate crucial safeguards proposed in December 2023, but with additional clarity and flexibility that will help facilitate clean hydrogen investment.

Specifically, the final rules require that taxpayers seeking to use Energy Attribute Certificates to attribute electricity use to a specific generator meet certain criteria for temporal matching, deliverability, and incrementality.

These safeguards help ensure that electricity consumption for hydrogen meets the statutory lifecycle GHG emissions standards, including that the lifecycle assessment take into account both direct and significant indirect emissions from hydrogen production, the U.S. departments said.

The U.S. tax credit offers up to US$3 per kilogram of hydrogen produced, depending on the carbon intensity of the hydrogen production process, over a 10-year period.

In Canada, the federal government offers a 15-percent to 40-percent refundable Clean Hydrogen Investment Tax Credit for clean hydrogen production, depending on the carbon intensity of the hydrogen produced (the lower the carbon intensity, the higher the tax credit).

Canada’s tax credit is available on eligible expenses incurred for projects that produce hydrogen from electrolysis, or from natural gas with emissions abated using carbon capture, utilization and storage.

Canada’s tax credit rate will be reduced by 50 percent in 2034 and fully phased out after 2034.

The Parliamentary Budget Officer in a report estimated that the investments eligible for the Clean Hydrogen Investment Tax Credit will reduce federal revenues by $5.7 billion from 2023-24 to 2027-28. U.S. Department of the Treasury

VC, PRIVATE INVESTMENT & ACQUISITIONS

Vancouver-based Aspect Biosystems raised US$115 million in a Series B financing round. The financing was led by Dimension, a multistage investment firm dedicated to the interface of technology and the life sciences, with participation from existing and new investors including Novo Nordisk, Radical Ventures, an undisclosed leading global investment firm, InBC, Pallasite Ventures, Pangaea Ventures, Rhino Ventures, and T1D Fund: A Breakthrough T1D Venture. Nan Li, founder and managing partner at Dimension, was appointed to Aspect Biosystems’ board of directors. Aspect is a biotechnology company pioneering the development of bioprinted tissue therapeutics as a new category in regenerative medicine. Aspect said the financing will enable the company to advance multiple bioprinted tissue therapeutics towards the clinic with a mission to deliver a new class of cellular medicines and functional cures for people living with serious metabolic and endocrine diseases. Additionally, the funds will fuel the expansion of Aspect’s full-stack tissue therapeutic platform, which integrates proprietary AI-powered bioprinting technology, computational design tools, therapeutic cells and advanced biomaterials. Aspect Biosystems

Toronto-based Float Financial raised $70 million in a Series B financing round. The all-equity round was led by Growth Equity at Goldman Sachs Alternatives, with participation from OMERS Ventures, FJ Labs, Teralys and existing investor Garage Capital. Clare Greenan, a vice-president with Goldman Sachs growth equity, will join Float’s board. Float provides prepaid corporate credit cards and other financial products to small and medium-sized businesses. Float plans to use the money to launch new products, hire new staff and grow its market share in Canada. BusinessWire

Vancouver-founded Gumloop, which offers an AI-powered work automation platform, raised US$17 million in Series A funding as the company relocates to Silicon Valley to find talent there. Nexus Venture Partners led the all-equity round, with participation from First Round Capital, Y Combinator and angel investors Max Mullen (Instacart), Shaan Puri, Bryant Chou (Webflow), Reynold Xin (Databricks) and several more. Gumloop said it plans to use the funding to attract top talent and build its products “with no external distractions.” McGill University classmates Max Brodeur-Urbas and Rahul Behal founded Gumloop, previously known as AgentHub, in 2023. The company uses AI to automate tasks like processing email invoices, reaching out to potential job candidates on LinkedIn, and researching competitors’ advertising strategies without requiring the user to code. Gumloop

Oxford Cancer Analytics (OXcan), based in Oxford, U.K. and Toronto, raised US$11million in Series A funding in a round led by We Venture Capital and Cross-Border Impact Ventures, whose partner Annie Theriault will join OXcan’s board. Participants included  return investors Eka Ventures and Civilization Ventures and new investors DigitalDx Ventures, Macmillan Cancer Support (Innovation Impact Investment Portfolio), Aurelium Ventures, OKG Capital, and prominent angel investors. OXcan is a medtech company developing blood tests for early cancer detection using advanced proteomics technology. OXcan said the investment positions the company to develop and globally commercialize its new generation of minimally invasive liquid biopsy blood tests for the early detection of lung cancer. OXcan has an office in the University of Toronto’s Banting Institute and has worked with the Vector Institute on its science. OXcan also appointed Dr. Heinrich Roder as senior vice-president, research and development, who’ll be responsible for further advancing OXcan’s lung cancer blood test for deployment. BusinessWire

Atlantic Canada is emerging as a tech ecosystem especially in hardware innovation, with Startup Genome ranking the region in the global top 15 of tech ecosystems that deliver bang for the buck. Atlantic Canada offers more affordable commercial real estate, talent costs are competitive, and regional governments have prioritized business-friendly policies and non-dilutive funding opportunities. Nova Scotia, for example, offers tax credits covering up to 50 percent of eligible research and development expenditures, which significantly reduces the financial burden on startups developing research-intensive hardware. Provincial programs and federal programs like the Atlantic Canada Opportunities Agency and the National Research Council-Industrial Research and Assistance Program offer a deep pool of non-dilutive funding to help cover the hefty upfront costs faced by tech companies. Atlantic Canada also offers a robust support system for tech startups seeking space, resources, mentorship or a network, including Canada’s Ocean Supercluster, Lab2Market, Propel, Startup Atlantic, and pilot opportunities through agencies such as Invest Nova Scotia. The region is home to CarbonCure Technologies, which embeds captured carbon dioxide into concrete; Halifax-based healthtech startup Mymor Molecular which piloted its muscle health diagnostic tool in Nova Scotia; and Mount Pearl, Newfoundland-based oceantech startup Kraken Robotics with its advanced robots and sensors. The Center for Aquaculture Technologies Canada in Prince Edward Island was one of the first to test Dartmouth-based DeNova’s sustainable fish feed made from greenhouse gases. Halifax-based Planetary Technologies also partnered with Dalhousie University to conduct the first trial of its technology that reduces acidification in the ocean. BetaKit

Vaughan, Ontario-based waste management company GFL announced an agreement to sell its environmental services unit for $8 billion, with asset manager Apollo Funds and investment firm BC Funds each getting 28 percent of the business. GFL will retain a 44-percent equity interest ($1.7 billion) in the environmental services unit. GFL will pay down $3.75 billion in debt and repurchase up to $2.25 billion in shares with the proceeds. The company will have the option to buy the environmental services business back within five years of the deal, expected to close by the end of the first quarter of 2025. GFL

Virgina-based BWXT, a nuclear components and services firm, has an agreement to acquire Toronto-headquartered Kinectrics Inc. for approximately US$525 million, including Kinectrics’ net pension and debt liabilities and estimated transaction expenses. Kinectrics provides lifecycle management services for the global nuclear power and transmission and distribution markets, and in the production and supply of isotopes for the radiopharmaceutical industry. Kinectrics employs over 1,300 engineers and technical experts located across its 20 sites worldwide. The acquisition complements BWXT’s commercial operations segment and will enable an expanded portfolio of products and services for current and new customers in the global nuclear power and radiopharmaceutical industries, BWXT said. David Harris, president and CEO of Kinectrics, will continue to lead the organization and will report to John MacQuarrie, president of BWXT Commercial Operations. BWXT

Minneapolis-based SPC Commerce Inc., a retail supply chain cloud services company, reached an agreement to acquire Toronto-based Carbon6 Technologies Inc. a provider of software tools to Amazon sellers, for approximately US$210 million, of which about 40 percent is SPC Commerce stock. Whether selling to Amazon as a first-party seller or through Amazon’s marketplace as a third-party seller, there are specific supply chain processes suppliers must adopt to maximize revenue on each order they fulfill through the platform. To simplify this, Carbon6 offers ChargeGuard, a solution that helps first-party sellers manage invoice deductions by automating the dispute process, and Seller Investigators, a solution that helps third-party sellers recover lost revenue occurring from fulfillment errors. SPC Commerce said the acquisition strengthens the company’s ability to optimize invoice deduction disputes by streamlining access to standardized, reliable data. SPC Commerce

Toronto-based Humi, which offers an employment platform, was acquired by Australia-based software company Employment Hero in a cash-and-equity deal estimated to be worth $155 million, according to BetaKit. The acquisition is a strategic partnership that combines Employment Hero’s global innovation and Employment Operating System with Humi’s understanding of the Canadian market, creating a localized solution for businesses, Humi said. Humi will become the Canadian hub for Employment Hero and plans to retain all its current employees. The partnership delivers an all-in-one platform for payroll, human resources and benefits, designed specifically for Canadian businesses. BusinessWire

Santa Clara, California-based Eltropy, an AI-powered unified conversations platform for financial institutions, acquired Montreal-based Lexop, a collections technology provider. Financial terms of the deal weren’t disclosed. By combining Lexop’s innovative technology with Eltropy’s AI-powered communications platform, the partnership will modernize debt repayment and collections, helping community financial institutions reduce and prevent delinquencies, and collect faster while enhancing borrower experiences, Lexop said. The combined company will continue to operate from both Eltropy's headquarters in Santa Clara and Lexop's headquarters in Montreal. Eltropy

Toronto-based password management company 1Password acquired U.K.-based software-as-a-service startup Trelica to expand the capabilities of 1Password’s Extended Asset Management platform and help businesses secure every sign-in for every app on every device. The acquisition gives 1Password access to technology that enables security teams to discover and manage access to previously unknown and unmanaged applications. Financial terms of the cash-and-stock transaction weren’t disclosed. Trelica’s entire 23-person team is joining 1Password as part of the deal. 1Password

Toronto-based Klick Health, an independent commercialization partner for life sciences,  acquired California-based Peregrine Market Access, a market access strategy and value communications specialist in life sciences. Financial terms of the deal weren’t disclosed. Klick Health provides best-in-class marketing and advertising, media strategy and purchasing, medical affairs and medical communications, value and market access services, as well as enterprise omnichannel enablement among its specialized offerings. The acquisition strengthens the company’s position and ongoing investment in the increasingly important value, access and reimbursement segments within life sciences commercialization, Klick Health said. Klick Health

Montreal-based healthtech company Carebook Technologies announced a deal to sell all the company’s common stock to its largest shareholder, UIL Limited. The deal means Carebook will delist from the TSX Venture Exchange and become private. The transaction, which is subject to court approval and customary closing conditions, is expected to close in Q1 2025, after which Carebook’s common shares will be delisted from the TSXV. Carebook sells digital health products to businesses, employers, pharmacies, and insurance providers. Carebook Technologies

Toronto-based EMERGE Commerce Ltd., an e-commerce brand portfolio in Canada and the U.S., sold its premium web domains Shop.ca and Shop.us to Ottawa-headquartered e-commerce firm Shopify Inc. for approximately $536,000. Following the transaction, the Shop domains now automatically re-direct traffic to Shopify's Shop App. EMERGE said its management is also advancing discussions to monetize other non-core/legacy assets to further bolster the company's cash position, while doubling down on its growing grocery and golf brands in 2025. EMERGE

REPORTS & POLICIES

Canadian mergers and acquisitions show slight uptick but low productivity still weighing on Canada’s economy: PWC report

Canada saw 1,068 mergers and acquisitions (M&A) in the period from July 1 to November 30, 2024, with a total value of $227 billion, according to professional services firm PWC’s annual M&A outlook report.

PWC said it expects Canadian M&A markets “to continue on this slightly upward trajectory” in the first quarter of 2025, with a steady increase in activity as the year progresses.

Uncertainty around U.S. tariffs and the continuation of free trade in North America due to the incoming Donald Trump administration may lead to delays of transactions that would otherwise have taken place in Canada, the report said.

“On the other hand, we may see increased transactions involving Canadian companies that want to set up shop in the United States as part of an effort to potentially reduce the risk of losing market share.”

According to the report, one significant feature stands out in Canada’s economic landscape: low productivity growth.

For example, in 1980, Canada’s GDP per capita was 88.6 percent that of the U.S.. By 2023, it had fallen to 75.8 percent (all measured in constant purchasing power parity US dollars).

In recent quarters, Canada’s GDP per capita has declined in constant dollars. “This has significant implications for economic growth, standard of living and global competitiveness.”

Canada’s declining productivity is a long-term issue that can be traced back to the 1980s and the start of the digital revolution with the introduction of the personal computer, the report said. Canada’s lagging productivity can be attributed to two main factors: (1) inability to embrace the digital revolution and transform itself into a true knowledge economy; and (2) inability to fully use its rich endowment of natural resources, according to the report.

The specific skills of the workforce and its flexibility, mobility and inclination to work harder are crucial elements in its productivity, the report noted.

In 1970, Canada’s labour productivity on a per-hour-of-labour basis was 84.9 percent that of the U.S. By 2022, it had declined to 71.1 percent.

All other things being equal, labour productivity will be higher if an economy is more capital intensive, the report said. In the era of the digital revolution, this means not only tangible assets but, increasingly, intellectual property and know-how.

A study by TD Bank calculated that, between 2000 and 2023, capital spending per employee in the U.S. increased by approximately 60 percent, while in Canada, it barely changed over the same period.

Canada has also seen lower investment in research and development. In 2022, Canada spent 1.71 percent of its GDP on R&D, while the U.S., with an economy roughly 12 times larger, spent 3.59 percent of its GDP on R&D.

Multi-factor productivity measures how effectively capital and labour are used together. Factors such as innovation adoption, managerial practices and competitive business environments are crucial.

Canada’s multi-factor productivity has increased over the last four decades at about half the rate of the U.S., the report said. “This is further evidence Canada has failed to develop IP and know-how that are used in Canada and enable Canadian companies to develop economic advantage that pays economic rent.”

PWC said its research suggests Canada’s incentive system for the creation and commercialization of IP isn’t encouraging scaling of companies, leading to much of Canada’s IP being commercialized in the U.S.. “Consequently, Canada has struggled to create large world-leading companies, as well as retain and attract highly skilled employees.”

Low productivity could reduce Canada’s ability to provide essential public services, which would make Canada less attractive to skilled workers. This could accelerate the “brain drain” phenomenon and make Canada less attractive for skilled immigrants, the report said.

The report recommends several actions for businesses that could address some of the key drivers of low productivity in Canadian businesses, including:

• Develop acquisition strategies that avoid the trap of assuming linear progression in your industry. Instead, consider the evolving and emerging global trends that may affect demand and supply in the markets and supply chains in which your business operates.
• Continuously conduct market scans for emerging technologies in your field, as well as for companies that use and/or develop them.
• Continuously assess labour supply to identify potential future shortages in key professions and develop a strategy (organic or inorganic) to address those.
• Scale your business, as technological advances often create a winner-takes-all scenario. Companies in many industries will need to be of sufficient size to enable them to be global leaders in their niche market.

PWC’s report noted that, as in prior years, the financial services sector in Canada continues to be very active in terms of M&A. “We’re seeing significant volume (and often sizable transactions) driven, in many cases, by appetite to transform through inorganic strategy.”

Macroeconomic challenges, such as higher-for-longer interest rates and global trade disruption, and shifting demographics and customer preferences are prompting many in the sector to look for new ways to acquire and build scale, as well as to optimize the way they engage with customers, according to the report.

Many transactions in the financial services sector involve technology-enabled businesses, the report said. Acquisitions such as these help financial services businesses improve operations and reduce costs through enabling technology, including cloud-based platforms, artificial intelligence and machine learning, PWC noted.

“We anticipate a busy year ahead as financial services organizations continue to look for ways to reinvent how they drive value.”

PWC said a study it conducted in 2020 on the impact of Canadian private equity investment (PE) in small and medium-sized enterprises found, on average, capital investment, productivity and profitability increased significantly in the three years following an initial PE investment, outperforming non-PE-backed benchmarks.

Improvements in productivity and profitability didn’t come at the expense of jobs, as employment also increased relative to non-PE-backed benchmarks, PWC said. “This suggests PE-backed businesses achieve a higher level of multi-factor productivity, a key metric in evaluating overall productivity.”

PE funds drive these results by bringing sector-specific expertise and experience, as well as significant capital resources, and often adopting a roll-up strategy: consolidating smaller complementary businesses to achieve the scale needed to support investment in automation and technology, according to the report.

This capability positions PE to make a transformative difference in Canada’s manufacturing sector, the report said. By putting its sector expertise, consolidation playbook and effective capital deployment strategy to work, PE could yield financial returns for its limited partners and productivity gains that serve the interests of the Canadian economy. 

In addition – and at the root of improved manufacturing productivity – there’s an opportunity in the sphere of industrial automation, the PWC report said. Canada’s productivity crisis and an acceleration of the onshoring trend in the U.S. (bringing higher manufacturing costs) suggest there could be heightened demand for industrial automation and automation technology in the near and longer term.

PWC said that as businesses and governments in Canada take steps to address national productivity, it anticipates deals activity will be impacted by economic transformation. Some deal activities likely aligned with upcoming changes are:

• Scaling of businesses in areas like advanced manufacturing and high-tech that have the prospect to develop and commercialize IP.
• Consolidation of companies operating in industries that are vulnerable to technological disruption.
• Deals in industries that will see demand for their products increase globally where Canada has the potential to become a world leader. These may include nuclear energy, agri-tech and critical minerals. In many of these areas, the Canadian government is providing additional support via refundable clean economy tax credits.
• Deals in health care technology companies. If Canada wants to sustain and improve its health care system in the face of an aging population, the country must find a way to develop and adopt technology that will enable it to do more with less, PWC’s report said. “This could open opportunities for deals that involve companies that develop IP in that area.” PWC

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Public-private partnerships in new models of industrial policy are unlikely to succeed: Fraser Institute

Industrial policies that rely on public-private partnerships – like policies implemented by Canada, the U.S. and other countries – are unlikely to succeed, according to a study from the Fraser Institute.

Many developed economies have implemented major government programs to promote the growth of specific industries and sectors, including electric vehicles and the critical inputs to manufacturing EVs such as batteries, semiconductors and artificial intelligence.

The key premise behind industrial policy is that the government can and should promote the expansion of specific industries and activities that have the greatest potential to increase society’s standard of living.

But when it comes to using public-private partnerships (PPPs), the study said: “Given the problems that many PPPs have experienced, it seems unlikely that the complex cooperation and coordination between the public and private sectors as called for in new models of industrial policy will lead to more successful initiatives in the future than have been achieved in the past.”

The study, Industrial Policy as Zombie Economics, was written by Steven Globerman, senior fellow and Addington Chair in Measurement at the Fraser Institute.

Critics of industrial policy argue that bureaucrats ordinarily do not have the knowledge or the incentive to reallocate productive resources so as to accelerate real economic growth, he noted.

While supporters of industrial policy acknowledge the failure of many past initiatives, they contend that the underlying problems can be addressed by modifying the industrial policy process. In particular, they argue for embedding government in the private sector in what amounts to a public-private partnership, Globerman’s study said.

PPPs have been used for decades, primarily in the construction and operation of infrastructure assets such as roads, ports and hospitals. But the track record of PPPs is, at best, mixed, according to the study.

“Specifically, many PPPs have failed to deliver their anticipated net benefits because of high transaction costs associated with assigning responsibilities, monitoring the performance of the involved parties, and enforcing terms of the underlying contractual agreement. Too often, the outcome is the termination of the PPP before its intended maturity.”

PPPs are usually structured around achieving specific explicit objectives. They also usually draw upon well-understood technological and managerial principles.

However, these conditions typically do not apply in the case of transformative industrial policies which, by their nature, involve many more “partners” than do PPPs, as well as much greater economic and technological uncertainty, the study said.

The study pointed out that a growing consensus that climate change requires an accelerated substitution of green energy sources for carbon-based fuels has motivated renewed support for industrial policy in Canada, the U.S., and Western Europe.

Prominent examples of green industrial policy include major subsidies by federal and provincial governments in Canada to companies participating in different stages of the EV supply chain, as well as the Biden Administration’s Inflation Reduction Act, which is largely focused on restructuring the U.S. economy away from fossil fuels and toward green energy.

Tariffs and related trade policy initiatives implemented by the U.S., Canadian and European governments against Chinese EVs and other products have also reemerged as prominent instruments of industrial policy.

Research has found that the number of industrial policy initiatives increased consistently over the period from 2010-2021, and that there were more than 2,500 industrial policy interventions worldwide in 2023 alone, Globerman’s study noted.

A growing number of scholars and policymakers are calling for much more ambitious and systemic government intervention into the economy than did earlier proponents of industrial policy, according to the study.

Recent programs involving massive subsidies to specific participants in the EV supply chain, as well as subsidies to producers of semiconductor chips and AI software, “underscore a seemingly renewed commitment to transformative industrial policy on the part of Western governments.”

The main ostensible objective of traditional industrial policy is technology-led economic growth, with a related objective of mitigating the economic harm that workers in sunset industries suffer, primarily by providing temporary income support and retraining.

While promoting innovation and economic growth is also a focus of newer models of industrial policy, the latter also highlights environmental, social and governance-related objectives, particularly the transition to a green economy.

Both traditional and newer arguments for industrial policy draw upon presumed imperfections in private markets that lead to too much or too little of some specific activity being carried out from the perspective of society’s overall welfare, according to the study.

Alternatively, the imperfection may be an undesirable geographic location of an activity or an undesirable unequal income distribution resulting from economic activity.

Globerman noted that a point of contention between proponents and opponents of industrial policy concerns whether government intervention targeted at promoting specific sectors, regions and producers will stimulate technological change more efficiently than policies focused on improving the environment for innovation broadly, for example across all firms, industries and locations, through measures such as general tax policy, support for public education, intellectual property protection and so forth.

Lower capital gains taxes, stronger intellectual property protection, increased supplies of skilled scientists and engineers, and private property rights effectively make innovation a more profitable market activity, either by lowering input prices and/or by increasing the net profit margin associated with innovating, the study said.

“This should encourage more innovation activity generally, and thereby increase technology spillovers, particularly in industrial sectors and geographical locations where entrepreneurs believe it is most efficient to carry out innovative activities.”

In contrast, the industrial policy approach would have government officials extend direct subsidies or tax incentives to specific firms engaged in particular activities and in specific locations.

A recent example of the latter is the hefty subsidization by the federal and provincial governments in Canada of EV battery production and mining of critical minerals in specific locations, such as southwestern Ontario and Quebec, respectively.

A more general criticism of industrial policy is that government officials have insufficient information to deliver net social benefits through selective industrial policy initiatives, the study said. That is, policymakers are insufficiently informed about where major industrial growth opportunities exist in the economy.

An enduring criticism of industrial policy is that capital markets and not government officials are best positioned and have the greatest incentives to determine how financial capital and other productive inputs should be allocated in order to promote real economic growth and higher standards of living.

Private investors, including operating businesses, have the incentive to identify and finance economic opportunities in pursuit of increased wealth and to defund investments that prove to be financially unpromising, Globerman argues in his study.

A related concern is that the reallocation of productive resources resulting from industrial policy will be unduly influenced by political lobbying such that productive resources are wasted, and governments will be captive to entrenched interests, often specific firms and industry groups, so that inefficient patterns of production created by industrial policy are perpetuated for long periods of time.

Some research shows that industrial policies promoting individual companies tend to fare badly.

For example, the Airbus consortium was created in Europe in the late 1960s and received direct government subsidies, as well as a government commitment to absorb financial losses.

Airbus became a formidable competitor to Boeing, although Airbus continued to receive subsidies for decades after it was established.

Conversely, the Commercial Aircraft Corporation of China, a state-owned company, has yet to have its commercial airliner certified by any major aviation authority outside of China, notwithstanding government investments of up to US$70 billion.

Other research identified the U.S. government’s financial support of Solyndra, a manufacturer of solar cells, as a notable failure at using financial incentives to promote an individual company. However, some researchers argue that the rise to prominence of the Korean electronics firms Samsung and LG in the 1990s can be traced to financial support provided to those companies by the Korean government in earlier decades.

Researchers have identified the North Carolina Research Triangle Park and Florida’s Biotech Center as successful examples of government policies to promote technology clusters.

“The empirical evidence regarding the economic benefits and costs of industrial policy is not definitive, although it provides strong grounds for skepticism about whether the current enthusiasm among Western governments for major industrial policy initiatives is justifiable as good public policy,” Globerman’s study said.

When it comes to utilizing PPPs in industrial policy, the claimed advantage of PPPs is that private sector managerial skills and financial acumen will create better value-for-money outcomes for taxpayers when proper cooperative arrangements between the private and public sectors exist. Such arrangements involve the type of embeddedness of government in private sector activity that is a feature of new industrial policy.

However, Globerman pointed out that PPPs can often be prone to conflict between the contracting parties, as well as high contracting costs and opportunism, where the latter phenomenon refers to one or the other party in a collaboration seeking to renegotiate more favourable terms to the original agreement.

Other problems with PPPs include complexity, uncertainty and the requirement for one or another party to invest in assets that are specific to the project in question. Asset specificity creates the potential for opportunism which, in turn, often undermines the necessary ongoing cooperation between the contracting parties.

The study noted that the challenges associated with public-private sector coordination in pursuit of industrial policy goals such as transformational innovations, eliminating the use of carbon fuels, or remedying income inequality across gender and racial lines, are orders of magnitude greater than those facing conventional PPPs.

“The need for even periodic renegotiation of terms of agreement between parties to PPPs is a major hurdle to the success of PPPs, even when the project’s objective is well defined and the underlying technology is well understood.”

The broader and less easily measured goals of recent and suggested industrial policies compared with PPPs, along with the increased number of likely participants, and the much greater technological and economic uncertainty surrounding so-called “moonshot” public policy initiatives, “make it very unlikely that many of the relevant initiatives will be successfully and efficiently carried out,” Globerman’s study concluded.

“In particular, the broader, less well-defined, and more complex the tasks that must be defined and accomplished, the more likely it is that the parties to the relevant activities will be less accountable and act more opportunistically – which is a recipe for policy failure.” Fraser Institute

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Canada’s GDP by industry increased in 2022 post-COVID, but national energy use and GHG emissions also rose: Statistics Canada

Canada’s real gross domestic product by industry increased by 4.1 percent in 2022 compared with the previous year as the Canadian economy continued to recover from the COVID-19 pandemic, according to a report by Statistics Canada (StatsCan).

National industrial energy use (+3.3 percent) and GHG emissions (+2.2 percent) both rose in 2022, continuing their increase from 2021 after sharp declines in 2020 during the pandemic, StatsCan said.

The Canadian economy, as measured by real GDP, grew 4.1 percent in 2022, continuing the trend of slower growth of GHG emissions relative to total GDP.

Canada's economy has been growing at a faster pace than industrial GHG emissions for over a decade. GDP rose on average 2.3 percent per year from 2009 to 2022, while industrial GHG emissions have remained close to 2009 levels, rising on average 0.02 percent per year from 2009 to 2022.

The oil and gas extraction industry remained Canada's top industrial energy user in 2022, accounting for just under one-quarter (23.7 percent) of Canada's total industrial energy use.

Oil and gas extraction was also the highest GHG-emitting industry from 2009 to 2022, accounting for 29.6 percent of Canada's total industrial GHG emissions in 2022.

Prior to 2014, GHG emissions from the oil and gas extraction industry were growing alongside GDP. However, this changed in 2014, and from that year to 2022, the economic contribution of the oil and gas extraction industry grew by 27.6 percent, while emissions decreased 7.3 percent.

Over the 2009 to 2022 period, the electric power generation, transmission and distribution industry significantly reduced its GHG emissions, moving away from coal toward less GHG-intensive energy sources for generating electricity.

As a result, this industry's GHG emissions fell by 44.6 percent over this period, while its GDP rose 18.4 percent nationally.

In the wake of the unprecedented disruption to global air travel during the first year of the pandemic, energy use in the air transportation industry fell by 58.9 percent year over year in 2020, in tandem with GHG emissions (-58.9 percent).

These restrictions were substantially eased in 2022, resulting in the air transportation industry's energy use almost doubling (+96.8 percent) along with GHG emissions (+97.1 percent) from 2021 to 2022. Nevertheless, energy use in the air transportation industry remained 19.5 percent lower than its peak in 2019.

Households accounted for over one-fifth (21.8 percent) of Canada's total energy used in 2022, virtually unchanged from one year earlier and less than one-sixth (15.7 percent) of Canada's total GHG emissions.

GHG emissions per capita increased by 1.3 percent to three tonnes per person in 2022, following a one-percent decrease in 2021. As in previous years, emissions per capita varied substantially by province and territory.

In 2022, household use of motor fuels and lubricants was the main source of total GHG emissions for four provinces: Prince Edward Island (26.4 percent), Newfoundland and Labrador (18.3 percent), Quebec (16.9 percent) and Ontario (15.4 percent).

Electric power generation, transmission and distribution were the main sources of GHG emissions in Nova Scotia (40.5 percent) and New Brunswick (27.2 percent).

The crop and animal production (except cannabis) industry accounted for the largest share of total GHG emissions in Manitoba (35.4 percent).

Pulp, paper and paperboard mills were the largest source of GHG emissions in British Columbia (18.3 percent).

The oil and gas extraction industry was the largest GHG-emitting industry in Alberta (52.7 percent) and Saskatchewan (30.4 percent) in 2022.

The mining sector was the largest GHG emitter in Nunavut and the Northwest Territories. Metal-ore mining accounted for over half (53.7 percent) of the GHG emissions in Nunavut, while non-metallic mineral mining and quarrying accounted for nearly one quarter (23.1 percent) of the GHG emissions in the Northwest Territories in 2022.

In Yukon, support activities for mining and oil and gas extraction (15.9 percent) were the highest emitters, closely followed by air transportation (15.7 percent). Statistics Canada

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Agriculture and Agri-Food Canada has no strategy to meet its GHG emissions-reduction target: Canada’s Auditor General 

Agriculture and Agri-Food Canada (AAFC) spent 27 percent of its science budget on reducing agricultural greenhouse gas (GHG) emissions during the last fiscal year without having any strategy to meet its expected contributions to reducing national emissions, according to an audit by the Office of Canada’s Auditor General.

Despite spending $223 million more on science and innovation in the 2023-24 fiscal year compared with FY 2020-21, AAFC achieved limited results and had poor results measurement, the audit found.

Delays in reviewing applications and selecting recipients for funding led to delays in implementing projects on the ground and limited results achieved in the three programs’ first year, in 2021.

Performance targets for all three of AAFC’s programs designed to reduce GHG emissions were changed over time and were reported inconsistently across departmental and government documents, the Auditor General found.

For AAFC’s On‑Farm Climate Action Fund and Living Labs programs, many of the dates by which targets were to be established, finalized or achieved were pushed out to later years.

This was because the programs were either waiting on first‑year results (2022–23) to establish or finalize targets, which had been delayed, or the programs were extended and received additional funding.

“In our view, these changing targets make it difficult to assess progress and publicly report results in a clear and transparent manner,” the Auditor General’s office said.

Canada’s agricultural sector accounts for 69 megatonnes (Mt) of carbon dioxide equivalent (CO₂e) of Canada’s total emissions.

Between 1990 and 2021, greenhouse gas emissions from the agriculture sector grew by 39 percent, mostly driven by an increase in emissions related to crop production. 

AAFC’s programs had tracked a total of only 0.2 megatonnes of CO₂e in greenhouse gas emission reductions by January 31, 2024, the audit noted.

All three of AAFC’s programs had not yet quantified any expected greenhouse gas emission reductions from their projects that would contribute to Canada’s methane emission-reduction target. “Furthermore, without a strategy to provide the sector with a long‑term vision and direction, the department’s path to help achieve this target remained unclear.”

“Given the limited results to date, nearly all the reductions [required to meet the department’s 2030 emissions-reduction target] will need to take place in the remaining six growing seasons until 2030,” the audit said.

The audit found that AAFC did not validate the greenhouse gas emission reductions and CO₂ sequestration data it received from recipients under its three programs. The department relied on the data reported by the recipients but did not require documentation to verify results.

Also, AAFC provided only limited guidance to recipients on how to report results, which led, for example, to inconsistent reporting that made it difficult to roll up overall program results.

None of the three programs made provision for post‑project monitoring to verify project results or assumptions on the permanency of emission reductions. “As a result, the department will not know the extent to which beneficial management practices or greenhouse gas reductions from adopted technology will be sustained over time or what their contributions will be to the 2030 and 2050 targets.”

The Auditor General concluded that AAFC had not effectively delivered its climate change mitigation programs and activities to ensure that results were being achieved with respect to commitments to reduce greenhouse gas emissions and sequester carbon.

The Auditor General also concluded that AAFC “had not designed or implemented an approach for how the agriculture sector will contribute to Canada’s 2030 and 2050 greenhouse gas mitigation and sequestration goals, commitments and targets, as was first called for in 2020.”

The audit made several recommendations to AAFC, including:

• establish measurable outcomes based on best available science, with concrete deliverables, accountabilities, timelines, performance metrics and a plan to monitor progress.

• identify and implement concrete actions to expedite the reduction of greenhouse gas emissions from its climate change mitigation programs and activities.

• undertake analysis to ensure policy coherence among its programs and with programs of the department’s federal-provincial-territorial partners.
• expedite the development of a data strategy to address data and measurement challenges at the farm, regional and national levels.

• finalize measurable, time‑bound targets for the programs and publish annual results reports on the progress achieved against the programs’ expected results, in particular, on reductions of greenhouse gas emissions.

• assess the funding and resources needed to successfully implement the strategy and the department’s climate change mitigation programs and activities to lead to permanent emission reductions from now to 2050.

• verify the extent to which the adopted beneficial management practices and clean technology would result in permanent reductions of greenhouse gas emissions. Office of the Auditor General of Canada

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Hydrogen should play only a limited role in Canada’s energy economy, say McGill University researchers

Hydrogen’s role in Canada’s energy economy should be narrow and restricted to a few uses, mostly in hard-to-decarbonize industrial sectors, according to two McGill University researchers.

For many other applications – especially home heating and personal vehicles – there are options that are cheaper, safer and more efficient, Sarah Jordaan and Jeffrey Bergthorson write in an op-ed in Canada’s National Observer.

Electrification is almost always a much better solution – using electricity directly without unnecessary losses through hydrogen storage, they argue.

Jordaan is an associate professor of industrial ecology & life cycle assessment in the Department of Civil Engineering. Bergthorson is a professor in the Department of Mechanical Engineering and leads McGill’s Alternative Fuels Laboratory.

There is also controversy over the form of hydrogen to use, they note.

Hydrogen can be produced from fossil fuels, mostly natural gas. “Green” hydrogen, while currently more expensive, is preferred from a climate perspective because it has no carbon emissions when produced; it uses renewable electricity to split water into hydrogen and oxygen. Hydrogen can then be used for energy or to replace fossil-based hydrogen to make fertilizer, steel and concrete – emitting water and no carbon dioxide.   

“Green” hydrogen, despite its climate advantage, faces huge barriers in reaching its full promise, including high costs, low efficiency and a lack of enabling infrastructure. Currently, green hydrogen is not expected to be cost competitive with fossil fuel alternatives by 2030, Jordaan and Bergthorson said.

An additional challenge is that hydrogen, being a small molecule, can easily escape from infrastructure systems, slashing efficiency and sparking environmental concerns given that hydrogen has secondary global-warming impacts, they said.

“Even if green hydrogen can overcome these hurdles, it is tricky to transport and there is very little distribution infrastructure.”

The safety of using hydrogen in our energy systems is an ongoing societal concern, and resolving this concern is key to social buy-in, Jordaan and Bergthorson said.

This is compounded by the lack of data to support claims about new hydrogen facilities, and an uncertain policy and regulatory environment, they said. “Transparent data is essential to developing robust policy and getting the concerned public behind new projects.”

Despite these barriers, Canada is already making a name for itself in green hydrogen with projects across the country. In B.C., for example, Ballard Power Systems has invested more than $1.5 billion in cutting-edge fuel cell technology in the past 40 years. 

HTEC is piloting heavy-duty hydrogen fuel cell trucks and developing hydrogen production facilities. 

In the East, TES Canada of Montreal plans to produce 70,000 tonnes a year of hydrogen from renewable power in Quebec.  

In Newfoundland, World Energy GH2 plans to produce hydrogen from 300 newly-built wind turbines in addition to a hydrogen-ammonia plant. But projects are already facing harsh criticism due to potential pitfalls.

Canada is among 38 countries that mention hydrogen in their submitted Paris Agreement pledge. Globally, a steady growth in final investment decisions is expected to result in five times the green hydrogen production in 2030 compared to 2024. 

Nevertheless, a hydrogen project may be either essential or just a dangerous distraction from demonstrated climate solutions, Jordaan and Bergthorson said.

“Canada needs a well-thought-out plan to ensure that only hydrogen projects that work for our environment, our economy and our people are developed.”

That means a shift from all-of-the-above thinking of the current Canadian hydrogen strategy, to an approach that focuses on applications with no alternatives, or where the alternative is more costly economically or environmentally, they argued.

This strategy can be enabled with a clear regulatory framework. And to overcome high costs, policies must drive deployment and lower costs. Such policies, including tax incentives, are already being implemented federally and provincially. 

“Clearly, there is a long road ahead to demonstrate the role hydrogen can play in our climate action,” Jordaan and Bergthorson said.

“This road requires not only education, but also a better understanding of the consequences of hydrogen to our climate, including both the benefits of this carbon-free energy carrier and its pitfalls.” Canada’s National Observer

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GDP contribution by environmental and cleantech products declined in 2023 after two years of gains: Statistics Canada

Canada’s real gross domestic product generated by the environmental and clean technology products sector declined by one percent in 2023, following gains of 2.6 percent in 2022 and two percent in 2021, according to a report by Statistics Canada.

The decline in national GDP of this sector in 2023 was driven by decreases in Manitoba (-6.6 percent), Quebec (-3.9 percent) and British Columbia (-2.6 percent).

Although the GDP growth rate for the overall economy slowed in 2023 compared with the previous two years, it still maintained positive growth (+1.6 percent).

While goods-producing industries faced challenges in 2023, their impact on the overall economy was offset by higher output in the services-producing industries in 2023 in most provinces and territories.

Similarly, in the environmental and clean technology products sector, GDP generated by goods declined 5.1 percent, but the increase generated by services (+2.5 percent) was not enough to offset the overall decline in this sector.

In 2023, clean technology products (50.3 percent) and environmental products (49.7 percent) equally contributed to the sector's gross value added.

The decline in the GDP generated by electricity from renewable sources (-6.8 percent), which includes hydroelectricity, contributed to the decline in the GDP of the sector in 2023.

Quebec, Manitoba and B.C. are significant contributors to Canada's hydroelectricity production, but a hot summer and low precipitation in 2023 resulted in all three provinces reporting lower hydroelectricity generation for the year.

The two-percent increase in national GDP for the environmental and clean technology products sector in 2021 coincided with both a 2.7-percent increase in direct energy use and a 2.9-percent increase in greenhouse gas directly emitted during production. These trends aligned with the six-percent increase in Canada's overall GDP that year.

In 2021, decreased energy demand in the construction services (-4.4 percent), scientific and research and development services (-2 percent), and support services (-0.8 percent) subsectors were not enough to offset significant increases in demand by the waste management and remediation services (+15.6 percent), waste and scrap goods (+8.8 percent) and biofuels and primary goods (+8.5 percent) subsectors. These factors contributed to the overall increase in GHG emissions by the sector in 2021. Statistics Canada

THE GRAPEVINE – News about people, institutions and communities

Athana Mentzelopoulos is no longer president and CEO of Alberta Health Services (AHS) after working just one year and 32 days of her four-year contract. The Government of Alberta appointed Dr. Chris Eagle to run Acute Care Alberta for now and Andre Tremblay will help support Eagle’s work and lead AHS “through its transition from a regional health authority to a hospital-based service provider.” Eagle’s appointment takes effect on February 1, 2025, to coincide with the establishment of Acute Care Alberta as a legal entity. Eagle is a former president and CEO of Alberta Health Services, who was appointed to a five-year term in that role on April 1, 2011, and quit just over two and a half years later in the fall of 2013. Tremblay, the deputy minister of Alberta Health, will continue in this role and also becomes interim president and CEO of AHS while the board looks for a permanent president and CEO. Govt. of Alberta

Vancouver-based Broadsight Technology Corp. appointed Steve Lowry as CEO to help the University of British Columbia spinout as the company seeks to take advantage of artificial intelligence. Lowry brings a wealth of experience in AI-powered technology, having co-founded the Artificial Intelligence Network of B.C. and served in corporate development at companies such as Hootsuite and Clio. Broadsight’s flagship product, Tracker, is a web-based collaboration platform that leverages AI to help communications teams save time and ensure messaging is consistent and error-free across channels. Tracker also enables teams to harness data, analyze trends and automate C-suite level reporting. Techcouver

The Environmental Services Association of Alberta (ESAA) announced Erin Ciezki as its new executive director. Ciezki joined ESAA in July of 2023 as the manager of strategic relations. With 10 years’ experience working with the Alberta Water and Wastewater Operators Association, 25 years’ experience in real estate and property management and additional experience working with the Canada Customs and Revenue Agency, Ciezki offers a diverse perspective to the ESAA team. Ciezki will be responsible for overseeing all of ESAA’s day-to- day operations along with delivery of the signature high-level events that ESAA is known for such as the Remediation Technologies Symposium and the Environmental Summit. Water Canada

The Alberta Ecotrust Foundation appointed Rod Ruff as CEO effective January 1, 2025. Ruff is succeeding Pat Letizia who retired from her role as CEO on December 31, 2024, after 24 years. Ruff, who has been on Alberta Ecotrust’s leadership team for more than a decade, brings a wealth of experience and a deep understanding of the organization, its community partners and the environmental landscape in Alberta. Over the last decade, Alberta Ecotrust has distributed more than $25 million through grants, programs and investments to various community initiatives. This includes becoming a founding member of the Low Carbon Cities Canada Network, creating the Climate Innovation Fund to invest in climate solutions in Calgary and Edmonton, and the launch of various programs to reduce emissions from the built environment and improve housing affordability. Alberta EcoTrust

The Lyle S. Hallman Foundation committed $3million to establish the Hallman Foundation Scholars Award program, which will provide financial aid to postsecondary students from the Waterloo region who demonstrate financial need. Starting in the fall of 2025, the awards will be allocated to students registered at Conestoga College Institute of Technology & Advanced Learning, University of Waterloo, and Wilfrid Laurier University. These awards will provide students with financial support from registration to graduation. The Lyle S. Hallman Foundation has a long history of partnering with local educational institutions in support of student success and wellbeing. Cambridge Today

Concordia University in Montreal signed the San Francisco Declaration on Research Assessment (DORA), a global initiative that seeks to transform research recognition and evaluation. This global initiative, endorsed by over 25,000 individuals and organizations – including Canada’s Tri-agency and the Fonds de recherche du Québec – advocates for transforming how research is evaluated and recognized. Instead of relying on journal-based metrics to determine funding, appointments and promotions, DORA advocates for employing a more holistic assessment of scholarly work that considers factors such as policy influence, impact on collaboration and community engagement. By signing DORA, Concordia aligns itself with emerging national and international standards while strengthening its commitment to foster a culture of inclusive research excellence. This step also complements Concordia’s recently launched Pathways to Impact initiative, which aims to support researchers in amplifying the impact of their work. Concordia University

Saskatchewan Polytechnic has become a founding member of Artificial Intelligence Saskatchewan (AiSK), a non-profit dedicated to advancing Saskatchewan’s AI sector. This initiative is supported by a three-year funding agreement aimed at advancing AiSK’s mission to become the central hub for AI innovation in the province. As a member of AiSK, Sask Polytech’s Digital Integration Centre of Excellence (DICE) – a Natural Sciences and Engineering Research Council-funded Technology Access Centre – will support regional companies in using AI to improve their efficiency, competitiveness and sustainability. The funding from Sask Polytech for $35,000 per year will enable AiSK to host events, convene industry roundtables and deliver programs and services that help to advance the adoption of AI in the province. Sask Polytech

Brock University in St. Catharines, Ontario is introducing a 12-month course-based degree option for its Master of Sustainability program, starting in the fall of 2025. The new option, which complements an existing major research project stream with co-op and thesis streams in the same program, grew out of extensive consultation with students, alumni and professionals working in the sustainability field about how best to build capacity in the growing sector. The new pathway will provide sustainability students with flexible study options while meeting student and professional demand. The newly broadened course bank also benefits research-focused students, who will now have more choice in the topics they explore through elective course work as well as an increased range of experiential learning opportunities. Applications for all streams of the Sustainability Science and Society program for 2025 are now open. Brock University

The University of British Columbia Okanagan (UBCO) is introducing a Master of Biotechnology program that will prepare students to work in the biotechnology industry. The 16-month course-based program, created in consultation with industry partners, will start in September 2025. The program combines coursework, laboratory training and internships; 70 percent of the program credits come from hands-on training. Students will receive training in a variety of areas, including: microbial, plant and animal cell culture; genomics and bioinformatics; and molecular cloning. The creation of the new MBtec was made possible by an investment from the provincial government that added 200 new student seats on UBC’s Okanagan campus in biotechnology, data science and engineering. UBCO

Researchers at the University of Waterloo’s Institute for Quantum Computing (IQC) have found that quantum algorithms could speed up generative artificial intelligence creation and usage. Their study, Gibbs Sampling of Continuous Potentials on a Quantum Computer by Pooya Ronagh, IQC member and professor in the Department of Physics and Astronomy, and Arsalan Motamedi, IQC alum and researcher at Canadian quantum computing company Xanadu, explores how quantum algorithms can relieve bottlenecks in generative AI. The study, published in Proceedings of Machine Learning Research,  was instrumental in securing $412,500 from the National Research Council’s Applied Quantum Computing grant, which will fund further research in this area. Ronagh says the researchers found quantum algorithms can speed up mimicking real-world patterns and phenomena, but not for the typical generative AI problems in computer vision and speech. “We saw more significant speed-ups for the types of problems that have periodic patterns, for example in analyzing molecular dynamics.” The function of large molecules like proteins depends on how they fold into specific 3D structures, which makes the search and generation of these structures a vital problem in pharmacology. Current state-of-the-art techniques use generative AI to enhance this process. With quantum algorithms, Ronagh said, “we can aspire to simulate molecules better, leading to development of superior materials and life-saving drugs. This holds the potential of being a very economically valuable application of quantum computers to our daily lives.” This research was supported in part by the Natural Sciences and Engineering Research Council of Canada’s Discovery grant. University of Waterloo

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