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

Release date: 2023-10-11

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

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

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

Government funding for energy R&D

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

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

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

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

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

Date modified:

2023-11-24