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Innovation in Canada: Bright Ideas, Bright Future

The Canadian government supports innovation across all business sectors, seeing it as a powerful economic driver for positive global change.

Location Canada 2012
Innovation needs more than just a good idea - it also requires a robust support system. That means a stable national economy, healthy banks, a strong financial sector, and a proactive government that nourishes a business climate geared toward success, including low corporate tax rates and generous R&D tax incentives. Combine those attributes with a highly educated work force and the result is an environment that entrepreneurs, venture capitalists, and foreign investors find safe and attractive. These are all reasons why Canada has an international reputation for groundbreaking innovation and discovery.

For 2011-2015 The Economist Intelligence Unit ranks Canada first in the G-7 and fifth in the world as a country in which to conduct business. Canada was also the world's eighth-largest recipient of foreign direct investment (FDI) inflows from 2001 to 2010, averaging about US$36 billion annually - a direct result of international confidence in the Canadian economy. That's not all - KPMG's Competitive Alternatives 2010 report indicates the cost of R&D in Canada is the lowest in the G-7 and as much as 12.9 percent lower than in the United States. Nine of Canada's top 25 corporate R&D spenders in 2009 were foreign investors, including IBM, Pratt & Whitney, Ericsson, GlaxoSmith-Kline, and Merck.


Innovation and research in Canada is anchored by the National Research Council (NRC) - the federal government's leading research agency. NRC partners with industry, government agencies, and universities across all fields of research. Canada's "Made-in-Canada" innovation model, where basic research is integrated with business applications, has driven down research costs and accelerated time to market for investors. As a result, research and development spending in Canada has steadily increased, totaling about $29 billion in 2010.

The National Research Council oversees 19 research institutes, two innovation centers, and four technology centers. The federal Networks of Centers of Excellence (NCE) program creates and funds multi-disciplinary partnerships among these groups and other universities, government and non-government organizations, and private-sector companies. The centers of excellence are often the core of high-tech clusters where innovation is flourishing. The federal government continues to commit new resources and programs to support leading-edge research and international collaborations in key innovation-intensive sectors, especially clean energy, information and communication technology (ICT), and life sciences.

Clean Energy

The Canadian government recently renewed funding of almost $100 million over two years for research, development, and commercialization of clean energy technologies. It has also committed about $40 million over two years to Sustainable Development Technology Canada to support the development and demonstration of new clean technology projects.

Canada's clean energy industry consists of more than 400 technology companies spanning nine sectors, including bioenergy, alternative energy, energy efficiency, recycling, transportation, and water treatment and management. Key clusters are located in Toronto, Montreal, Calgary, and Vancouver.

British Columbia has the highest ratio of clean-tech companies to GDP in Canada; Vancouver is especially well known for green transportation systems, energy-efficiency technologies, and water treatment. The city's $25 million Innovative Clean Energy Fund provides financial assistance to companies that develop commercial renewable energy technologies.

Burnaby, B.C.-based Ballard Power Systems is an international leader in the development and manufacture of fuel cells. The company just won Frost & Sullivan's "2011 New Product Innovation Award" for its proton exchange membrane (PEM) fuel cell power generation system called CLEARgen™.

"Ballard's solution surpasses the competition in terms of fuel cell durability, product cost, and load-following capability, all keys to commercially viable grid-scale solutions," says Tomasz Kaminski, a research analyst with Frost & Sullivan.

CLEARgen™ is a complete system designed to generate clean energy from hydrogen and reduce demand for grid electricity. Toyota Motor Sales plans to install this system in California to provide electrical power and heat during peak times, utilizing hydrogen produced by the steam reformation of renewable bio-gas generated at a landfill.

Calgary, Alberta, long known as a global energy leader, is responding to the world's growing need for renewable energy through its Sustainable and Renewable Energy (SURE) industry group. These proactive companies conduct important R&D in wind, solar, biofuel, and waste management technologies.

For example, Calgary-based Alter NRG Corp., recently tested an advanced industrial waste-to-ethanol conversion process for Australian company Phoenix Energy. Waste feedstock - including simulated municipal solid waste, sewage sludge, and tires - was successfully gasified by Alter NRG into clean syngas, which was then converted to ethanol.

"Conducting this test was critical to our project development plan," states Peter Dyson, owner of Phoenix Energy. "The successful results have given us the confidence to continue the development of our project to be located near Melbourne, Australia, which will convert up to 2000 tonnes per day of waste to ethanol."

Information and Communication Technology (ICT)
This rapidly growing sector is a key driver in the Canadian economy and continues to receive strong research support from the federal government. Major ICT clusters are located in Waterloo, Ontario; Montreal; Vancouver; and Toronto.

Toronto is the third-largest ICT sector in North America and Canada's largest center for ICT research and development. It is home to almost one third of the nation's 40,000 ICT firms, with nearly half of all Canada's ICT R&D investment carried out in the city. Moreover, six of the 10-fastest growing ICT companies in Canada are located in the Toronto region. Collaborations abound, such as the August 2011 agreement between the province of Ontario and Cisco Systems to invest almost $500 million in research and development facilities, creating 300 jobs in Ottawa and Toronto.

Wireless technology is one of the fastest-growing ICT sub-sectors. The Canadian government encourages wireless R&D through its many centers of research excellence, including the Communications Research Centre Canada and National Institute for Information Technology (NIIT). Major wireless clusters can be found in Ottawa, Toronto, Waterloo, Montreal, Calgary, and Vancouver.

Wavefront, an incubator for wireless and new media companies in Vancouver, recently partnered with the federal government to launch a national Centre of Excellence for Commercialization and Research for wireless technologies. The Wavefront Wireless Commercialization Centre (WWCC) will receive $11.6 million in federal funding through the Networks of Centres of Excellence program, and about $11 million from participating industrial, academic, and government partners. "WWCC will build world-class commercialization capabilities in machine-to-machine technologies," says Jason Cohenour, president and CEO of Sierra Wireless, an industry partner. "We look forward to advancing Canada's position in this fast-growing market through new sophisticated wireless devices, value-add hardware, advanced applications, and complex systems integration."

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