Why Canada’s energy sector lags behind in research, development money
Underinvestment in R&D is as Canadian as maple syrup. So whose job is it to invest in new technology anyway?
It’s easy to forget sometimes, given all the rhetorical mud that gets thrown in its direction, but the oil sands began as a research project – and one of the most ambitious in Canadian history. Syncrude Canada was founded 50 years ago as a research consortium that included the provincial and federal governments, and it was tasked with finding a way to turn the bituminous sands around Fort McMurray into a commercially viable project. To say that project was a success would be something of an understatement.
But Canada’s energy sector is falling behind when it comes to the amount of money it’s investing in research and development. This is not a problem that’s unique to the energy sector, mind you, as most sectors of the Canadian economy tend to under-invest in research and development compared to their global peers. That said, as a high-cost producer in what is, for the foreseeable future at least, a low-cost world, our energy sector needs to make the necessary investments in the kinds of technology that can improve our competitiveness.
That might be a tough sell. The energy sector already has a reputation for being risk averse, and it stands to reason that the inclination will only be exacerbated in the current environment where many companies are more focused on survival than success. With low revenues now testing budgets throughout the industry, it’s entirely likely that R&D levels will remain below where they need to be. But here’s the good news: there’s a growing community of accelerators, incubators and government-funded competitions that are stepping forward and meeting the challenge of de-risking technologies for the energy sector.
According to Kevin Frankowski, the executive-in-residence at Innovate Calgary and program director for Kinetica Ventures, that’s as it should be. “The core business of the energy companies is not to develop technology; it’s to develop resources and to produce those resources and get them to market. Asking them to take on technology de-risking is, I think, unrealistic – and it’s unfair. Other entities such as Innovate Calgary and Kinetica can help to do that, along with other players in the innovation ecosystem. We have a strong innovation ecosystem in Alberta, and it’s a matter of getting the right elements of that ecosystem working together in the right way.” Will it happen? If we want to be able to weather the next downturn in commodity prices better than we’re managing the current one, it pretty much has to.