Cleantech's Value Proposition

B.C. is taking a leadership role in innovations to limit environmental footprint

Kirk Washington (guest writer)

Vancouver is home to a number of global anchors in the clean technology sector, among them Ballard Power Systems, Xantrex Technology and Westport Innovations.

However, the capital intensity of growing these businesses has caused many to conclude that it takes 10 years and $100 million to grow a clean technology company.

In many ways, the great experiment that has come to be called “clean tech” is whether or not the venture capital method and technology business models can be applied successfully to traditional industries, while still achieving the rates of return in timeframes for which venture capital investments are known.

NxtGEN Emission Controls in Burnaby is an example of how such an investment can work for the environment, for customers focused on their bottom line, and for investors looking for venture-scale returns – all by leveraging the know-how gathered in B.C. over the last 20 years.

NxtGEN enables clean diesel engines as mandated by the United States Environmental Protection Agency and other regulatory agencies worldwide. Its technology produces hydrogen from diesel fuel directly on board a vehicle, which is then used to reduce nitrogen oxide and particulate matter emissions – a catalytic converter for diesel engines.

More importantly, it accomplishes this in such a way as to reduce fuel consumption. This creates a compelling economic value proposition to vehicle operators, while cleaning up emission problems – a solution that pays for itself in less than one year at today’s fuel prices.

Ironically, technology first developed to make hydrogen for fuel cells to replace internal combustion engines is being used to reduce toxic emissions and increase efficiency, thereby also reducing greenhouse gas emissions.

NxtGEN developed a market-ready product in 15 months, with less than $10 million. And with an addressable market totalling more than $7 billion – markets that exist today – NxtGEN is a venturegrade investment.

So, how were so few able to accomplish so much with so little?

NxtGEN is a product of Vancouver’s clean tech cluster – former employees of Ballard Power Systems and QuestAir Technologies with more than 100 years of combined experience in hydrocarbon fuel processing – using millions of dollars of existing local infrastructure at facilities owned and operated by Westport Innovations, Hydrogenics Test Systems, Canada Research & Development and the University of British Columbia.

NxtGEN is also a poster-child for leveraging Canada’s excellent research and development support programs – some of which are specifically targeted at clean tech innovation.

NxtGEN recently announced $2.5 million in funding from Sustainable Development Technology Canada (SDTC), along with consortium members Engine Control Systems Inc. and Mullen Trucking LP adding to the more than $1 million already granted by NRC-IRAP and SR&ED programs.

NxtGEN Emission Controls, by taking full advantage of all that B.C. has to offer, is an example of what is possible when local entrepreneurs partner with local venture capital managers that can help connect all the dots.

Indeed, NxtGEN initially worked here at our offices in Yaletown to further reduce their startup costs by collaborating with industry contacts and prospective customers to confirm market demand and product requirements, prior to spending millions of dollars on research and development.

These activities led to some of NxtGEN’s first strategic partnerships. Canada, and British Columbia in particular, with its talent base and industry infrastructure, could rank among the best locations in the world for building next generation transportation technology companies.