Editorial: Rethinking innovation

Why does Canada lag in innovation? Because our policy-makers sacrifice excellence for equality.

In this issue, we focus on some of the strides in science and technology being made by Canadians. Unfortunately, it seems, such accomplishments are too few and too far between. In its latest national report card, the Conference Board of Canada gives this country a resounding D when it comes to innovation.

That's D as in “duh.”

Critics can quibble over methodology, but the overall evidence is damning. Canada is below average in terms of the share of revenue generated by innovative goods, as well as the share of gross value added by higher-technology manufacturing. Part of the gap can be explained by our economy's high dependence on natural resources, but relying on those commodities for our continued prosperity is a fool's game.

Indeed, compared with 16 other industrialized countries, Canada places 14th when it comes to innovation, ahead of only Norway, Australia and Italy. No surprise, then, that this country has a paucity of researchers and science-technology graduates. In fact, Canada has 7.2 researchers per 1,000 employees, compared with top-ranked Finland's 16.5. In other words, Finland has more than twice as many researchers per capita as we do. Worse yet, we're lagging behind despite years of attention and government policies designed to catapult us into being one of the Top 5 innovative countries in the world. The Conference Board reports that the share of GDP dedicated to investing in the knowledge economy has stagnated during the past decade, while Sweden's has increased by 1.7 percentage points—even though Canada ranks near the top in handing out tax subsidies for R&D.

This situation is likely to only get worse as China and India ramp up their knowledge industries and put the brainpower of two-and-a-half billion people to work. Yet Canada's federal science and technology strategy, unveiled in May, mentions China and India a mere two times in 110 pages, and neither of those mentions is in any of the 36 policy commitments.

One of policy-makers' main problems is that they're just too darned Canadian when it comes to figuring out a national innovation strategy. We're obsessed with making sure no industry—and no region—is left behind. That kind of thinking doesn't work. We need to focus and build on specific areas of expertise by providing the infrastructure and funding each area needs to thrive. That may, in turn, attract foreign investment and skilled workers and, ultimately, translate into commercialized ideas. Otherwise, we'd better get used to being known as a technological also-ran.

LEADERS OF THE G8 NATIONS in June pledged to work together on climate change. Prime Minister Stephen Harper hailed the consensus as much-needed progress on a critical issue, but what precisely is to be worked on remains unclear. Perhaps that isn't surprising: Canada's own plan to reduce greenhouse gases 60–70% below 2006 levels by 2050 is similarly long on ambition, short on details.

Given all the cloudy language on this file, one clear policy idea sticks out like a smokestack in a blue sky. Back in March, Harper visited Edmonton to announce Alberta's share of the 2007 federal budget's green for green: $156 million for provincial projects aimed at “real” reductions in greenhouse-gas emissions. At the top of the prime minister's list for Alberta is a commitment to “developing a large-scale carbon dioxide capture and storage system.” This amounts to a proposal for a pipeline to channel carbon dioxide from Fort McMurray to oilfields near Edmonton. There, the CO2 will be injected, flushing out oil, prolonging the fields' lives—and burying Canada's expanding emissions problem deep underground.

More oil plus buried carbon dioxide equals a win-win for the economy and the environment—on the surface. But even Alberta's Environment Minister Rob Renner says the proposal might cost $5 billion in taxpayer dough—for a pipeline that may not even be economically necessary.

As Gerry Angevine and Dara Hrytzak-Lieffers explain in a recent paper from the Fraser Institute, a relatively large supply of CO2 will likely become available from bitumen upgraders in the Edmonton–Fort Saskatchewan area. Piping in more lowers the cost for companies looking to buy CO2 for sequestration. The companies will benefit. How the public gains is less clear.

One such company is Calgary-based EnCana, whose sequestration project near Weyburn, Sask., is profiled in this issue. EnCana declined to divulge the amount of money it earns from the project, but did say that thanks to sequestration it is extracting 18,000 barrels of oil a day from Weyburn. That represents more than a million dollars a day from a project that's in its $40-million final phase—much of which is also taxpayer money.

There's no question startup costs on such projects are considerable, but at current prices the potential windfall for companies engaging in sequestration is also huge. As Angevine and Hrytzak-Lieffers conclude, “Because these players are fully capable of absorbing the cost of the pipeline themselves, public support for the project is unwarranted.”