Clean 15 Series: The Water Opportunity
Last year, I went to see Michael Lee Chin speak at an event held at the prestigious Royal York Hotel, downtown Toronto. There were many pearls of wisdom, but there was one thing that really struck me during his delivery—he was always looking for an opportunity. Even in bad situations, Lee Chin believed opportunities lay in waiting. He told us about the saying, “In every crisis there is a danger and opportunity”.
The key is to respond to the opportunity before anyone else does.
In 2010, there is mounting evidence that a global water crisis is brewing and Ontario is moving to focus on the water opportunity it presents. Perhaps it might make some sense for us to briefly have a look at the crisis, the dangers and the opportunity. Then we can see what some Canadian cleantech companies are working on to meet the challenge and seize the water opportunity.
The crisis (oil, food, and water)
Our civilization is underpinned by oil, food, and water. These three resources are the essential building blocks of the modern world. Without water, we cannot harness modern energy or grow the food we need to survive. And let’s not forget we simply need water for our bodies to function. Ninety-seven per cent of all the water in the world is salty and another two per cent is locked in ice, leaving us with approximately one per cent for our use.
As the world population gets bigger and our societies become more complex, our demand for water increases. It is estimated that 36 states in the U.S. will face water shortages in the next five years. This is important because the U.S. is not only one of the largest consumers of water, they are also the largest producer of food in the world.
The problem is much worse in the emerging world with approximately 2 billion now living with unsafe water. Unfortunately the crisis is not on some far-off date for our grandchildren’s children to worry about; the crisis is unfolding as we speak. According to Prince Willem Alexander, the Chairman of the UN’s Secretary General’s Advisory Board on Water and Sanitization, in just 20 years the demand for water will go up by a whopping 40 per cent over current supply and as high as 50 per cent in the fastest emerging economies. This is very alarming since we are currently withdrawing our water from sources faster than they can replenish themselves.
It may come as a shock to many that 70 per cent of the world’s fresh water is locked in ice. Most of the water that we use is in aquifiers and we are draining them faster than they can replenish themselves. As more people are added to the planet and more people are in search of a lofty North American middle-class lifestyle or simply the necessity of food, the demand for fresh water may soon outstrip the supply.
The U.S. is the breadbasket of the world; however, according to the United Nations, 40 per cent of the country is considered vulnerable to desertification and approximately 74 per cent of the dry lands in the U.S. used for agriculture are already degraded. To put that into perspective, half of all the fruits and vegetables grown in the U.S. are grown in an area called Imperial Valley in southern California. This area only gets approximately three inches of rain a year. The water needed to grow 50 per cent of the vegetables and fruits in the U.S. is had via irrigation methods and piped-in water from far off places.
A report by the Water Resource Group that included the cooperation of some of the largest companies in the world states that “Business-as-usual trends are insufficient to close the water gap, the result in many cases could be that fossil reserves are depleted, water reserved for environmental needs is drained, or—more simply—some of the demand will go unmet, so that the associated economic or social benefits will simply not occur.”
The Canadian Water Summit, to be held on June 17 at the Toronto International Centre, is a response to the market need for idea exchange and collaboration among diverse stakeholders who are shaping Canada’s new water reality. To explore the opportunity, I spoke with Anthony Watanabe, the organizer of the Water Summit, and the CEO of OCETA, Kevin Jones, one of the lead arm’s-length government organizations driving the Water Opportunities Act in Ontario.
DWAYNE MATTHEWS: Tell us a little bit about the purpose of the Summit.
ANTHONY WATANABE: Water has long been recognized as an important environmental issue but is only now becoming recognized as a key driver of prosperity. As a result, in recent years, there has been growing demand for new knowledge, language, and planning foresight on water issues from the private and public sectors.
The Canadian Water Summit was created to assemble the full spectrum of water stakeholders, with an aim to foster collaborative working relationships that can help to unlock Canada’s potential to become a leader in delivering 21st-century water solutions. The Summit will convene leaders from business, government, NGOs, and academia to debate water and the future of the Canadian economy.
DWAYNE MATTHEWS: Why should cleantech companies focused on water participate?
Anthony Watanabe: Not only will cleantech companies access a first-rate forum for exploring strategies to meet water sustainability challenges, but they will also learn about the latest issues, best practices, technologies and policies driving the water agenda.
We have dedicated a full track to Innovation & Investment in cleantech companies and investors focused on water. As part of this track, the Summit will feature two workshops: one on funding H2O innovation and commercializing water technologies, and the other on the challenges, opportunities and governance models that enable widespread technology adoption.
Speaker highlights include David Henderson from XPV Capital, Scott MacDonald of Emerald Technology Ventures, Tamin Pechet of Banyan Water, John Neate of OCETA and Doug Wright of Ontario Centres of Excellence as moderator.
DWAYNE MATTHEWS: The impending global crisis in water is gaining awareness. What is the water opportunity?
KEVIN JONES: LUX Research has estimated that by 2020, the global water market will be valued at approximately US $1 trillion. This water opportunity is being driven by five major global macro trends. These include population growth, urbanization and industrial growth (which are all driving the increased demand for fresh water), and deteriorating and insufficient water infrastructure (which are seriously reducing the supply and availability of fresh water).
These global macro trends are creating significant economic, environmental and social drivers that are increasing demand for “next generation” water technologies, products and solutions. These fall into four main categories:
Demand Destruction: need for solutions to reduce water consumption, and the underlying usage of energy, chemicals and other material inputs to convey and treat water.
Reuse: need for solutions to reuse water and wastewater streams, such as advanced membrane bioreactors, oxidation and ultraviolet disinfection technologies.
Wastewater to product: need for solutions and technologies to recover metals, fertilizers and other materials, and to generate energy from wastewater streams.
Infrastructure renewal: need for solutions to optimize and extend the life of water infrastructure such as leak detection equipment, in-situ pipe rehabilitation, rapid detection of waterborne contaminants and smart water grids.
DWAYNE MATTHEWS: Why do you believe that Ontario can be the global leader in water technology?
KEVIN JONES: Ontario has a strong foundation of water excellence and assets that can provide a distinct competitive advantage in capitalizing on the global water opportunity. These include:
Leading private technology and service companies and a proven track record of creating world-class technology product companies;
Internationally recognized academic and research institutes with specialization in water;
Extensive municipal and industrial infrastructure and expertise that can support the successful commercial demonstration and early adoption of innovative water-related technologies and services;
Strong water regulations and standards, and developing integrated policies related to water management that can create opportunities for Ontario companies, municipalities and system operators to develop global leading expertise;
Access to capital to drive a successful and vibrant water industry that includes private and public equity, and highly specialized water venture capital firms, such as XPV Capital.
DWAYNE MATTHEWS: What are some of the key ingredients of success for Canadian cleantech companies focused on water?
KEVIN JONES: Canadian water companies need to focus their efforts on understanding the needs of the market and the pain of customers they are trying to reach in high-demand growth sectors. Additionally, these companies need to build best-in-class product commercialization practices around strategy and growth, product management and marketing, sales and distribution. Finally, they need to think global. Water technology is a global business and potential customers want the best products they can buy regardless of where they were designed and manufactured.
DWAYNE MATTHEWS: What is the path forward to realizing Ontario’s water opportunity?
KEVIN JONES: Ontario is already on an aggressive path. The government of Ontario is taking bold, decisive action with the introduction of the Water Opportunities Act. This Act will send a clear message that water must be managed in a manner that ensures sustainable availability of this vital and precious resource. The subsequent regulations and actions will significantly alter how users perceive, understand and value water – and will motivate efforts to conserve and improve water efficiency. One of the key next steps is creating an integrated water industry platform or hub – the hub would direct, coordinate and execute strategic initiatives to drive growth, attract investment and brand Ontario as a leading jurisdiction in water.
Responding to the opportunity: Canadian water technologies leanding the way
Here are some exciting Canadian companies that are focused on water technology:
The Company: VIVE NANO
Last Year’s Clean 15 winner, Vive Nano is working to improve our water in two ways. It is working with companies to selectively clean contaminants such as dyes and arsenic from water. This improves not just the water we drink, but also what is returned to our streams. Equally as important, the company is working to improve the solubility of active ingredients in hard water, reducing the amount of water required when spraying crop protection products. This is significant since most of our water use revolves around agriculture. “Clean water is one of the most important problems facing our society,” said Keith Thomas, CEO, Vive nano. “The environmental and economic impacts are huge—and so is the business opportunity.”
The Company: WESCORP
Wescorp’s H20maxx technology helps oil and gas producers solve their “produced water” challenges. The process uses patented aeration technology which creates microscopic bubbles several orders of magnitude smaller than conventional technology. These bubbles attach to impurities in the water and float them to the surface where they are floated over to the oil recovery tank. The process is continuous and scalable allowing the rapid processing of essentially any volume of water. This is accomplished through an environmentally benign aeration process that does not involve the addition of any chemicals. The H20maxx unit uses no chemicals, no filters and no heating. In addition, there has been third-party verification by the Alberta Research Council of cleaning the water to less than 10 ppm which is very significant. This technology could be used to clean up oil spills in the ocean.
The Company: TECH SONIC
Tech Sonic Services Ltd. is revolutionizing how major process facilities are addressing foulant or contaminant removal from their critical process equipment. The standard process for cleaning fouled process equipment has been high-pressure water jetting, utilizing water pressure from 5 – 40,000 PSI. This process uses mass amounts of water (up to 60 gallons per minute) and is highly inefficient. Tech Sonic has designed and implemented industrial scale ultrasonics (sound waves) to eradicate fouling in process equipment. This submersion technology has taken cleaning to a completely new level, returning process equipment in “like-new” condition to the production process. The greatest savings, however, is in environmental costs, as all of the cleaning is conducted in a Tech Sonic’s engineered vessel. Hundreds of thousands of gallons of water is saved as water jetting is not required and capital savings are in the millions.
The Company: ENVIROTOWER
EnviroTower is a water management solutions provider. Its beachhead product is an integrated system, which provides a proven, reliable solution for maximizing energy and water efficiencies while minimizing the environmental impacts of cooling towers. This solution enables commercial, institutional and light industrial customers to drive down their energy and water costs through a clean, comprehensive water conditioning system that delivers consistent, measurable results. The company’s solution includes a patented water-conditioning system and leading-edge remote system monitoring capabilities; this is also supported by a comprehensive service program to ensure that customers receive the maximum return on their clean cooling tower water-conditioning system investments.
The Company: D-TEX
D-TEX, Inc. has developed core technology to detect contaminants in water in real-time. This means instant detection of harmful bacteria is now possible and could lead to safer water supplies. Water requires careful monitoring to ensure it meets quality standards. Currently, standard tests to determine the presence of dangerous microorganisms takes days for results. D-TEX’s revolutionary new instrument provides results in real-time, allowing actionable decisions to be made immediately. A unique combination of high-fidelity optics and microelectronics permits D-TEX to achieve these remarkable results.
“Water will be the most talked about resource in the twenty-first century,” says Craig Milne, Principal, D-Tex, “and here at D-TEX we are positioning our platform technology to be the first in line to monitor to ensure a safe supply.”
The need for speed to market
Response time to address this global challenge must be swift. Much of the technology needed for the mitigation of this challenge has already been invented. The issue then becomes speed to market. Smaller firms have the innovation and agility, but they lack the capital and channels needed to quickly distribute the technologies fast and far enough. Larger firms have the capital and the established channels to drive technology into the market fast.
The open innovation concept can bring clean technologies to the market significantly faster than conventional models and approaches. The process benefits Canadian SMEs in the water tech space because they are able to enter markets faster and in more geographic locations, while preserving scarce capital. Partnering with larger incumbents that control the assets needed for market entry and market volume allows the smaller companies to leverage established channels, corporate capital and generate additional revenue streams through multiple licensing agreements, joint ventures and strategic partnerships. With the impending water crisis, open innovation will matter.
By Dwayne Matthews