Will cheap oil take the wind out of B.C.’s clean-tech sails?

Natural gas engine company’s stock price drop mirrors oil price plunge

Blair Qualey, CEO of the New Car Dealers Association of BC, said a decline of electric vehicle sales in B.C. has more to do with an incentive program ending than low gas prices. | Richard Lam

B.C. has no oil industry to speak of, but it does have one sector that could be hurt by sustained low oil prices: clean tech.

With companies such as Ballard Power Systems (TSX:BLD) (hydrogen fuel cells), Westport Innovations Inc. (TSX:WPT) (natural gas engine technology), Endurance Wind Power and clean-energy innovators like General Fusion, B.C. is known as a Canadian clean-tech hub.

It is also one of the jurisdictions in North America that has been trying to foster wider adoption of electric vehicles, a change that some analysts predict could be slowed by low oil and gasoline prices.

“Every time you see a dip in fossil fuel prices, the renewable sector always takes a hit,” said Dallas Kachan of the clean-tech consulting firm Kachan and Co.

While “long-term supply and demand is going to work in clean tech’s favour,” Kachan said,  “it’s definitely going to give investors pause when looking at the clean-tech space, if oil prices are going to stay low.”

Westport Innovations is one B.C. company in the clean-tech space that has been hurt by falling oil prices.

Since August, its shares have dropped 78% in value – from $18.73 per share at the beginning of August to $4.13 on January 13 – and that stock slide has moved in tandem with a 50% decline in oil prices.

Karen Hamberg, vice-president of strategy for Westport, said there’s no question falling oil prices have depressed the company’s share prices. It’s too early to say, however, if there will be an effect on sales of engines that use the company’s natural gas technology.

As Hamberg points out, the cost of clean technology and renewable energy is not the only factor in its adoption.

Governments worldwide still need to address climate change and air pollution, and the demand for technology that cuts carbon emissions continues to grow, especially in places such as China and India.

“For those geographies that have concerns about air quality, there is a very strong environmental value proposition for switching to natural gas,” Hamberg said.

Jonathan Rhone, chairman of the BC Cleantech CEO Alliance, thinks any effect of low oil prices on clean tech will be minor.

“I think, in large measure, the impact will be minimal in terms of the growth of our clean-tech industry,” he said.

One sector that could be directly affected is electric vehicles.  Since September, Tesla Motors Inc. (Nasdaq:TSLA) stock has dropped 28% in value.

Blair Qualey, CEO of the New Car Dealers Association of BC, said sales of electric vehicles in B.C. started dropping off late in 2014, but he said the drop is more a result of the end, in March 2014, of a $5,000 rebate program.

“Electric vehicle sales have softened,” Qualey said. “We all knew that was going happen.”

Qualey does not think low oil prices will hurt electric vehicle sales, because the early adopters have other motivations besides costs.