THE STANDING SENATE COMMITTEE ON ENERGY, THE ENVIRONMENT AND NATURAL RESOURCES
EVIDENCE
OTTAWA, Thursday, March 31, 2022
The Standing Senate Committee on Energy, the Environment and Natural Resources met by videoconference this day at 9:03 a.m. [ET] to study emerging issues related to the committee’s mandate.
Senator Paul J. Massicotte (Chair) in the chair.
[Translation]
The Chair: Honourable senators, I’m Senator Paul Massicotte from Quebec. I’m the chair of this committee.
Today, we’re conducting a hybrid meeting of the Standing Senate Committee on Energy, the Environment and Natural Resources.
Before we get started, I would like to remind senators and witnesses to please keep your microphones muted at all times unless the chair calls on you. When you speak, please do so slowly and clearly.
For those participating by Zoom, please use the “raise hand feature” to take the floor.
For those in the room, I would ask that you let the clerk know that you intend to speak. I’ll do my best to get to everyone who wants to ask a question. To that end, I ask that you keep your questions and preambles brief. This also applies to the witnesses.
Should any technical issue arise, particularly in relation to the interpretation, please let me or the clerk know so that we can resolve the issue quickly.
Please note that we might have to suspend the meeting if technical issues arise so that all members are able to fully participate in the meeting.
I would now like to introduce the committee members who are participating in today’s meeting. We’re joined by Senator Margaret Dawn Anderson from the Northwest Territories; Senator David Arnot from Saskatchewan; Senator Claude Carignan, P.C., from Quebec; Senator Rosa Galvez from Quebec; Senator Clément Gignac from Quebec; Senator Mary Jane McCallum from Manitoba; Senator Julie Miville-Dechêne from Quebec; Senator Dennis Glen Patterson from Nunavut; Senator Judith Seidman from Quebec; Senator Karen Sorensen from Alberta; and Senator Josée Verner, P.C., from Quebec.
I would like to welcome all of you, as well as the Canadians across country who are tuning in. Today we’re meeting pursuant to our general order of reference, to undertake a study of hydrogen.
Our first panel consists of Mark Kirby, President and Chief Executive Officer of the Canadian Hydrogen and Fuel Cell Association, and Sabina Russell, Principal and Co-Founder of Zen Clean Energy Solutions.
Welcome, everyone. Thank you for accepting our invitation.
We will begin with Mr. Kirby. Mr. Kirby, you have the floor.
[English]
Mark Kirby, President and Chief Executive Officer, Canadian Hydrogen and Fuel Cell Association: Thank you very much, honourable senators.
I’m joining you from North Vancouver, the traditional and unceded territory of the Coast Salish people — Musqueam, Squamish and Tsleil-Waututh. I thank you for the opportunity to testify today.
You have probably heard by now that hydrogen is hot. You have probably heard that it is a keystone of achieving net-zero 2050 and, in fact, that up to 30% of our final energy needs will be supplied by clean hydrogen by 2050. You’ve also heard of the massive economic opportunity it represents, with over half a trillion dollars of projects announced through 2030, many of those here in Canada.
But if you are like many Canadians, you are probably still wondering just how it works. Why is it so important, and is it really clean? Given your positions, you are probably, no doubt, wondering what, if anything, the Canadian government should do to support it.
I’m going to start with the latter part. There are many measures, policies and developments needed to ensure that Canadians fully benefit from the hydrogen opportunity, but I’d like to focus on three.
First, we need meaningful support for early adopters of fuel cell vehicles. Costs are dropping, but it will take until 2030 before commercial fuel cell products are widely available and cheaper than gasoline and diesel vehicles. Canada already provides support to zero-emission buses through Infrastructure Canada, and similar support needs to be extended to trucks and other vehicles.
Second, the Clean Fuel Standard will launch this year, and it has the potential to level the playing field of hydrogen cost versus diesel and gasoline until such a time as the hydrogen grid is built and hydrogen is actually cheaper than diesel. But that Clean Fuel Standard must be designed so as to support private-sector investment in hydrogen fuelling stations. That’s what happens in California and in British Columbia with their low-carbon fuel standards.
Third, let’s get 30 hydrogen hubs in place across the country by 2030. Hubs de-risk investment, improve the economics and attract more investment, foster innovation, develop skills and lead to meaningful GHG reductions. But they don’t just happen. Hubs must be supported with funding for foundation reports, economic analyses, professional management, stakeholder communication and key infrastructure investment.
To illustrate why those measures are important, let’s consider mobility. The government has said that 100% of light-duty vehicles will be zero emission by 2035 and 100% of trucks by 2040. Let’s say that you are a taxi fleet operator or a trucking company. You know you need to go zero emission, and you want to use electric vehicles to do it because they are safe, simple, reliable and offer excellent performance. But you are worried about the electricity needed to power them. Sure, batteries are fine for some in perhaps many situations, but you are worried about the cost to bring that electricity to your facility. You’re worried about the space and the cost for charging stations, about the loss of productivity from your drivers and vehicles while they charge those batteries and about the revenues because they cut delivery short due to range or weight restrictions — and not to mention resilience to handle emergency deliveries, new customers, cold weather, route changes and power outages. In fact, you are likely worried enough that you will resist switching to these electric vehicles unless someone addresses your concerns. And we all know how stubborn truck drivers can be. The result of all that is that Canada will not achieve its net-zero emission vehicle targets.
What you need is condensed power — some way to capture lightning, condense it and put it in a bottle and allow you carry it around until you need it. That is what hydrogen fuel cells offer: a safe, light, compact bottle providing an incredible amount of safe, clean, reliable electricity to power your electric vehicle, which could be refilled quickly, cleanly and conveniently.
If you have that combined with batteries, then your drivers and vehicles will be more productive than ever. It’s wonderful. You’re no longer worried, and we can get on with decarbonizing transportation. But as a business, you still cannot afford to pay more than you do today. That’s why we need vehicle subsidies for early adopters, the Clean Fuel Standard to make the fuels competitive and those hubs to provide scale, economics and a business case for investment in production fuelling.
I tried to limit it to three recommendations, but I will add a fourth. We need to tell Canadians about the vital role that hydrogen will play and commit to ensuring that Canadians from coast to coast have abundant access to the world’s cleanest and low-cost hydrogen. It will make achieving net zero a lot easier. Thank you very much.
The Chair: Before we go to the questions, I suggest we also hear from Ms. Russell so we can do the questions for both at the same time.
Sabina Russell, Principal and Co-Founder, Zen Clean Energy Solutions: Good morning, senators. Thank you for this opportunity to join you for this discussion about the potential for hydrogen in Canada.
I’d like to begin by acknowledging that I’m joining you from Vancouver, the unceded territories of the Musqueam, Squamish and Tsleil-Waututh Nations.
Zen is a consulting firm that specializes in hydrogen and fuel cells, and our team worked closely with NRCan in the development of the Hydrogen Strategy for Canada that was released in December 2020. The strategy is an urgent call to action.
Simply put, hydrogen deployed at scale across Canada is needed for us to meet our decarbonization objectives and climate change commitments. We cannot get to net zero without hydrogen.
Hydrogen is a versatile energy carrier and can be made through different pathways. Canada has the great fortune to be rich in feedstocks to produce hydrogen. We have among the cleanest electricity supplies in the world. This clean power coupled with Canada’s freshwater resources can be leveraged to produce hydrogen from electrolysis. Canada also has abundant fossil fuel reserves and leads in innovation and geological storage potential to enable carbon capture and storage. We will need both of these pathways — blue and green — along with new innovative ones to make enough hydrogen to meet both domestic demand and to serve the rapidly growing global market.
Hydrogen can be used as fuel in high-efficiency, zero-emission fuel cell electric vehicles as well as for stationary power generation. It can be burned to produce heat without carbon emissions, and in the near term we can blend it with natural gas to decarbonize our natural gas pipelines. Hydrogen is also used as a feedstock in industrial processes like ammonia and methanol production and in the upgrading and refining of our oil to produce gasoline and diesel. In the future, we’re going to see new industries emerge that use hydrogen as a feedstock.
The strategy lays out a bold but achievable vision for 2050. Here is what we could see in Canada if we act with the urgency and purpose needed to meet net -zero by that same time frame.
Up to 30% of Canada’s energy can be delivered in the form of hydrogen. We can be one of the top three global clean hydrogen producers. Hydrogen fuel cell electric vehicles — I drive one today — will have helped put us on our path to a full zero emission vehicle fleet across Canada. We’ll see hydrogen fuel cells, especially in those toughest applications like long-haul trucking and public transit where batteries just can’t do the job. The deployment of these hydrogen-powered vehicles will be enabled by a fuelling station network that spans our country and that offers safe and reliable fast fuelling for consumers.
Canada’s natural gas pipeline network will have been repurposed to transport hydrogen — and hydrogen and natural gas blends in some regions — and we’ll have decarbonized our heating.
Importantly, all this work will have resulted in the creation of more than 350,000 jobs in the sector, more than $50 billion a year in annual revenues in the hydrogen sector directly from domestic deployments and an established and thriving hydrogen export market. All of this can be realized while also enabling annual emissions reduction of up to 190 megatons per year.
This all sounds great, but how do we get there?
In the near term, we need to lay the foundation. The focus of the next five years will be in developing new hydrogen supply, distribution and fuelling infrastructure in concentrated geographical hubs, and we’re already starting to see them form. Regulations like the Clean Fuel Standard and the federal ZEV mandate are important policy signals to drive the needed investment in the sector today. We need to also foster development of the export market now by addressing the roadblocks that major project developers are facing. These include higher electricity rates in some of the competing regions and a lack of production incentives like the one being considered by our neighbours to the south.
Over the five years following that — the midterm — we will enter into growth and diversification where more end-use applications will be cost competitive and commercially available, and I put the challenge out there: let’s see 30 hydrogen hubs in Canada by 2030.
Finally, the long term, from 2030 to 2050, is where we will see the benefits of all this early work with rapid market expansion across all the applications.
We’ve been a leader in hydrogen and fuel cells, starting with major electrolysis breakthroughs more than one hundred years ago and fuel cell technologies in the last four decades. We have world-recognized expertise and innovation leadership here as well as strategic natural resources. There are an increasing number of projects under development in Canada, but to be honest, the progress is slower than we need. So the question is: do we have the will as a nation to back the strategy up with the bold action to meet our vision for hydrogen in 2050? It’s yet to be seen, but I would say the signals are really encouraging.
Thank you very much.
The Chair: Thank you very much. We will go to questions.
Senator Galvez: My question is to Mr. Kirby. There were three points that you didn’t talk about in your remarks. What is the best feedstock and energy source to produce hydrogen? Are our present pipelines that transport oil and gas good to transport hydrogen? Do we need to build new ones? With respect to cost, given the situation — and you know the criticism that the government is taking us to big international debt — should the government choose technologies to subsidize, like we did with oil and gas? Should we choose winners and losers? Thank you.
Mr. Kirby: Thank you very much for those great questions, and I’ll take them in order.
The first question was, as I understand, how we should make the hydrogen. Is there a better way than other ways to make hydrogen?
I will say that, in Canada, we celebrate hydrogen diversity. There are many ways to make hydrogen. There are many different sources of energy that you can use and convert into hydrogen. That’s really one of its benefits. You can make hydrogen from clean energy — clean renewable power like solar, wind and hydro. You can make it from nuclear power. You can make it from biomass. We have a number of members working on novel technologies to convert biomass into hydrogen.
You can also make it from fossil fuels — clean hydrogen — provided you manage the carbon emissions. That’s the key thing, and Canada leads in this. There are ways to take the fossil fuel resources that we are blessed with and convert those into hydrogen efficiently and manage that CO2 — make sure it doesn’t come out as a greenhouse gas. Canadian companies have leading technology. You can do it through pyrolysis, where you make elemental carbon. You can do it through capture, sequestration and storage. Again, there are leading companies in that area in Canada.
When I talk to my members — and they cover the full range — they’re universal that we need a lot of hydrogen, and we need a diversity of means to make it, taking advantage of all of our energy resources. That competition will be a good thing. That will lead to lower cost and increased availability.
Now, standards do need to be in place, and we’re working on that. Those standards are to measure the full life cycle carbon intensity of each production pathway. We need those in place, and we need to have that certified so people can be confident that if they’re buying hydrogen, it is indeed clean hydrogen. That is needed, but that is coming. At the same time, many new technologies are coming forward to produce the hydrogen.
I’m already forgetting the second question that you’d asked, senator.
Senator Galvez: Maybe the most important part is how we are paying for this.
Mr. Kirby: Obviously, we need the private sector to pay for this. We need to put in place the policies that stimulate that private-sector investment. We’re seeing that from major companies coming forward with projects, but the reality is that they will need some support over the next years. So, yes, we do need government support. We’re seeing that in Europe, the United States, Japan and many other places.
Canada is doing it. We have the Clean Fuels Fund. We have support from Infrastructure Canada for zero-emission buses. We do have the ISED SIF program around clean transformation, but that is needed. Some needs to be directed towards hydrogen and hydrogen-specific technologies during the next few years when those technologies are developing.
Over time, hydrogen will actually be cheaper than diesel. Hydrogen fuel cell vehicles will be at cost par with gasoline/diesel vehicles and certainly with battery vehicles. It is not that long term we are condemning ourselves to a higher cost for these things. They will come down and they will be very competitive. Truck drivers and others can enjoy, frankly, cheaper and better products using hydrogen fuel cells, but it will take some time for that to happen, and help is needed from the federal government in the interim if we are going to take full advantage of that.
Senator Galvez: Thank you.
The Chair: I would like to give all senators time for a main question and a supplementary, so I would ask everyone to tighten up, including our witnesses, so we can get everyone on.
Senator Seidman: Thank you to both our presenters for being with us this morning.
My question is for you, Mr. Kirby. In fact, I’d like to pursue the line of questioning of Senator Galvez.
In an opinion piece that was published by the Hill Times at the end of February, the author stated that Canada no longer has the lead when it comes to hydrogen and fuel cell technology. In fact, what was indicated in this article was that between 2004 and 2019, Canada reduced its spending on hydrogen R&D by two thirds, so now we’re spending one third of what we spent early in 2004.
Canadian fuel cell technology is being used around the world in buses, commuter rail systems and other forms of transportation, but it isn’t being used in Canada. For example, Canada does not have any fuel cell buses, according to what I read, and the agency building the commuter rail system in southern Ontario has deemed fuel cells too risky.
How do you understand this, and why is our technology being used around the world but not in Canada?
Mr. Kirby: I agree with the article. I am familiar with it. Without question, Canada’s support for hydrogen fuel cells did slip after the 2010 Olympics. The reasons for that are probably many and varied. The conditions were different at those times.
My members, though, I’m very proud to say, have taken the technology and continued their leadership globally. They have looked to more foreign markets. They are working in China, California and Europe, and they’re selling their products and services.
But, yes, when I joined the association, one of my mandates was we need to do more in Canada. We need more deployments. Deployments are necessary to maintain that technical leadership, and one of the main focuses we’ve had since then has been how we get deployments happening in Canada to benefit Canada and help grow and maintain this world-leading industry that we’ve got.
Ms. Russell: I agree with the takeaway from the article. Since 2019, we’ve seen an incredible turnaround, and there is a lot of investment in the sector.
The other thing that prevented deployment in Canada is we didn’t have the right policy signals here. Our firm does a lot of work in California where CARB has put in a zero-emission bus mandate called the ICT mandate, and there is one now in place for trucks. It’s that kind of regulation that drives the action, and that’s where a lot of our fuel cells are going — fuel cells from Ballard and bus chassis from New Flyer, two Canadian companies. Lots of our buses are in California, none of them here yet. There are activities to change that.
Senator Seidman: Both of you put out what the government can do in terms of moving forward, but if you both agree with the article in the Hill Times about the fact that we’re just not moving in that direction at all at the present moment, how would you expect us to get to your recommendations?
Mr. Kirby: To be clear, I totally agree with what Sabina said. There has been a complete and utter sea change, and it is amazing to watch the growth in interests and activity here in Canada, but there is more to be done. That’s what I led off with, some of the things we recommend.
There have been some very good measures taken. Canada now has in place some of the leading policies around the world. We’re watching to see what others are doing and copying what they’re doing. We need to continue that and increase it. There is the need for, as I say, the clean fuel standard to be the underpinning technology. That needs to come in and to be supportive of hydrogen. We do need funding in place for those early adopters. We see a lot of companies stepping forward to invest in production technologies to supply it.
We need to work on the demand side. How do we get that demand? How do we stimulate our industries and encourage our industries to take those products up? A lot of it is on my industry. We need to get out there, talk and bring forward those good products, but we need that support to move it forward.
Ms. Russell: While I agree that we are not leading in deployments in Canada and we did decrease investments in R&D over a period, we still do lead in technology and human resources. Around the world, countries look to Canada and especially B.C. as this cluster of know-how and innovation. That has kept burning slowly through the tough times but has been reignited recently, so it’s not too late for us to catch up. We just have to put our foot on the pedal and go faster, but we can get there.
[Translation]
Senator Carignan: My question is about modes of transportation. We see this in the memo from the Library of Parliament, and Senator Galvez said something about this in her first question. I understand that you represent an association and that some of your members might be in a better position to answer my question, from a technical standpoint, but the subject that interests me is the transportation of hydrogen.
Can you tell us something about the issues involved in transporting hydrogen and tell us how a pipeline can be one of the solutions?
The Chair: Would you like both witnesses to answer?
Senator Carignan: Yes.
[English]
Ms. Russell: A lot of good work has been happening in mixing hydrogen into natural gas pipelines. Some large projects in Europe are doing it, and some in Canada have started, like with Enbridge in Markham, Ontario.
The good news is we can put up to about 20% hydrogen in natural gas by volume today without encountering issues with material compatibility or performance of end-use appliances. I put a little caveat on that in that whether it’s 10% or 20% depends — it always depends as an engineer — on whether you are in transmission pipelines that are higher pressure and steel-based or in the distribution network where you tend to have polyethylene pipelines that are lower pressure. Those are more hydrogen compatible and can go to higher limits.
The good news is we can do a lot today without any big changes, and a lot of work is going on in industry to look at retrofitting existing transmission pipelines to even get up to 100% hydrogen. There comes a certain point where a blend no longer makes sense and it makes sense to just flip to this is now a hydrogen pipeline. Some of our pipelines will be fairly easy to retrofit, and some it will make sense to build new pipelines for moving hydrogen around. But yes, a lot of good work on that. The Canadian Gas Association is also leading that work. Most of our natural gas utilities are now studying their own networks in detail to figure out where their limitations are, what the opportunities are in the near term.
Mr. Kirby: Sabina has covered it fairly well. There are no fundamental barriers to 100% hydrogen pipelines. There have been pipelines in operation in Canada for many years safely and reliably moving hydrogen in pipelines, so there are no fundamental technical barriers to doing it. Existing lines need to be confirmed and checked, and some will be suitable, some won’t. It’s certainly very possible and low cost to move hydrogen in pipelines, and I will go on to say that that’s something we need to be planning for. Over the next decades, we need to move to very large hydrogen production in low-cost areas, and we need to use pipelines to move that to major urban centres and to tidewater for export and to major liquefaction facilities. We need to start planning and thinking about hydrogen pipelines and ensuring we have the social licence for them and that we have the acceptance of those from the affected communities.
[Translation]
Senator Miville-Dechêne: I don’t know who could answer my question. I think it was you, Mr. Kirby, who mentioned that Canada’s difficulty in choosing hydrogen stems from the hazard presented by what you call fuel cells in English, which was cited as a reason for buses not being able to use this technology.
I’d like to know about these hazards. Obviously, I know you represent the industry’s interests, but what are the known hazards that are a source of concern when it comes to fuel cells?
[English]
Mr. Kirby: Thank you for the question. I’ve been working with, I’ve been building equipment for, I’ve been distributing and transporting, I’ve been handling and using hydrogen for 40 years, and I have a great deal of respect for hydrogen. It is a flammable gas. It is usually carried under pressure. It can be carried as a cryogenic liquid, and there are hazards that need to be managed in the handling and use of hydrogen, much as there are in the handling and use of gasoline or natural gas or any other of the products we use. But I’m also comfortable and have safely handled hydrogen for that time.
There are standards that have been developed over the years to manage the materials that are used, the controls that are used, to ensure that the equipment is constructed safely. Canada has led in the development of many of those standards, and I have a great deal of confidence and have been overseeing workforces with young engineers with a great deal of confidence that they can work safely using that hydrogen.
Three blocks from where I sit right now there is a hydrogen fuelling station built according to codes and standards by a Canadian company. There is a pump right next door to a gasoline pump, and Sabina and I have pulled up to that gas station. You open the port door on your car and you plug on the hydrogen nozzle, fill it up, and you check your iPhone while you’re doing it, which I know you’re not supposed to do. It’s just like filling up a gasoline tank.
[Translation]
Senator Miville-Dechêne: I have a second question, one from a neophyte.
At present, we have cars with batteries and we are trying to build a network for charging the batteries. What you are proposing is to add hydrogen cells to the cars or add an entire network for refilling them with hydrogen, even if they already have batteries.
Do I understand correctly, that you would like cars to have both, batteries and hydrogen? Explain that for me, because I’m not an expert on either cars or hydrogen.
The Chair: Is that a question for both witnesses?
Senator Miville-Dechêne: To those who can answer in layperson’s terms.
[English]
Mr. Kirby: I’ll lead it by saying that we need both. We need both charging stations for battery electric vehicles and we need hydrogen fuelling stations for hydrogen vehicles. The combination works together to allow us to completely replace internal combustion engines. The good news is the combination will be lower cost than to try to do it all with one or the other.
Ms. Russell: I think the question might have been a little about whether in a vehicle there is both a battery and a fuel cell too, so maybe I’ll add on the vehicle side because I think that was part of your question.
Fuel cell vehicles, battery vehicles, they are both electric vehicles. They have a lot of the same components in them. A fuel cell vehicle has a different power train. You don’t retrofit it or anything like that. You can think of it like it replaces the battery with a tank of hydrogen in a fuel cell that looks quite a bit like a battery. Hydrogen is flowing through it along with oxygen from the air, and it has a chemical reaction similar to a battery. All fuel cell vehicles do have a battery in them to capture energy from regenerative braking, but it’s a different battery size than a pure battery electric vehicle.
[Translation]
Senator Miville-Dechêne: Thank you.
[English]
Senator Arnot: Good morning and thank you.
This is a question directed to both witnesses. Subsidies are obviously required for innovation and investment, and a certain level of subsidy to be effective. Are you aware of any federal program that is linked and complementary to provincial programs? I ask that question because the Saskatchewan Petroleum Innovation Incentive was announced in June of 2020, and it promoted the idea of hydrogen being extracted from existing oil resources. I’m wondering, specifically provincial and territorial governments, are they working in concert with the federal government to develop complementary programs? Do you know of that? Specifically, is the Saskatchewan government’s program linked in any way to the federal programs that are available?
My initial observation is that we need a more funding, a level of funding that will get success. What is that level of funding? It needs to be more directed and more coordinated. We need better policy and, therefore, better programs to work in concert to get a better result. I would like to hear both witnesses respond to that observation. What is the gap? What really needs to happen from a policy perspective to have effective programs?
Mr. Kirby: The situation across Canada varies, of course, from province to province, which is normal. Certain provinces are very supportive of hydrogen and work closely with the federal government to ensure that things such as hydrogen fuelling stations are built. I would look to B.C. where we’re going to 18 fuelling stations and Quebec where we’re going to 8 fuelling stations. That is a result of collaboration and cooperation between the provinces and the federal government.
In Alberta, the world-leading hydrogen hub is centred in and around Edmonton. We have two major conferences happening there because of that. That has come about as a result of cooperation between the Alberta and federal government to put in place the capability to produce the world’s cheapest hydrogen, and the most of it. That’s something we don’t recognize we have. We have already done that in Alberta.
So there has been some very good cooperation. More is needed. When my members look to put in fuelling stations or to deploy vehicles, we are looking for federal support. We are looking for support for the purchases of those, but we’re also looking to the provinces. To get a project moving forward, you need that provincial support as well.
I’ll go back to the beginning: There is a need for support for early adopters. There is a need to fund the development and demonstration of hydrogen hubs. There needs to be policies in place, such as the Clean Fuel Standard, that provide the business case that level that playing field. Those are the areas where alignment is needed between the federal and provincial governments if we are actually going to continue leading in the area of hydrogen fuel cells and see this help us to achieve net-zero 2050. And that’s what it comes down to. If we don’t support and get hydrogen infrastructure and hydrogen vehicles in place to complement batteries and biofuels, we’re not going to achieve net-zero 2050.
Ms. Russell: I very much agree with the comment that Senator Arnot made that we need more alignment between the provinces and the federal government.
Zen, in addition to doing strategy work, actually works with clients to develop projects. That’s what we care about the most: getting it out there and making a difference. It’s so hard to develop a project right now because you do need funding from all these different little sources, and you have to do them one at a time. You have to show the federal government. Now we have the provincial government in through this fund for the fuelling stations, but for the vehicles, we’re going to tap into this other fund. For the liquefaction, it’s this one. You need very determined and stubborn people like me and Marc, who have been in the sector for a long time, to just not give up and try to put these pieces together. If we want to move faster, we have to make it easier.
There are a few good examples. A few years ago, Sustainable Development Technology Canada, SDTC, had a joint call with B.C.’s ICE Fund. You could get up to 66% funding for clean energy projects, but it was only if you had like a really innovative early-stage technology. For deployment at scale, we will need some different types of funds that are more like that, where it’s a joint call between a province and the federal government.
It’s really exciting in B.C. that we have the LCFS, the low-carbon fuel standard, that our province brought in. It has been extremely effective in hydrogen. The CFR is coming in, which is the clean fuel regulations. Those will likely be stackable in B.C. The province is working with the government to do that. That will drive huge momentum, too.
Senator Arnot: Do you have any comments about the lack of policy at the federal level and the lack of coordination? In other words, what is your best advice to policymakers to ensure coordination and directed efforts to move this agenda?
Mr. Kirby: It’s about looking around the world at the policies that have proven to be effective in helping to support the adoption of the zero-emission technologies and vehicle mandates. That’s something we’re moving forward on. It’s an area that has been shown to help drive adoption. Also, the Clean Fuel Standard, as mentioned, has been shown to help stimulate private-sector investment into fuelling stations. Those are two critical policy needs that we have in Canada.
Ms. Russell: I really hope policymakers can start beginning with the end in mind. Often policy is about taking the next step for an incremental improvement, and we end up ignoring certain technologies that will be needed for the last, hard 30% of our decarbonization. It’s sort of a philosophical thing, but we are seeing policy coming out that deals more with incremental steps. If we embrace net zero, beginning with that in mind, we need any and all levers.
We need policy that is performance-based and not prescriptive. What I mean by that is that if our goal is decarbonization, we shouldn’t rule out a technology. There should be an opportunity for anything that can achieve the goal or performance we are trying to achieve to be aligned with that policy that is brought out.
Senator Sorensen: Thanks to the speakers. Both of you have been able to articulate your points clearly and, I’ll add for my purposes, simplistically. I appreciate that.
I have a couple of beginner questions. The first one perhaps either one of you can answer. I’ll throw this one to Mr. Kirby, just because he has used the term a couple of times: Can you further explain what a hydrogen hub is? I know we have one in Edmonton. I’m looking at what it does. Do they vary what they do in different areas?
Second, I think the goal was 30. How many do we have?
Mr. Kirby: That’s an excellent question as well.
Senator Sorensen: Thank you. I feel very junior here.
Mr. Kirby: The whole question of hubs is very near and dear to me. You’ll be talking to Dr. Layzell after me, and he will probably carry on talking about hubs. He has been a visionary in that area.
For a hub, you simply cluster demand around supply. One of the challenges with hydrogen is that it’s fairly expensive to move it. We don’t have the pipelines yet, so it’s expensive to get it from where you produce to where you need it. So what do you do? You cluster the things together to minimize that distribution cost, so you do not have just one bus deployment but you have a bus, truck and train deployment, coupled with an industrial processing need — a steel mill or chemical plant — combined with your utilities, blending it into their natural gas. Now you have scale. Scale leads to lower costs, and that leads to good economics. It’s achieving that — pulling all those things together.
Senator Sorensen: That’s very helpful.
Mr. Kirby: This is not my idea; this is what is happening around the world. It’s how it’s developing.
The Chair: Ms. Russell, did you want to add something?
Ms. Russell: That was a good explanation of a hub.
Senator Sorensen: We will apparently get more information, but thanks for that, Mr. Kirby. That was helpful. At one point, I was thinking it was just a think-tank, so I’m glad it’s something more operational.
My second question is also fairly simple, and perhaps we can get some very concise answers. I love a good strategy plan, but with a strategy plan, I like to see measurable goals, I like to see the tactics attached to that and I like to see specific dates attached to those things. I reviewed our library notes, which speak to the pillars of the plan, but it’s not very concise. I just was scanning the actual strategy, and I can see a section on timing. To both of you, just on a very subjective level, what grade would you give Canada right now? On a scale of 1 to 10, where are we in this strategy, understanding that we have goals for 2030 and 2050?
The Chair: A quick number would be a good idea. Go ahead.
Ms. Russell: I’ll go with a grade. I would give us a C-plus, maybe. I agree. I like to have smart goals with defined metrics, and having authored this strategy on behalf of NRCan, every time it was reviewed by different groups and government at different levels, it got watered down. That’s being honest. Everybody has a different interest. So we had some in there, but they didn’t make it through. Regarding the “30 hubs by 2030,” to be honest, I’m trying to start putting numbers out there because we’re seeing them form that are not in the strategy. But yes, I would give us a C-plus.
Mr. Kirby: I would agree with Sabina that a C-plus is where we are right now. There is a lot of intention to move things forward, but we do need to get those standards in place and to start getting actions in place.
Senator McCallum: I am also feeling very junior in this.
I want to switch the conversation to Indigenous people, specifically the environmental and geographic racism that exists. Indigenous lands continue to be attractive sites, whether it is land dispossession for hydro production or the extraction of metals for the batteries for electric vehicles, although this is separate. Will this racism continue to exist with the fuel cells? What are the potential areas of conflict, like pipelines, that we need to be aware of? The question I’m asking is this: Will Canada achieve net zero at the expense, once again, of the health and lives of Indigenous people?
Mr. Kirby: I will do my best to answer your question, senator.
There is an enormous economic opportunity here. We have had a number of discussions with First Nations groups, and I know that there are a number of First Nations that are moving forward to take a leadership position in utilizing their resources to produce hydrogen and to help to lead projects that will produce hydrogen or to help their communities through the deployment of hydrogen technologies.
It’s hard to say at this stage how it will move forward. I don’t think there is anything inherently in hydrogen that blocks First Nation participation. On the contrary, to take an example, take a small community that has a local energy source, whether that’s biomass, wind or solar. They want to take advantage of that to provide their heat, power and their transportation fuel, and to do that cost effectively. By combining hydrogen, batteries and other technologies, they can do that. They can be energy-independent, and instead of having to import diesel at a premium and being at a disadvantage because of their energy costs, they can actually use their local energy sources to potentially, with development and work, be at a cost advantage.
Ms. Russell: That was a good response.
I would just say, to address the question, “I really hope not.” We have done so much damage in the past, and we have to do things differently going forward.
The drive to net zero should help all of us in terms of cleaner air and water, because hydrogen has a lot of different properties than fuels like gasoline, diesel and bitumen that move through our energy systems today. If they spill, they are very harmful to those around us. No matter what we do as humans, there is usually some kind of damage that we create. If we build new pipelines, and there is no avoiding some, I think you have to look at what is in the pipelines. When I look at hydrogen, I feel so much better about that, because if it leaks, it disperses rapidly and it doesn’t contaminate the ground. It’s just a very different, cleaner type of fuel.
So I think we will see improvements, but we have to work so hard at that going forward.
Senator McCallum: Does your industry already receive subsidies? If it becomes a predominant type of industry, will the costs be going up, then?
Mr. Kirby: The government at various levels has provided supports to clean fuels generally, and to hydrogen in particular, so we are getting some benefits today. Those are necessary to get things moving forward.
But fundamentally, hydrogen is cheaper than gasoline/diesel once we get the infrastructure in place and the fuelling stations we need. It will be very cost competitive and take us off our dependence on moving expensive oil and gas around the country, as Sabrina said.
There are also going to be some increases in costs, such as in heating. We use cheap natural gas today. Over time, we are going to have to stop using that. The alternatives will be electricity and hydrogen. Having both of those available will ensure that the cost increase to heat our homes and businesses is minimized. If we invest wisely and take advantage of it, we can keep those impacts of going clean to the minimum. That’s for heating. Transportation should actually come down in cost.
The Chair: Ms. Russell, did you want to add something?
Ms. Russell: No, I think that was well said, thank you.
The Chair: I have a quick question before we go to a second round.
We’re talking a lot about how to make our product more competitive and how to make it work. It looks like we’re making good progress, in spite of the fact we’re only a C-plus. Be that as it may, is there an opportunity internationally where we as a country can benefit from our knowledge and from being more competitive? What is that? Is that local jobs? Is there a benefit more than simply supplying hydrogen to Canadians? Ms. Russell, please start.
Ms. Russell: Sure. Sorry, can you repeat the last part of your question?
The Chair: Is there something we could gain as a country with this knowledge and capacity? We’re talking about local consumption, but is there an international play with this technology?
Ms. Russell: Absolutely there is. There is a huge opportunity for us. Obviously, Canada is an energy-exporting country. We have amazing resources for both our own use and we have been supplying partners around the world. With hydrogen, that opportunity is enormous.
To be honest, a lot of the projects we’re seeing in our company that are being developed are big gigawatt-scale-type projects that are looking at using Canada’s clean water and clean electricity to produce hydrogen, make it into ammonia and export that ammonia. That resource leaves Canada, but it creates here a bulk production that can actually have a stream supplying our local market to bring costs down — economies of scale. All of the project developers looking to bring foreign direct investment into Canada recognize that we’re only going to do it if we bring jobs here. We need so to see localized manufacturing. There will be jobs to operate the plants. Frankly, I think the message going out to some of them is, “We also need you to invest in our R&D here and work with our local companies.” I think there are so many spin-off benefits to the international opportunities that are there.
We also have many companies that are producing goods and services that are used at that end destination. Ballard makes fuel cells for many vehicles in China. A lot of our materials go into products that are being used in Japan and South Korea from the West Coast. Then in Europe, there are great opportunities and partnerships developing with Germany and Canada on the hydrogen front, as well as the Netherlands and Canada. It is just starting that trade. There are great opportunities there.
Mr. Kirby: The 160 member companies of the CHFCA sell products and services around the world today. I can give you some stats from a recent survey we’re preparing. Among the small organizations, revenue has increased 329% from 2017 to 2021; and overall employment increased 60%, and among small companies, it increased by 109%. Investment is flowing into those companies to help them grow and scale their production. There are huge economic benefits happening now, and that can continue if we support the sector appropriately.
The Chair: Thank you. We’re nearly out of time. I will ask Senators Carignan and Galvez to ask their questions. Witnesses, please take a note of the questions, and I will ask you to answer them in one flow.
[Translation]
Senator Carignan: Yesterday, I was talking to the manager of a steel mill in Quebec. He wanted to use hydrogen. We are hearing witnesses these days and I was doing my work as a committee member. It was extremely interesting. He explained how we can reduce greenhouse gases generated by big industrial consumers like steel mills and cement plants by a very large amount. I’m thinking of Port-Daniel–Gascons in particular, which is one of the biggest greenhouse gas producers in Quebec. They have contributed a lot to the increase in greenhouse gases.
Can you tell me something about this? Would this not be the kind of prioritizing we could do—provide hydrogen to these big consumers, to have a faster impact on reducing greenhouse gases, rather than creating a whole distribution network for cars, for example?
[English]
Senator Galvez: Mr. Kirby says that we have had several sources to produce hydrogen, but I was wondering about the situation with the Quest project. How is it possible that some people say that instead of reducing emissions, they are increasing emissions? The company says no, that is not happening. So what is the problem? Is it the data or the transparency? Can you comment on that, please?
Ms. Russell: When it comes to large industry, and steel production is definitely a great opportunity for hydrogen, I think we should be focusing on those large-scale applications that are big emitters. In fact, we’ve looked at some steel and mining operations in Quebec and see some great opportunity there.
Here is the challenge, though. A lot of these big industries would use hydrogen for heat. In steel, you use it for direct reduction and for heat production. The comparable is that it’s cheap energy. It’s Bunker C and it’s natural gas, cheap but very harmful energy, but everyone looks at the economics. The better value for using hydrogen today is transportation, and that’s why we talk a lot about transportation. You’re displacing gasoline and diesel. You have higher efficiency engines that you’re replacing them with.
When we talk about hubs, we also talk about multiple end-use applications in the same place. The best thing to do is pair large demand at an industrial site where we’re making hydrogen for that, decarbonize things like steel, but we’re also supplying hydrogen for a local transportation market, because then you get the value of that transportation fuel.
On the Quest project, it’s frustrating for someone who has been in the industry for all this time to read some of these articles that come out, because you could say: Does the first of any new technology project meet the long-term efficiency and goals? They don’t. There is some truth about it not being as efficient as if you built the plant today, but I think there was a fair bit of misleading information about the way that was presented in terms of emissions reduction. I think Mark probably can give you some of the facts, but I don’t agree that the conclusion is carbon capture and sequestration results in more emissions. That is absolutely not true. That one early project may have had some learning challenges, but that’s not what we should judge going forward.
Mr. Kirby: In essence, on the first question, I completely agree that industrial processing is a huge opportunity, but it’s not either/or; it’s both. We need to decarbonize transportation, a massive source of emissions; we need to decarbonize industrial processing, a massive source of emissions; and we need to do both of them. By combining them in hubs, as Sabina says, we can do that more cost effectively and efficiently.
As far as the Quest project, we didn’t blame John Glenn, when he did his first orbit around the earth, for not making it to the moon. The Quest project started over 10 years ago. It was new technology, and it has sequestered over 3 or 4 million tonnes of CO2 now, I think. But, yes, it doesn’t capture all the CO2 being emitted by those processes. It captures just over half.
New technologies will capture 95% of that. They build on that Quest technology. They build on the Canadian learnings that came out of that, and they will capture 95% of it. I totally agree that if you’re putting in new hydrogen capacity, you don’t want to be doing what Quest did. You want to be doing the 95%, and that’s what people are doing. The new projects will be 95% capture, and that is very clean and puts us on the path to net zero.
The Chair: Thank you, Mr. Mark Kirby, President and Chief Executive Officer of Canadian Hydrogen and Fuel Cell Association; as well as Ms. Sabina Russell, Principal and Co-Founder, Zen Clean Energy Solutions, for your availability and sharing your knowledge. It has been much appreciated. We will probably chat with you again very soon.
[Translation]
For our second group of witnesses, as individuals, we have Normand Mousseau, Professor of physics and Scientific Director of the Institut de l’énergie Trottier at the Université de Montréal, David Layzell, Energy Systems Architect of The Transition Accelerator at the University of Calgary, and James Meadowcroft, Professor at the School of Public Policy and Administration at Carleton University.
[English]
Welcome to all and thank you for being with us this morning. We will begin with Mr. Mousseau.
[Translation]
You have the floor.
Normand Mousseau, Professor of physics and Scientific Director of the Institut de l’énergie Trottier, Université de Montréal, as an individual: Thank you for this invitation. I am very honoured to be here. I am also, apart from the titles you gave, the co-founder and research director of The Transition Accelerator, that we will have more to say about later. I am also a founding member of the Canadian Climate Institute.
The analysis that I will be presenting will be based on that work, but also on the Canadian Energy Outlook, which provides analyses of decarbonization scenarios for Canada based on the most sophisticated techno-economic modelling in Canada today.
Hydrogen’s role in the energy transition has yet to be completely defined, so there are still many unanswered questions.
First, we have to understand that the nature of hydrogen itself is complex. It can be a secondary energy source, using grey or blue hydrogen from methane reforming. This is a new energy, if you like, or energy carrier: a way of storing electrical energy, called green hydrogen, produced from electrolysis of water. These are two different things, in terms of access to energy.
We also have to consider technological developments in hydrogen production, including hydrolysis production, but also blue hydrogen production—that is, low carbon emission energies. There are issues in that, but we have also seen developments in technologies in its utilization, whether as a source of heat or of electricity.
And there is also the diversity of the Canadian energy system. The supply of various types of energy across the country varies considerably, and this raises issues and means that we can’t necessarily apply a single solution throughout Canada.
In our modelling, it is clear that meeting Canada’s climate goals will depend primarily on electrifying a large part of energy services while at the same time decarbonizing electricity production. Electricity won’t be able to do everything directly. That is why other sources and carriers will be necessary for specific uses, for strengthening the resilience of the energy system, which was mentioned earlier, and for improved alignment of energy supply and demand.
Since hydrogen alone or as a compound does not emit GHGs when used, it is certainly, and we are increasingly discovering this, an ideal complement that can be categorized in the context of hydroelectricity—hydrogen plus electricity—that would create an integrated energy system. Significant challenges remain. First, hydrogen has to be produced with a low GHG emission source. I think that if we really want to embark on hydrogen, it is critical to define what we mean by low-carbon hydrogen, and to do that very quickly, since the definition can be changed over time. That is absolutely important.
When we talk about low carbon, this is a complete life cycle starting with methane, from extraction to the production of hydrogen. It has to be clearly delineated, or there will be opposition that will prevent transformation. We have to ensure that hydrogen usage leads to net zero. It must not be used as an excuse to keep a natural gas network in place or keep fossil fuels around. We do see tensions in this regard.
There also need to be regional strategies, because the current power grid is very different everywhere in Canada and green hydrogen is a lot more expensive to produce than blue hydrogen, which we are not yet producing at present. The roles will vary across Canada and that has to be taken into account. When we talk about hydrogen, we have to understand that prices are very different depending on how hydrogen is produced, and those prices will have an impact on the optimal role it will play in the various structures.
We also need a real industry policy approach. We talk about support or structuring hubs, which are essential, and with The Transition Accelerator, we are involved in these hubs. Canada does not have a very effective industry policy approach in general, not just with hydrogen.
The hydrogen strategy that has been proposed is very fragmented and vague and does not really permit a genuine transformation. We need a proactive approach that will bring together the right players, identify regulatory and structure barriers to hydrogen, and find a way to support the optimal role of hydrogen, rather than scattering our efforts or supporting things that make no sense from an economic standpoint. Thank you.
The Chair: Thank you, Mr. Mousseau.
[English]
David Layzell, Energy Systems Architect, The Transition Accelerator, University of Calgary, as an individual: It’s very good to be here. It’s my pleasure to present to this committee today.
I’m the energy systems architect with The Transition Accelerator. It’s a pan-Canadian, non-profit charity that was set up about three years ago to speed the transition to a net-zero energy future. My colleagues Normand Mousseau and James Meadowcroft and I were involved in setting this up. It is separate from the University of Calgary. It’s not part of the University of Calgary. That’s another hat I wear.
The transition to a fuel hydrogen economy is not only important for the environment. It also offers Canada a rare $100 billion per year economic opportunity for the development of new zero-emission energy carriers that could be used domestically and be exported to the world.
Canada, as we’ve heard previously in this presentation, is one of the lowest-cost sources of both blue and green hydrogen production, especially for provinces like Quebec, more for green hydrogen, and Alberta and Saskatchewan for blue hydrogen. There’s a very exciting opportunity here. Hydrogen could be a way to bring the various regions of Canada together with a shared vision for an energy future, and that would be a real welcome change, I would argue, for this country.
One of the greatest challenges for a new hydrogen economy today is the need to develop fuel hydrogen demand. I think we heard that in the first session with Mark and Sabina. If there is demand, we would argue that the market forces will be able to develop to deliver this demand. However, it’s really important in the early stages, as Mark very eloquently talked about, to have demand and supply coordinating in concentrated areas — to create an efficiency of scale in concentrated hubs to reduce the cost and actually get deployment much more quickly.
When we look at policy instruments to help focus on the demand side, there are a number of points that I’d like to identify.
First is the need for hydrogen hubs. The federal and provincial governments need to coordinate in providing meaningful funding support to regional economic development agencies to carry out assessments for the feasibility of that region actually supporting new fuel hydrogen value chains. We call these “foundation reports” within The Transition Accelerator.
Then, meaningful funding needs to be offered to the more promising regions to create these hubs that will bring together the consortia and launch pilots, demonstrations and commercialization projects — actually build out the hydrogen economy in those regions and create new value chains that connect supply through to demand.
Second, we need demand creation in the heavy transportation sector. As was discussed in the previous panel, transportation offers the lowest hanging fruit for the deployment of the hydrogen economy.
We also need demand creation in hydrogen for use in the heat and power sectors. With the cost of energy today, it’s more of a challenge for hydrogen to play a role in, say, space heating or industrial heating. But when you look at the comparison of hydrogen for heating versus electricity for heating in many jurisdictions, hydrogen for heating can, in many cases, be the much more sensible direction. However, we can’t make that decision now. We have to start moving in that direction with pilot programs and demonstrations. For example bleeding hydrogen — blending hydrogen — into natural gas pipelines, then putting in the infrastructure to allow that to happen and then, when the time is appropriate, looking to conversion to full pure hydrogen for space heating in industrial, residential and commercial buildings.
Third is the demand for hydrogen fuelling stations. It is very important. We’re not going to move to hydrogen for heavy trucking, buses and trains if we don’t have the infrastructure and the fuelling stations in place in order to provide the fuel to those vehicles. We need capital subsidies for strategically located fuelling stations around hydrogen hubs and hydrogen corridors. It is also important to support college training programs for the construction and maintenance of these stations.
The fourth point is hydrogen storage and transportation infrastructure — to provide capital subsidies supporting the storage and transportation of fuel hydrogen, including the compressors, liquifiers, hydrogen pipelines — they’re going to be extremely important — and salt caverns to store large amounts of hydrogen to handle seasonal and temporal changes in demand and supply. There also needs to be support for the repurposing of natural gas pipelines for use with pure hydrogen. A lot of work needs to be done in this area.
Finally, for hydrogen to be considered a low GHG fuel, we need to look at low-carbon hydrogen production to develop a standard of required maximum life cycle greenhouse gas emissions. I would argue that all of the emissions of the fossil fuel companies need to be exposed to carbon taxes. Then, the economic benefit that comes from the carbon taxes can be used to transition these sectors to the production of zero-emission fuels like hydrogen or ammonia and to move them off the production of the fuels that we know we need to replace, which are gasoline, diesel, jet fuel and natural gas.
Thank you very much for this opportunity.
The Chair: Thank you very much.
Mr. Meadowcroft, please.
James Meadowcroft, Professor, School of Public Policy and Administration, Carleton University, as an individual: Thank you for the opportunity to speak with you today.
Getting to net zero over the next few decades is extremely challenging. It means moving off fossil fuels for all our end uses. It means dealing with process emissions from various industries and agriculture. One of the other challenges, of course, is removing carbon dioxide from the air, which is the “net” in the “net zero,” if you like. Those technologies are still immature, uncertain and quite expensive.
So this really is a big challenge, and all the international studies suggest that hydrogen will be a critical pillar to move forward because we can’t electrify everything. Particularly, we need low-carbon fuels for heavy transport — big trucks, trains, ferries and things like that — as well as for heavy industry — including steel, cement and so on — high temperature heating and perhaps other heating as well.
Canada is well placed to develop the hydrogen component of this decarbonization effort. We have technology and lots of resources — some of the other speakers addressed this earlier — that can feed into this.
I’d just like to raise some other things for you to think about hydrogen.
First, it’s a critical thing for decarbonization over the coming decades.
Second, as Professor Layzell pointed out, there is an enormous economic opportunity here for Canada. We can develop something that is good for our own economy and may develop an export sector. It’s an economic play as well as an environmental play, if you want. But I’d like to highlight two other points.
One is that, in a way, hydrogen can be a national unity play because it’s something that can be developed in different ways using different resources in different parts of the country, and yet it’s something that can all be built together. That links particularly to the last point in that it presents a potential future for the fossil fuel sector, to some extent, in a decarbonized energy future.
One of the pathways to produce hydrogen is by transforming fossil fuel resources with carbon capture and storage or other ways that prevent greenhouse gases escaping into the atmosphere. To the extent that this is done, it offers one of the possible energy pathways for Canada to continue to be an energy exporter, even in a decarbonizing world.
For all these reasons, we should be paying attention to hydrogen.
One thing I would like to address here — and it actually came up in the earlier session — is there is always hesitation about the question of the role of government in developing new technology. Should government be in the business of picking winners? No one wants of the Minister of Energy saying, “I like this company. My brother-in-law works for it,” or something like that. We don’t want picking winners in that sense, but for the development of large-scale energy technologies everywhere, government is involved. There is no other way to do it. There would have been no Canadian nuclear industry if the government had not been involved. There would have been no Alberta oil sands. If we look around the world, everywhere in these large-scale energy technologies, building out the infrastructure, setting the standard, it is critical that governments play a leading role if we want these systems to develop.
This leads me to the question of industrial strategy or the economic strategy that Professor Mousseau referred to. This is critical in many sectors for Canada going forward. The energy world will be completely transformed over the next two, three or four decades. If we want Canada to have a prosperous and competitive place in that world, we need an orientation for a green industrial strategy or low-carbon industrial strategy — however you term it — and hydrogen is obviously a critical element of that. It’s not the only element in Canada, but it’s a critical one.
This means governments at multiple levels stepping up to the plate with a series of policies, initiatives and, above all, the long-term vision, because we can’t think of what is the next thing we need to do. We need to think of how we want hydrogen to fit in our energy systems in 20 or 30 years, because it’s going to take that long to roll out all the things that we need to do. There are many specific policies. There is the zero-emission vehicle mandate. Particularly relevant for hydrogen is heavy-duty vehicles, for example. There is the development of the hydrogen hubs. There are other things that we could talk about, but it needs to be said clearly within a vision of building a new energy economy for Canadians going forward.
Thank you.
The Chair: Thank you very much.
[Translation]
Senator Miville-Dechêne: I would like to thank our witnesses. My question is for Mr. Mousseau.
You talked about tensions in the hydrogen market, a little too briefly for my taste. What you said is that obviously there are different ways of producing it, but all the ways must still lead to net zero, which brings us back to the differences in hydrogen production, depending on whether we are in Alberta or in Quebec.
Is this all viable at the same time, when one of the methods captures CO2 and the other doesn’t produce it?
However, you said it is a lot more expensive to produce green hydrogen than blue hydrogen; there seem to be contradictions. I would like to hear your thoughts about the tensions, because your colleague talked about a program that could promote national unity. So we don’t seem to be entirely on the same wavelength.
Mr. Mousseau: Thank you for that question. First, when I talk about tensions, hydrogen is obviously not produced the same way Canada-wide.
We have to understand that green hydrogen is not a new energy. You take electricity and you transform it into hydrogen, and you lose 30% of the energy during the transformation. So it isn’t energy that will add anything or make up for electricity.
In the case of blue hydrogen, which is the only hydrogen we can imagine producing, this is a new energy. You take natural gas and you transform it; so it is a new secondary energy that adds to the existing system and is produced at a lower cost, even in a situation where you are doing sequestration.
I agree that at present, we are not sequestering at 90 or 95% in a lifecycle. There are challenges and we have to ask ourselves whether we are going to get there. Not everything has been resolved at present as regards this production issue. Our modelling shows that we have no choice; we have to rely on all of them if we want to achieve net zero.
And a last point, the national question must be considered not so much in the production of hydrogen as in its use — that is, there will be hydrogen usage technologies, whether in heavy industry, in heavy transportation, in certain leading edge applications, and in others, that are going to vary across Canada, but are going to bring about a number of transformations, if you like. So the demand for hydrogen usage will vary in Canada, but it is a way of seeing a transformation that will support electrification to varying degrees across Canada.
[English]
Mr. Layzell: As was previously mentioned, hydrogen is very challenging to move around and to store. If you’re trying to set up a hydrogen hub in Quebec, you really want to use green hydrogen because you have a lot of electricity there. It’s low cost, and you can actually bring the electricity to where you need the hydrogen and make it right there or very close by.
In Alberta, we already have about 5,000 or 6,000 tonnes of hydrogen being made every day. It is being made as an industrial feedstock, and there are billion-dollar projects to make that very low-carbon hydrogen. By 2025, we will see the first of those. It makes more sense, I would argue, in Alberta, which doesn’t have large hydro resources and low-carbon electricity to use to make blue hydrogen.
The reality is that downstream, once you have hydrogen, hydrogen is hydrogen. I think there is an opportunity for both green and blue hydrogen, to foster and to find the location where they can be best applied. We need them both in order to achieve in this net-zero transition.
The Chair: Mr. Meadowcroft, did you want to add to the answer?
Mr. Meadowcroft: I’m happy with those answers.
Senator Galvez: Thank you to our witnesses. This is a very interesting conversation.
The three of you mentioned the need to review our industrial policy. Canada has been very good at establishing commitments and engagements, but we have never reached any of these goals with respect to emissions reduction. I think that is related to the lack of and the problems with industrial policy. We know that we have to align investments with efficient technologies and our climate engagements. Could you please just name one or two conditions for this industrial policy to work so we can push, in that sense, as legislators?
[Translation]
Mr. Mousseau: First, I’m going to let my other two colleagues speak, who are more familiar with industrial development issues, and then I will come back and add to what they say.
[English]
Mr. Layzell: For most of the last 25 years where we’ve had a desire to significantly reduce our greenhouse gas emissions, most of the policies in the Canadian government have been about incremental reductions. About two or three years ago, they started to bring in the concept of net-zero emissions. I would argue, within The Transition Accelerator and personally, that net zero changes everything. There are millions of ways to get incremental reductions, but when you talk about a net-zero 2050, most of those incremental reductions fall off the table, and you’re left with a relatively small number of things we need to do. I would argue it’s been an incredible advance in Canada to start talking about net zero and really getting to terms with what we need to do. That really starts getting down to, for example, the industrial side.
We do need to massively reduce our emissions, but then when you know you’ve got to get to zero, you look at where your emissions are coming from, and 46% of the emissions in Canada come from the distributed end-use combustion of gasoline, diesel, jet fuel and natural gas. Clearly, we need to replace those energy carriers. We need to articulate that, get federal-provincial cooperation on that and determine what we are going to replace them with.
Zero-emission electricity is probably the biggest zero-emission energy carrier in the future. Hydrogen has a very important role as well. Biofuels are a third one. There are not many other ones other than those that can really achieve the goal. That creates a clarity of thinking that allows us to have conversations with our industry about the transition pathway for each of those sectors, whether it’s steel, what the oil and gas sectors will do, et cetera. There are options for all of them.
We need to change the question that we’re trying to solve here. It’s not just about incremental reductions; it’s about zero emissions.
Mr. Meadowcroft: I’ll add one thing. When I was talking about industrial policy, I was talking not just about the decarbonization of industry but about building competitive industries, focusing on export and things like that.
To take that bit of the answer to your question, one has to start by looking at what Canada’s economic situation is and what our resources are that we could exploit in a low-carbon world. For instance, we have a lot of biomass, we have mineral resources that will be required for batteries and all sorts of uses as societies internationally electrify more, and we have timber resources that can be used for mass timber and lowering the carbon content of buildings.
One needs to look at what we already have that we do well — the skills and technologies — and the industries that can be transformed going forward. Then think forward. Develop road maps for those industries and how they could be built into powerful world-competitive sectors and so on.
Canada is a mid-sized country with an export-oriented economy. We are trade-exposed. That makes certain criteria for what sorts of industries we can further. We’re not going to beat China at building solar panels, but there are many important niches in a low-carbon economy where we could flourish. But we need to be identifying those now to move forward both with our own climate policy and to build our economy to contribute internationally.
[Translation]
The Chair: Mr. Mousseau, do you want to add something?
Mr. Mousseau: Yes, I have a few points to add. First, there is an important aspect that has to be understood. We have to reduce the barriers. Hydrogen usage involves a number of obstacles, and the same is true for transformation. Little attention is being paid to those issues. We have to use regulation to facilitate development. This is an aspect we often forget. Pilot projects are set up and we can’t get to the next stage.
As well, the markets have to be integrated. Often, in Canada, we support the development of technologies, but we don’t open a door to the market. The way that bidding processes are designed means that we can’t support these technologies because of the regulatory reasons I mentioned: the design of bidding and other processes. We have a big problem in that regard. We don’t have an integrated vision from development to large-scale deployment. That is somewhat what the hubs as they are currently designed want to do. This is a big issue. In the federal government’s plan that was tabled yesterday, we see a big lack of connection; we see various programs and expenditures, but with no integrated vision toward a clearly defined goal. That is how policies have to be structured.
[English]
Senator Arnot: Thank you, witnesses, for your attendance today. This is very informative.
My question is directed to Professor Mousseau. The Trottier Institute for Science and Public Policy did a comprehensive study and publication on the Canadian energy outlook in 2021. You talked a lot about regional strategies today as well. Saskatchewan was an early adopter of carbon-sequestration technologies. I would like you to comment on blue hydrogen production processes and the linkage to carbon capture and sequestration, especially around the challenges for large-scale capture.
[Translation]
Mr. Mousseau: In fact, this aspect is crucial. We have to do sequestration. Globally, there is no infrastructure that does sequestration in terms of the complete lifecycle to get us to the point where we could really talk about blue hydrogen. We have to invest in these technologies in a very particular context, with the objective of saying: “This is the production we are aiming for as the final product.” How do we make sure that the entire production line for hydrogen gets us to 90 or 95%? It isn’t enough to talk about one point here and one point there, about this machinery or that machinery. We have to have an integrated vision to ensure that emissions are reduced at every stage. As we have seen with the Boundary Dam project in Saskatchewan, the technological issues present a significant challenge. It is important that we have examples, to learn and build. But we are not there.
[English]
Mr. Layzell: With CO2 capture, it has to be done at very large scale in order to be economical. We have learned that in Saskatchewan and through the work that has been done on carbon capture and storage in Alberta. It confirms that 1 million or 2 million tonnes of carbon dioxide per year need to be captured, which means you aren’t going to be capturing CO2 at the tailpipe of each car or from the chimney of each house. It has to be very large and industrial facilities.
It also makes sense that if you know you’re going to capture CO2 to change the chemical engineering process of what you’re trying to do as well. For example, when making hydrogen from natural gas, instead of using steam-methane reforming, one would use auto-thermo reforming. It’s a different process, it gives you a pure CO2 stream and it comes in at a lower cost as an overall process for making blue hydrogen. But it is done at very large scales so that you can justify the infrastructure investments.
I think what we need to do is to start to think about CO2 corridors — pipeline corridors — for companies to be putting carbon dioxide into pipelines and so centralize the geological sequestration so it can be safely monitored, managed and economically deployed.
Senator Arnot: Again, I have a question for Professor Mousseau.
Professor, in the Canadian energy outlook document that the Trottier Institute produced, you talked about the role of agriculture. You’re actually talking about a paradigm shift in land-use management, in dietary changes and alternative production methods. I would like you to comment on that and amplify that for me in the context of the agricultural industry and what it can do to support the changes required.
[Translation]
Mr. Mousseau: I am by no means an expert in agriculture. Questions about transformation of the agricultural sector are complex. There is a lot of uncertainty in terms of future technologies, and even in terms of transformations in eating habits upstream, to determine how people are going to change their eating habits. We can identify the issues. But at present, we don’t have the answers. Unfortunately, my field deals more with the energy sector than the agricultural sector.
[English]
Mr. Meadowcroft: When we look at pathways toward decarbonization in different sectors, it’s very important to understand that transitions and changes in those sectors go through various stages. There is a first stage where you are kind of exploring and finding out what to do, then there is a mass rollout phase and then there’s a final adjustment phase. Agriculture is one of those sectors where we know there are problems. We have ideas. For instance, no-till agriculture is a contribution. There are things that contribute to the solution, but there isn’t one solution. The contrast with something like light-duty vehicles is really clear. Just make them electric and you have solved that. But agriculture is way more complicated. It’s different by region, crop, soil and climate. I think, senator, you have identified something. That’s one of the examples of a difficult sector going forward that will require experimentation and innovation in technology and farming practices, as well as societal adjustments.
[Translation]
Senator Gignac: I’d like to thank our witnesses. Senator Carignan asked our previous guests about converting pipelines that could be used to transport hydrogen. Mr. Mousseau, did I understand that green hydrogen costs more to produce than blue hydrogen? I’m trying to understand.
In this energy transition, will it potentially be more economical for the Quebec market to import blue hydrogen from Alberta rather than produce it here, and maybe keep our electricity to export it to the Americans? I would like to hear your thoughts on a potential collaboration between Quebec and Alberta for more effective hydrogen use.
Mr. Mousseau: That is a very good question, senator. Because green hydrogen is produced from electricity, it is preferable to use electricity when we can and keep the green hydrogen as a supplement. It is a bit unrealistic to think we are going to export green hydrogen. Elsewhere in the world, it will generally be produced by intermittent energies. At night, when it’s windy, there is no demand for hydrogen. The prices will be lower than in Quebec, because water can be stored.
The idea of importing hydrogen for certain industrial processes where we’ll need less expensive hydrogen is a possibility we have to evaluate. How will it be imported? In the form of methane that would be transformed here to store the CO2? We don’t have a lot of places where we can store CO2in Quebec. These issues have to be evaluated and we have to do economic analyses to make sure we have a good balance, but we must not just keep saying that because we have a lot of electricity, we have to make green hydrogen or absolutely use green hydrogen at the expense of other solutions. We have to look at the whole to find the most appropriate, economical and balanced solutions.
[English]
Mr. Meadowcroft: Just to reinforce what Professor Mousseau said, today we have rather separate energy systems. We have gasoline for cars, we have gas for heating for buildings and industrial uses, we have electricity for our devices, and they are quite separate. Going forward, there will be a drawing together of these. The fossil fuel end-uses will stop burning gas in houses or gasoline in cars. Electricity will do much more, but hydrogen will be interlinked with it. But which one will serve at which particular thing? That depends on the evolution of prices and technologies. We can’t tell everything right now, but we do know that we’re going to need both more electricity and enhanced electrification, and we will need hydrogen to complement it. They will join back and forth, as hydrogen can serve to store energy from renewables when it’s not used, and it can do things that electricity is maybe more difficult to use for.
[Translation]
Senator Gignac: Quickly, is it too soon or are we starting to see pension funds [Technical difficulties]? We need long-term forecasts, for 20 or 30 years. Are you starting to see actors like pension funds, or are we still at the stage where governments have to support the financing?
The Chair: Who is your question for?
Senator Gignac: All three.
[English]
Mr. Layzell: We are active in discussions with the pension funds operators about hydrogen opportunities. There is a lot of interest in that sector. They haven’t actually started to significantly invest in the hydrogen opportunity, but I know they are looking at some exciting large-scale investments around hydrogen, and that would be considered on the green side of their portfolio. The opportunity there is we need clarity, with direction from the federal and provincial governments, to say this is the direction that we are going. That will help to relieve insecurities. It would be very helpful as well if the various political parties could come together on seeing hydrogen as part of a shared vision for an energy future so that if there is a change in government in the future, then programs won’t be cancelled.
[Translation]
Senator Carignan: That’s really fascinating. I love this committee. Personally, I’m counting on nuclear. We didn’t talk a lot about that in our presentation; we talked about black hydrogen in the case of nuclear. Of course, we have less of that here, but there is a lot in France. President Macron has presented his energy plan. He talks about using nuclear energy to produce green hydrogen so that France would be self-sufficient by 2030. That is a plan that President Macron tabled in October 2021.
I’d like to hear your thoughts on the added value from black or green hydrogen, whatever label you want to give it for marketing purposes. I’d like to know the added value and how comparatively competitive green and blue are, for example.
The Chair: Who is your question for?
Senator Carignan: All three. We have three fantastic experts.
The Chair: Do you want to start, Mr. Mousseau?
Mr. Mousseau: For the question of black hydrogen, in principle, if I understand correctly, it is made using reforming; so you make hydrogen by using the heat lost from nuclear power plants. Green hydrogen comes from electricity. We have the same problem as with hydroelectricity: it’s electricity that’s being transformed. It isn’t new energy. So that has to be done when you don’t need electricity, or else you are going to use it up.
For example, if Ontario uses its nuclear power plants with natural gas power plants and decides to use the electricity from the nuclear plants to make natural gas by keeping the natural gas plants running, there isn’t really any purpose to that. So you have to consider that best practices have to be tailored to the local situation. Canada certainly has a situation where the nuclear plants do not play the same role in terms of support or electrical surplus as in France. For example, at night, the plants have to keep running and demand is lower, so the electricity has to be sold at a loss.
[English]
Mr. Layzell: I could add a comment to that. Certainly, some of the nuclear power plants in Ontario are very interested and are starting to build electrolysis units to make hydrogen. The challenge with building a nuclear power plant to make electricity and then make hydrogen is that the cost of the electricity makes the hydrogen very expensive. One of the new technologies being developed in Ontario is thermal production, where you can make hydrogen directly from the nuclear heat. That’s not commercial yet, to my knowledge, and that could be a significant game changer, so you wouldn’t even go through electricity, just nuclear heat directly to hydrogen.
Mr. Meadowcroft: Going forward, one could imagine that you could build a nuclear plant that is optimized for hydrogen production rather than electricity production. But I think we shouldn’t obsess too much right now about where the hydrogen comes from, other than that it needs to be low carbon. I think the establishment of a progressive standard that decarbonizes, that makes sure — you know, carbon hydrogen is not 50% emissions. It’s got to be low, and it’s got to eventually get to zero. I personally don’t mind where it comes from, as long as it’s as cheap as we can make it and it’s as low carbon as we can possibly make it.
[Translation]
Senator Carignan: I would also like to hear your thoughts about transportation. I see that there are Airbus projects, such as a hydrogen airplane project. There is also a lot of research and development being done on ocean liner transport. What is the future of these projects, and how necessary will it be to adapt our airports and ports to accommodate this infrastructure? For the planes, it may be a bit too early, but at least for the boats and trains?
Mr. Mousseau: I would like to come back to what Mr. Meadowcroft said. We have to start by focusing on the sectors where it is easier to see investments. We don’t have to plan 30 or 40 years ahead right away. If we see a hydrogen structure in our projects, we have to start now on adapting production and asking how we can structure demand locally so we can make the transformations.
I’m sorry to keep coming back to this, but this is kind of the approach our development takes. For example, if we are talking about trains or modes of transportation that work with corridors and we have good control over the hydrogen supply, it is entirely reasonable to include all that in our analysis today.
However, in an international context in which we don’t control all the ports everywhere on the planet, there is no urgent need to launch into this kind of project, because the hydrogen delivered and the transformation will be of minor importance here. We can wait for there to be comprehensive agreements.
So I think the industrial policy is to know how to start, beginning today, without having an answer for everything, but by making investments that will structure an understanding of the hydrogen sector in terms of demand, equilibriums, technologies and know-how, as quickly as possible. That is much more worthwhile than launching into all sorts of pilot projects all over the country, independent and unstructured projects that are going to sink one after the other because we aren’t capable of maintaining them.
[English]
Mr. Layzell: In terms of airports, we are working with a number of airport authorities, not for transporting or putting hydrogen on airplanes but for the ground vehicles that are moving the luggage around and moving the airplanes. I think you’ll see within the next six to eight months some announcements from some airports doing some demonstrations and pilots on hydrogen. It will be another decade or so before we see hydrogen planes flying, I think.
Mr. Meadowcroft: To come back to the hubs once more, we have mentioned it many times. It’s really about connecting local supply and local demand. That’s what gives you the ability to scale up and reach out. For an historical analogy, electricity systems did not begin with the grid. Electricity systems began with an independent power station that served the local factory and the local community, and then they built out. So you had Niagara Falls and the industry around it, and then it built out and the grid connected. It is the same in Quebec. There were many different power companies in Quebec before it was brought together to Hydro-Québec. The grid is the last thing, not the first thing. Whereas we need hydrogen pipelines and all sorts of grand things, what we need now is to develop these place-specific hubs where we link supply and demand, build up, prove the concepts, develop it out, and they will reach out and connect.
[Translation]
Senator Carignan: Thank you.
[English]
Senator McCallum: B.C., Manitoba, Quebec and Labrador are all sites of mega dams, so they would be sites of green and black hydrogen production. For a site of production that is isolated to Northern and Indigenous lands, transportation and pipelines would be required. What does transportation, storage and local distribution look like? Where would the hubs and the grids be located?
[Translation]
Mr. Mousseau: In fact, electricity is going to be moved. When you already have power lines, we are going to move them to produce hydrogen close to the usage centres, because the cost of transporting hydrogen is much too high, particularly when the infrastructure hasn’t been built based on electricity. In that situation, with the existing production resources, we would move the electrons and do it on or near the usage sites.
[English]
Mr. Meadowcroft: The exception to that would be in remote communities that are not connected to the electricity grid, where hydrogen production could be useful for the community as a storage for either small local hydro or wind or something like that. In those contexts, you might produce hydrogen there, and then it would serve as a storage vector, and perhaps for fuels and things like that.
Mr. Layzell: One of the things that we’re involved in, and a number of First Nations communities and in the Northwest Territories, is exploring the potential for ammonia to be a transporter, a zero-emission energy carrier. In the Northwest Territories and Nunavut, diesel fuel occupies a very major role within their energy economy. Zero-emission alternatives are needed, and The Transition Accelerator has a number of students working on projects to explore opportunities. They are working with the government of the Northwest Territories and First Nations communities.
Senator Anderson: The N.W.T. was a good segue into this. If I’m correct, water is integral to the development of hydro. Would this impact water sources in Canada and the Arctic wherein, as David noted, many of the isolated communities actually have reservoirs and the water is trucked to the homes by vehicles? Is there a concern in the industry about the use of water and the amount of water it takes to develop hydrogen?
[Translation]
Mr. Mousseau: You don’t need a lot of water to produce hydrogen. For example, if all of Quebec’s electricity were transformed into hydrogen, you would only need a week for transforming water in Montreal. It isn’t a very large volume of water.
Obviously, in the communities where water is difficult to access, managing with hydrogen would call for special efforts to be sure of access to water, but you don’t need an enormous volume of water.
[English]
Senator Anderson: Thank you. Aside from water resources, what other natural resources are required in the use and development of hydrogen?
[Translation]
Mr. Mousseau: On the question of the resources needed for producing hydrogen as such, we talk about electrolizers that don’t need special equipment. The use of hydrogen is where important equipment comes into it, particularly when we’re talking about fuel cells, for example, where you need platinum and rare metals that act as a catalyst and facilitate the separation of hydrogen to produce electricity.
So the issues of access to natural resources arise to a much lesser extent in hydrogen use technologies, particularly for electricity. If it involves burning hydrogen, that doesn’t present any problems, but it is really these issues — we often hear about rare metals — that we will have to work on to find other solutions to allow for large-scale deployment. That is the context in which it is happening.
The Chair: Thank you. I have a question before the meeting ends. As you all know, there is a plan to raise the price of carbon; some people are calling it a carbon tax. It is very important in order to align the interests of the actors and it is essential in order to ensure the right decisions are made and all the costs are understood. Am I mistaken about this, and if so, what in particular am I mistaken about? Mr. Mousseau?
Mr. Mousseau: The costs, even with the carbon tax, don’t change enormously. The cost of natural gas is still very affordable. In the context of fuels, it isn’t so much the carbon tax as all the other taxes and all the other issues that cause the price of diesel to rise and make it so that blue hydrogen is already competitive in comparison with diesel, in transportation.
So there are sectors in which hydrogen is competitive, but in terms of natural gas, the issues are such that, at present, it is not yet competitive to use for heating spaces, for example.
[English]
Mr. Layzell: Certainly if you have $170 per tonne of CO2 on natural gas, it raises the natural gas heating price to a price that is within striking distance of blue hydrogen feeding into home heating within Alberta, so the carbon price is very important as part of the transition strategy.
Mr. Meadowcroft: I will say that I completely agree that the carbon price will help a great deal and that it’s very important, but the obstacles to the kinds of changes to the systems we’re talking about are multiple. There are issues of regulation, and there are safety rules and raising capital. There are many obstacles. It’s a great step forward, but more can still be done by governments at various levels to unlock the potential of hydrogen.
[Translation]
The Chair: I would like to thank the witnesses: Normand Mousseau, professor of physics and academic director of the Trottier Energy Institute at the Université de Montréal, David Layzell, energy systems architect of The Transition Accelerator at the University of Calgary, and James Meadowcraft, professor at the School of Public Policy and Administration at Carleton University. Thanks to all three of you.
[English]
Thank you for sharing your knowledge. We have learned a lot. We probably still have a lot more to learn, but thank you for being with us this morning.
(The committee adjourned.)