THE STANDING SENATE COMMITTEE ON ENERGY, THE ENVIRONMENT AND NATURAL RESOURCES
EVIDENCE
OTTAWA, Thursday, April 7, 2022
The Standing Senate Committee on Energy, the Environment and Natural Resources met by videoconference this day at 9:02 a.m. [ET] to study emerging issues related to the committee’s mandate.
Senator Paul J. Massicotte (Chair) in the chair.
[Translation]
The Chair: I’m Senator Paul Massicotte from Quebec, and 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. 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.
I would now like to introduce the committee members who are participating in today’s meeting.
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.
Welcome to you all, colleagues, and to all Canadians who are watching.
We are meeting today pursuant to our general order of reference, to undertake a study of hydrogen-based energy.
Our first panel consists of Aaron Hoskin, Senior Manager, Intergovernmental Initiatives, and Sébastien Labelle, Director General of the Clean Fuels Branch, from Natural Resources Canada. Mr. Labelle will join us a little later.
Welcome, and thank you for accepting our invitation.
Mr. Hoskin, you have the floor.
[English]
Aaron Hoskin, Senior Manager, Intergovernmental Initiatives, Natural Resources Canada: Good morning and thank you for the opportunity to speak to you about the important role hydrogen will play in a net-zero future for Canada and the world.
Before I begin, I want to acknowledge that I am joining you from rainy and cold Ottawa, which is the traditional and unceded territory of the Algonquin Anishinaabe First Nation.
For Canada to reach its commitment to net-zero emissions by 2050, the economy will need to be powered by two key energy sources: clean power and clean fuels, including hydrogen. The essential role for both of these pathways was reinforced last week, in the Emissions Reductions Plan. Clean hydrogen can reduce our annual GHG emissions by between 22 and 45 million metric tonnes a year by 2030, and this number could be as much as 190 million metric tonnes by 2050, depending on actions taken and investments made across the economy.
Our world-leading hydrogen and fuel cell sector can form the foundation to grow an entire domestic industry and continue to make significant contributions internationally into a global market that Goldman Sachs has estimated to reach $11.7 trillion a year by 2050. In fact, export of Canadian hydrogen technologies has more than quadrupled in the last two years alone.
Our modelling projects that the domestic hydrogen sector could create as many as 350,000 jobs over the next three decades, all while dramatically reducing our GHGs, contributing to our 2030 climate targets and putting us on that path to net zero.
Canada has several advantages. We are rich in the feedstocks to produce low-cost clean hydrogen from multiple pathways across the country. Our energy and clean technology sectors are strong, and our geographic assets position Canada well in global trade markets.
In the east, we can produce hydrogen using our renewable resources and hydroelectricity, which could be exported to Europe to strengthen their energy security. This has only been made more urgent given the ongoing energy crisis. A recent independent study developed by Adelphi for the German government shows that there is sufficient renewable energy capacity in Eastern Canada to provide between 25 and 35 megatonnes of clean hydrogen to Europe every year by 2050. These findings were echoed in recent feasibility studies carried out by the Off-shore Energy Research Association, for Canada’s Maritime and Atlantic regions.
In Western Canada, we can lever our vast natural gas and conventional oil reserves, coupled with expertise in carbon abatement technologies and favourable geological formations, to produce clean hydrogen for domestic use and export to Asia.
Just over a year ago, in December 2020, we launched the Hydrogen Strategy for Canada, which is a call to action for governments, the private sector and Indigenous communities and businesses to capitalize on those opportunities. These actions are organized in 32 recommendations across eight key themes.
Actions are required across the entire value chain, and they must be sequenced over time, growing capacity now to lay the foundation for domestic use and export, while expanding opportunities in the medium and long term as the market evolves.
While there are many opportunities, the strategy also shows there are still important barriers to overcome, including how to reduce the cost and greenhouse gas intensity of production.
It will be important to focus on the carbon intensity of hydrogen produced, rather than a specific pathway or carbon intensity colour. One of the earliest actions we are undertaking, in collaborations with provinces, the private sector, and governments around the world is to develop a common global standard to determine that carbon intensity, which is the first step towards global trade.
While the strategy points to opportunities across the country, these opportunities differ from region to region. The strategy therefore indicates the need for a series of regional blueprints that will delve deeper into the regional variances to identify more specific opportunities and targeted actions that need to be developed to complement the strategy.
With our support, B.C. and Alberta have already released their own strategies, Ontario and Quebec are finalizing theirs, and two feasibility studies, one of which I mentioned earlier, have been released for the Atlantic region. Just last week, the B.C. government announced the launch of a new hydrogen office to expedite regulatory approvals and project decisions.
We know that we cannot do it alone, and we have struck a high-level hydrogen Implementation Strategic Steering Committee, which brings together senior leaders from across industry, provincial and territorial partners, non-government organizations and Indigenous businesses and communities.
It establishes priorities, guides actions, shares knowledge and tracks results, laying the foundation for success in the short term and identifying activities in the medium and long term.
Minister Wilkinson will be leading discussions with provinces and territories to drive economic prosperity and create sustainable jobs in a net-zero economy. The Emissions Reduction Plan announced a $25-million investment to support this process.
Seizing the hydrogen opportunity will take coordinated actions over the short, medium and long term. We need to grow production and distribution infrastructure now while also fostering greater deployment in key sectors like freight, mining and heavy industry, while ensuring essential codes and standards are addressed.
As technology evolves and matures and as access to clean, low-cost hydrogen grows, additional end users will become more viable, including rail and marine as well as industrial processes like steel, cement and manufacturing.
The high-level strategic steering committee I mentioned is supported by 16 thematic working groups, which bring together subject-area experts from across the country to take action, address the remaining barriers and ensure we are on a path to seizing the opportunities. This past year alone, these working groups have undertaken more than 15 targeted research and analytical pieces.
We are also taking action. Budget 2021 included several new measures that also support early actions outlined in the strategy. The $1.5 billion Clean Fuels Fund, which we’re also delivering, supports clean fuel production capacity in Canada, targeting at least 10 new hydrogen production facilities as well as other facilities. We are currently reviewing and evaluating proposals received through a competitive process with funding decisions to be made in the coming months. We also have a dedicated funding stream for Indigenous-led projects, which is currently accepting proposals. This also includes $50 million to support the continued development of essential codes and standards for hydrogen. Also announced at Budget 2021 were multiple tax measures for renewable fuel and hydrogen production equipment as well as for hydrogen refuelling and an expected investment tax credit for Carbon Capture, Utilization and Storage, or CCUS.
The Strategic Innovation Fund’s Net Zero Accelerator — that $8 billion fund — is supporting projects as well. In fact, there are two hydrogen projects that have been announced already: a $400 million investment to decarbonize the steel production facility in Hamilton and an investment of $25 million to support the development and commercialization of low-cost carbon capture technology for industrial applications, like clean hydrogen.
The budget also included $300 million for research and development to advance CCUS technology and $67 million over seven years to implement and administer the Clean Fuel Standard.
Support for the accurate measurement of low-carbon fuel cells was also included in Budget 2021. The Emissions Reduction Plan, or ERP, included news of targets of 100% by 2035, which will also drive demand for hydrogen vehicles, and we are getting ready with more than $460 million to support clean-fuel and zero-emission vehicle infrastructure.
To date, our electronic vehicle, or EV, and alternative fuel infrastructure programming has selected projects that will result in 19 new hydrogen-fuelling stations with 25 stations planned by 2024. Five of the stations are already open.
But hydrogen’s real potential for transportation is in the medium- and heavy-duty space. The Emissions Reduction Plan announced $500 million for purchase incentives for trucks as well as support for a real-world demonstration of long-haul trucks powered by hydrogen.
And we are not alone. In fact, more than 20 countries have released their own hydrogen strategies, backed by more than $80 billion in investments over the last 18 months, which speaks to the momentum for hydrogen as part of climate plans around the world.
On the international front, Canada has a long-standing history of fostering international collaboration through global fora like the International Energy Agency, the International Partnership for Hydrogen and Fuel Cells in the Economy and, most recently, the Clean Energy Ministerial hydrogen initiative, of which Canada led the development and is co-leading its implementation. This is a cornerstone of global hydrogen deployment.
We have also entered into several bilateral agreements, including one with Germany that is specifically focused on how best to establish a sustainable and secure supply chain while also enabling greater foreign direct investment. Most recently, as announced by the Prime Minister, we entered into a formal MOU with the Netherlands, through which we will look to establish formal supply chains.
Hydrogen’s time has come. NRCan stands ready to work with partners across the country and around the world, harness our combined will, expertise and financial resources to fully seize the opportunities that hydrogen presents and create a cleaner future, together.
To put it simply, Canada is ready to be — and must be — at the leading edge of the global hydrogen economy.
Thank you for your time.
The Chair: Thank you, Mr. Hoskin. I note that Mr. Labelle has joined us.
I’m going to ask a question, if you don’t mind. Mr. Hoskin, your presentation is quite convincing, talking about the immense potential and about how we’re ready and smart, and we’re going to make it, and we have all the right plans in place. Yet, I also note that a couple of weeks ago, the Canadian government basically made a proposal call to seek opinions from outsiders on how Canada should best pursue this potential. Since we are apparently very knowledgeable, ready and ahead of ourselves to get it done, could you explain the interest in that special study? Could you comment on that?
Mr. Hoskin: I’m not sure which study you are talking about. As I mentioned, we are supporting a number of studies with our various working groups. Fifteen are either underway or have already been completed over the last year.
As I mentioned in the notes and the strategy, not everything is complete. The strategy lays the foundation. It’s really a call to action. But some of the key activities that need to happen to seize those opportunities still have to be developed. That’s why we continue to do analysis and delve into those more specific areas. We have one study, which I think you are talking about, that is focused on the export opportunity and how Canada can become that clean, secure and reliable supplier of choice for clean hydrogen and the technologies that produce and use it. The strategy talks about the export opportunity, but the details on how to seize that opportunity — what the best markets are, how to get product to market — are needed, and that’s what that analysis will help to inform.
The market continues to evolve. In fact, the strategy was released a year and a half ago, and the global market has evolved significantly since then. A number of investments have been made, and technologies continue to evolve. Even some of the early analysis done for the strategy is already outdated because of the pace at which global markets and technologies are evolving. That’s why we need to continue to do analysis — to keep up to date with what’s happening domestically and internationally.
The Chair: Thank you.
Senator Sorensen: Good morning. Mr. Chair, is Mr. Labelle going to be speaking after? Are we hearing both those presentations before we continue with questions?
The Chair: I think Mr. Hoskin made it on behalf of both parties, and Mr. Labelle is here to answer questions.
Senator Sorensen: I have two questions. Either of you are welcome to jump in and respond.
We had some witnesses last week at our meeting that gave Canada’s progress on hydrogen a C-plus grade, with one witness saying Canada’s hydrogen strategy has been watered down. What would you say to that comment? Do you have your own grade?
Mr. Hoskin: It’s early days. The strategy was only released a year ago. The budget came out a few months thereafter. The strengthened climate plan came out a week before the strategy was released, and the strategy very clearly says that actions are needed in the short, medium and long term. The fact that we haven’t taken all of the actions required to seize that opportunity in the 12 to 18 months since it was released isn’t really a surprise, right? There has only been one opportunity to receive resources to go forward and do early actions. The working groups themselves, as you can imagine — establishing 16 working groups with subject experts, each of which has about 50 to 60 people — take time to establish, and many of the experts are on multiple panels. We can’t overtax them in terms of their participation opportunities as well.
So yes, it has taken a bit of time to get up and running. However, there have been some early wins, as I said, like those 15 studies and the fact we have that $1.5 billion Clean Fuels Fund, which is growing clean fuel capacity. These are big hydrogen-production facilities. Choosing those projects takes time to make sure it is done competitively, fairly, openly, transparently and as inclusively as possible. Building those facilities will take a good couple of years. So yes, we’re ramping up activities, but we’ll see what happens later today, and we’ll keep delivering and going forward.
It is not just an NRCan strategy. It’s not just a Government of Canada strategy. The private sector is stepping up. Some provinces are stepping up. Everyone needs to pull in the same direction and go forward as much as we can.
Senator Sorensen: I have a quick question about private sector involvement, and you actually just started to allude to it. There were a lot of numbers in your presentation and lots of millions and billions, but I wasn’t quite clear where the private sector falls into this. Maybe a quick comment on what the expectations are of the private sector and, frankly, how that’s going.
Mr. Hoskin: I would say the private sector is going keenly toward hydrogen. We are seeing conventional energy companies change their plans and pivot to a more sustainable future based on hydrogen. Companies like Shell and FortisBC have made investments. We’re seeing that gas utilities are adopting hydrogen, and they really see it as a new opportunity to both decarbonize the natural gas system and also to provide a new market for their existing resources, as long as we drive down that carbon intensity of their product.
They are investing. We are seeing, through the Clean Fuels Fund, none of the $1.5 billion is 100% funded by government. We provide up to 30% of the funding for those facilities. The remaining amount, that 70%, needs to be provided by either the private sector or other levels of government. They absolutely have to take their part. While we’re investing domestically, while the government is investing and subnational governments are also investing, Alberta and B.C. and Quebec and Ontario are investing, the private sector is, I would say, more than doubling the investments being made by governments.
Senator Anderson: The Northwest Territories is heavily reliant on carbon-emitting fossil fuels for power generation. We already face infrastructure deficits and dated infrastructure. The hydrogen study states that the N.W.T. could benefit from low-carbon-intensity hydrogen. Can you tell me what is being done to look at the transition to hydro? And what are some of the challenges faced in the move to hydrogen within the Arctic?
Mr. Hoskin: Sure. That’s a great question. Under the strategy itself, we actually have a dedicated provincial-territorial working group. We meet frequently to discuss the priorities in each jurisdiction, and the Northwest Territories is actively involved in those discussions. We also have a dedicated Indigenous working group. Indigenous businesses and communities in Canada’s North, as well as across the country, are involved in those discussions. That is about sharing information, sharing best practices, talking about the activities that are happening in each jurisdiction and identifying those unique opportunities that exist. We do have resources, as I mentioned. We’ve already supported analysis, either technically or financially, in B.C., Alberta, Quebec, Ontario and the Atlantic region, and we have resources to support analysis in the Northwest Territories as well.
We are seeing unique opportunities to get off diesel. It’s not just about the greenhouse gas emissions of diesel in the North. It’s also the black carbon emissions that can speed up snow melt because the carbon residue sits on top of the snow and expedites the snow melt. That’s also an issue about using diesel in the North. Getting off diesel is a program that NRCan has been delivering for a number of years now. That looks at both remote communities and other communities.
There are opportunities to link renewable electricity, whether wind or solar, in remote communities that are off grid with hydrogen. Hydrogen offers an opportunity for energy storage. If the wind is blowing too much, you can actually use excess wind to produce hydrogen, and then when the wind stops blowing, you can run that hydrogen through a fuel cell and produce electricity that can then electrify the community. So you actually help offset that diesel opportunity. You help to complement more renewable capacity by having that long-term energy storage option.
In fact, Canada was at the forefront of these technologies. One of the world’s first wind-and-hydrogen production facilities was on the Ramea Islands off the coast of Newfoundland. A second one is in northern Quebec at the Raglan Mine. That hydrogen production facility is tied into some of the highest wind turbines, in terms of latitude, in the world. That community uses the wind to electrify their operations. They use it to produce hydrogen to store the power if there is too much electricity being generated. Then they use the hydrogen to produce electricity when that wind ends.
So that’s one of the benefits, one of the flexibilities of hydrogen. You can use it for energy storage. You can use it as a mode of power. You can actually use it in a vehicle. There have been some snowmobile designs, as well, using hydrogen to power those operations. There are lots of opportunities to tie non-emitting sources, renewables, with hydrogen, and the two work together to help communities get off diesel.
Senator Anderson: You mentioned provinces, territories, Indigenous governments. Does that also include municipalities? Is that information filtered down to the communities? Because I am from the Territories, and I have heard very little in regard to hydrogen.
Mr. Hoskin: We work on the strategic steering committee as the Federation of Canadian Municipalities. They are a key part of delivering this strategy. I agree; it’s all about awareness and information. It is growing confidence in communities, with citizens and with the private sector.
Senator Arnot: Good morning. Thank you to the witnesses for coming.
Thank you for that overview, Mr. Hoskin. You have talked about the strategy and moving toward the implementation. You talked about it being a call to action and that there are regional blueprints. Particularly, it looks like Ontario, Quebec, B.C. and Alberta responded well. Is there any indication you can give me about the response from the Government of Saskatchewan? It seems to me that their response is not as robust as other provinces’ to the strategy and its implementation.
Mr. Hoskin: I would say that is not necessarily correct. B.C., Alberta, Ontario and Quebec already had large amounts of hydrogen. They were already engaged in hydrogen. B.C. has been the cradle of hydrogen fuel cell technology for a long time, likewise with Quebec and Ontario. Some of the largest companies in the world are based in those three provinces. Then Alberta obviously has a strong linkage. Already, one of the top 10 producers of hydrogen in the world is in Alberta, so they had that advantage.
Saskatchewan and the other provinces are very much interested as part of their long-term sustainability. In fact, there is a demonstration project happening in Saskatchewan with the support of the Saskatchewan government that is taking an unspent or half-spent oil well and producing hydrogen in the well. The carbon stays in the ground, and that hydrogen is going to be used to retrofit a coal-fired power plant to produce clean electricity in Saskatchewan. Saskatchewan’s carbon capture and storage, or CCS, technology is also an essential part. Then there are linkages to small modular reactors, which we know are part of Saskatchewan’s long-term sustainability as well.
I would say they are very interested and, across the country, every province and territory has expressed some interest in hydrogen. They see hydrogen playing a role in their sustainable future.
Senator Arnot: I’m glad to hear that. Saskatchewan was an early adopter of carbon sequestration under the carbon capture utilization storage plan. Also, I believe that project you’re talking about is under the Saskatchewan Petroleum Innovation Incentive, which is about extracting hydrogen from fossil fuels. Can you identify any other unique opportunities with respect to Saskatchewan?
Mr. Hoskin: Saskatchewan has a lot of unique opportunities for all clean fuels, not just hydrogen. There is a lot of agricultural waste in Saskatchewan which can be converted to clean fuels. Some of the earlier witnesses spoke about biomass gasification as a pathway to clean hydrogen as well. So there are opportunities. Saskatchewan also has significant opportunities for wind and solar in the longer term. There are opportunities, given the vast space there, to produce significant clean energy from those renewable resources which can be converted to hydrogen as well.
Those are a few of the opportunities. Then, we do know that Saskatchewan’s fertilizer industry, for instance — it’s one of the leading industries in Saskatchewan, other than agriculture — can benefit from clean hydrogen because hydrogen is a key feedstock to produce fertilizer. If you drive down emissions from that hydrogen, you inherently drive down the emissions from that key industry in the Saskatchewan economy.
The Chair: Thank you.
Senator McCallum: I wanted to go back once again to hydroelectricity. In the foreword of the 2030 Emissions Reduction Plan, it says, “A clean, affordable and reliable electricity system is essential for Canada to build a prosperous low-carbon future. . .”
I have worked with people at the Site C dam in B.C. and the mega dams in Manitoba, as well as Muskrat Falls. Look at the devastation that is caused by hydro, so when people say it’s clean, it causes me great concern.
The report says there will be an increase in use of hydroelectricity. What has the federal government done to work with First Nations whose lives and lands have been devastated by hydroelectricity? People continue to say it is clean, but should the human rights violation be taken into account? Should we not only look at GHG emissions but address the more critical violations against the United Nations declaration?
If we look at fish extinction, water and food insecurity, cultural erosion, land dispossession and the erosion of governance by hydro on Indigenous people, how has the government worked with Indigenous people to address this issue? Thank you.
Sébastien Labelle, Director General, Clean Fuels Branch, Natural Resources Canada: Thank you for the excellent question. It’s germane to our business at Natural Resources Canada, but this is not our area in the electricity space. I’d be happy to follow up and provide a written answer to the committee.
The Chair: That’s a good suggestion.
Senator Seidman: Thank you to Natural Resources Canada officials for being with us this morning.
Mr. Hoskin, I might ask you about something you said in your presentation before Mr. Labelle arrived, but I’m sure he’s familiar with the presentation, so we’ll see who’s going to respond here.
You made reference to barriers to hydrogen development, and you specifically spoke about cost and the greenhouse gas footprint. You went on to refer to a common global standard to determine acceptable levels of carbon intensity.
If you could, I would like you to expand a bit on this. There were allusions to this in the International Energy Agency’s report in 2019. I would appreciate hearing a bit more about that aspect of things. Thank you.
Mr. Hoskin: Thanks for that question. The global standard would be a common methodology to determine the carbon intensity. You might hear that various processes are called blue, grey, brown, pink or yellow, but you cannot standardize a colour. A colour is subjective. Anyone who has gone to the paint store to purchase paint knows that one person’s blue is not another person’s blue. They all have different meanings. Standardizing the methodology to determine that carbon intensity gets away from colours and focuses on what is important.
For hydrogen to be a key part of our net-zero future, carbon intensity has to be driven to zero on a life-cycle basis over time before we get to 2050. A common methodology will help get us there because all countries will be using the same playing field. They will all have the same assumptions in the model and the same inputs, and the carbon intensity should come out the same way.
Each country can then adopt a standard for what they deem to be a reasonable carbon intensity limit within their country, but as long as we’re on a level playing field, at least we can incorporate global trade that focuses again on the carbon intensity: This hydrogen is X-percentage carbon and that hydrogen is Y-percentage carbon, as opposed to this is green hydrogen and this is blue hydrogen.
Senator Seidman: That’s really helpful. So you’re saying that every country will then determine how they want to proceed and determine their own standard; is that correct? Would that be region-driven as well? As you discussed in your presentation, we have region-specific issues in this country, and we’re keying into region-specific assets as well in hydrogen solutions. How will that work across the country?
Mr. Hoskin: Internationally, it would be up to each country to determine their level on a life-cycle basis. We are working with the International Organization for Standardization, ISO, to develop that common standard as well. You could say very low carbon has to be X-percentage hydrogen.
In terms of regionality, we are also working with the provinces and territories on what that level could be. We realize that, regardless of the pathway in Canada, we need to drive down carbon intensity towards zero. We know that electricity generation and making hydrogen can be zero-emitting. Hydrogen produced from natural gas with carbon abatement can be up to 95% non-emitting. But on a life-cycle basis, it can actually approach zero because you are using it in technologies that are significantly less emitting in general than conventional technologies. Over, time that emission profile has to be driven towards zero, absolutely.
[Translation]
Senator Carignan: I have a lot of questions, but I’ll start with a statement made by Mr. Mousseau last week. He said that green hydrogen is much more expensive to produce than blue hydrogen, which isn’t yet being produced in sufficient quantities. I’d like to know whether you agree and, if not, why.
Mr. Labelle: It’s absolutely true that green hydrogen costs more than blue hydrogen today. It depends on electricity costs in the regions where it’s produced, but in terms of production costs, it’s more expensive at the moment.
That’s one of the challenges, as Mr. Hoskin was saying, of trying to match the carbon intensity of green hydrogen production so that, when blue hydrogen is produced, it’s less carbon intensive and more aligned with green hydrogen.
Senator Carignan: I saw that your target was to have 30% hydrogen energy in Canada by 2050. We’re very good at setting targets, and in fact the bigger the targets, the more we miss them. We’re not very good at shooting. Normally, the smaller the target, the better shooters we are.
How do you see the certainty or the way to achieve that 30% target? At the expense of what energy, which will be reduced so much in Canada’s energy portfolio, if I can call it that?
Mr. Labelle: That’s an excellent question. I’ll start, and then I’ll ask Mr. Hoskin to add to my answer.
The 30% is really, as we said at the outset, the potential of hydrogen in the Canadian economy. So this is really what we call transformative scenarios when we do modelling. In English, we use the word incremental. These are scenarios that change a bit every year. So when you’re talking about 30%, it’s really a transformative scenario where hydrogen production, for example in the West, is starting to become more and more widespread with decreases in carbon intensity in production and a market that is developing actively. That’s what we’re trying to do. I wouldn’t say that this is a target for which we necessarily have all the answers and all the ingredients to achieve it. We’re working on this with our partners, but we’re not at the point right now where we have a plan that takes us to 30% of the economy.
When we talk about displacing other forms of energy, there are several examples, and Mr. Hoskin can tell you more. We can think of road vehicles, especially heavy and light trucks. We believe there’s real potential there. The alternative would be to replace diesel with hydrogen. So there are many applications. We can think of electricity production and a fuel that could replace or complement natural gas. Hydrogen can really bring that dimension and, for example, reduce the use of natural gas for heating homes.
In some countries, mechanisms have been used to transmit natural gas and replace it with hydrogen.
Senator Carignan: I understand the various applications very well. I really like the issue of hydrogen as an energy. However, in 2050, if hydrogen represents 30% of energy consumption, what will the other 70% be made up of in Canada’s energy portfolio, or in terms of availability? That’s the gist of my question.
Mr. Labelle: Mr. Hoskin, can you answer the question?
[English]
Mr. Hoskin: The hydrogen strategy, and as I started, Canada’s future will be powered by two things: clean power, clean electricity — we know that we have a clean electricity commitment to be net-zero electricity production in Canada by 2035 — and clean fuels. These include hydrogen, but they also include advanced biofuels, synthetic fuels using world-leading Canadian technology that can pull CO2 from the air and convert it into a fuel that can be used in internal combustion engines. Biomass to advanced ethanol or renewable diesel is also an opportunity. Those are the two key pathways to get us to net zero, and hydrogen has a role there, but it’s certainly not the only energy source we will be using.
[Translation]
Senator Verner: My question is somewhat similar to that of my colleague Senator Carignan — perhaps because we are both from Quebec. It concerns the costs of producing green hydrogen produced by electricity. In December 2020, Quebec’s Minister of Natural Resources said that the production costs and the volume of energy in kilowatts required to produce hydrogen are very high.
A few days ago, the president of Hydro-Québec, Sophie Brochu, said that by 2027, so in five years, Quebec would no longer have a surplus of electricity as it did in the past. I would like to hear your comments on that. I’m wondering what the supply of green hydrogen from electricity is going to be if we don’t find a way to reduce the amount of electricity needed to produce it and the costs associated with it.
Have you made any projections on that? Do you have any comments? Were you aware of the statements made by Hydro-Québec’s president? My question is for both witnesses.
[English]
Mr. Hoskin: Growing capacity for electrification will be a key pathway for Canada, regardless of where we are, whether that’s Quebec or Ontario or across the country. We’re looking to electrify the economy through greater use of electric vehicles and other end uses of electrification in industrial going to electric as well. To meet our net-zero future, we do need to grow clean electricity production capacity across the country.
That said, there are also advances in technologies driving down the cost of hydrogen production and improving its efficiency. It’s already more than 80% energy efficient to convert water to hydrogen using electricity and electrolyzers. The price point will be decreased both by technology advances — and in fact that price point has dropped by more than 10 times over the past five years — and economies of scale. There are small facilities now producing hydrogen. The price point of the 20-megawatt facility that NRCan and Shell are building in Varennes, Quebec is significantly less than the 5‑megawatt facility that is there already. The price point continues to drop as you grow the size of the production facility and as technologies grow and also as the global demand grows.
It’s important to note, as we mentioned at the beginning, that $80 billion in investments that countries around the world made. Those investments aren’t just about deployment. Those investments are also about improving technologies. In the past couple of years, the price point for large-scale production has dropped. In fact, in early 2020, before the pandemic, the Hydrogen Council, a global consortium of more than 300 companies — conventional energy companies, global governments, clean tech companies, including Microsoft and others — did an analysis of hydrogen’s opportunity to be used in 35 end-use applications, including the production chain, the purchase of the technology to use it and the purchase of the technology to produce it.
In 25 of those 35 end uses, hydrogen was cost competitive by 2030, and that was before the $80 billion being invested in technology advancements and global growth, so economies of scale and advancements of technology will drive down the cost and improve efficiencies.
[Translation]
Senator Verner: Have you had any conversations with Hydro-Québec representatives on this, and with the Quebec government? Mr. Mousseau, last week, had the same comments about production costs. Were you aware of Ms. Brochu’s statements?
Mr. Labelle: We speak with Quebec government representatives often. This week, I spoke with my counterpart in Quebec City. The department is about to launch its hydrogen strategy. We’ve been told that it should happen in the spring, in the coming months. There’s only a month and a half left in the spring, so we’ll see.
Perhaps Mr. Hoskin could add something about Hydro-Québec.
[English]
Mr. Hoskin: Hydro-Québec is a key partner in that NRCan project I mentioned that is going forward in Varennes. They are supporting the project in the purchase of the equipment, and they’re also looking to provide the electricity to produce that hydrogen. Hydro-Québec has been a key partner on hydrogen for more than 20 years, actually. They’re very active in the Air Liquide facility in Bécancour, Quebec. They were very active in supporting the establishment of the Hydrogen Research Institute at the Université du Québec à Trois-Rivières. Hydro-Québec is very interested and active when it comes to hydrogen because they see the linkages between electricity, electrification of the economy, zero-emission vehicle deployment and hydrogen.
The Chair: Mr. Hoskin, I read an article recently which put into doubt the interest or the commitment of private enterprise into CCS, carbon capture and storage, whereby the experience to date worldwide has not been totally satisfactory. There is doubt that the private sector will buy into it. Sure, they will spend our money if we give it to them, but relative to significant investment by private enterprise, what are your thoughts about it? Will that happen and at a price point that makes sense to the Canadian taxpayer?
Mr. Hoskin: So carbon capture utilization and storage is a key pillar of our emissions reduction plan. It’s included throughout the plan. We’ll find out the details today of the carbon capture, utilization, and storage tax credit. Presumably, it will be in budget today. That is what was in the emissions reduction plan.
I read a few of those studies as well, Mr. Chair, that suggest that current technologies — and they like to point to Weyburn, Saskatchewan, and the Quest project — and they draw analogies with the future of the technology in terms of price and efficiency in emissions reduction.
I was looking through the past speakers. I would say the same thing. It’s hard to analyze or look at this technology, which is the first of its kind in the world, and compare it to what the near future will bring in regard to the technology — the price point, the efficiency. Technologies continue to evolve, and they will need to evolve for us to get to where we need to be for our strength in the climate plan or for the emissions reduction plan and to meet that net-zero future.
I would say that industry is very keen to invest in carbon capture and storage because it is one mechanism that drives down the emissions from their processes. I’m sure colleagues from Environment and Climate Change Canada will be able to speak more about clean fuel regulation. I won’t get too much into detail on that. To meet those regulations, investments in CCS are part of the credit-generation opportunities as well. So there’s going to be incentives and a need for industry to go forward on CCS as well.
Senator McCallum: I want to go back to the relationship with Indigenous people. When you’re looking at the areas of development, deployment, production and the commercialization continuum of hydrogen, will there be any specific issues that arise for Indigenous peoples? We want to ensure that lessons have been learned from past experiences with oil and gas, hydroelectricity, mining and the lumber industry. We would like this conversation to be held right at the beginning of production. Thank you.
Mr. Hoskin: For three years, we have worked to develop the hydrogen strategy for Canada, and we have engaged with Indigenous communities and businesses throughout the duration of those three years. They were part of the discussion from day one and they continue to be part of the discussion as we go forward on implementation. We have, as I mentioned, that dedicated Indigenous working group that is federal, provincial, territorial, Indigenous, as well as a dedicated government and Indigenous businesses and communities. We also are engaging with the national Indigenous organizations as well.
Also, as I mentioned at the beginning in the opening remarks, the Clean Fuels Fund has a dedicated Indigenous stream with $250 million dedicated to support Indigenous-led projects that will include hydrogen projects, so they’re absolutely part of the discussion. There was rights-holder engagement sessions to inform the design of that Indigenous work stream, and we continue to engage as much as possible with businesses and communities from Indigenous as well as across Canada.
[Translation]
Senator Gignac: Good morning to the witnesses, and thank you for being here. I understand that you’re in discussions with the provinces and businesses. Do you sometimes have discussions with large pension funds as well? It’s still 1.5 times Canada’s GDP. I’m thinking here of CPP Investments, which has a figure of half a billion in Canada. The fund invests around the world and is involved in partnerships, especially in Europe, on various hydrogen-related technologies.
At some point, is there a small round table to consider what could be done in Canada to move from first to second gear? Thank you.
[English]
Mr. Hoskin: I was hoping Sébastien would take that one.
Yes, absolutely part of it. We do see banks and pension funds being part of the discussion. In fact, some of the engagement sessions we held — again, it’s not just Natural Resources Canada that’s going forward on hydrogen. We work with stakeholders across the country. The Transition Accelerator, that I know you spoke with last week, have had a number of panel sessions with the financial community, and we’ve participated in that, providing them information on the opportunities for Canada. But also internationally, I mentioned the Clean Energy Ministerial Hydrogen Initiative. One of the key work streams under that is sustainable finance. That includes global discussion on how to lock in those investments that are required. The private sector investments provide that signal and that includes the financial industry.
In fact, I’m also part of an international working group led by the World Economic Forum that looks at what needs to happen on an economic basis and a sustainable finance basis. That information is brought back to Canada as well.
[Translation]
Senator Gignac: Thank you. I’ll give my time to my colleagues.
Senator Carignan: I want to go back to my question about the 70% of other energies. It’s as if, when we look at the greenhouse gas reduction projections, we don’t necessarily see a parallel reduction in the consumption of other energy sources. For example, if hydrogen consumption is increased or the energy is supplied by hydrogen, and the hydrogen is produced in part by electricity, but also in part by fossil fuels, that means that all of the 70% of energy also comes from oil and gas.
Does the greenhouse gas reduction plan reduce greenhouse gases, but not necessarily oil and gas production, because oil and gas are produced more, quote unquote, ecologically, because we’re capturing CO2 and changing the exploitation and extraction methods?
In your opinion, there will still be gas and oil in 2050. What percentage of Canada’s energy consumption will be gas and oil or other energy sources for the 70%? If I have 30% hydrogen, I automatically have 70% other energy sources. What will be the share of oil and gas in 2050?
[English]
Mr. Hoskin: Clean electricity doesn’t necessarily have oil and gas involved. In fact, we have that commitment to being a zero-emission electricity grid in Canada by 2035, so that means that part of our energy will be coming from clean electricity. That will also produce clean hydrogen. It’s not the only mechanism to clean hydrogen. Clean fuels, biofuels, advanced ethanol from waste products are also not directly linked to the oil and gas sector. So the majority of the energy in Canada will not be linked to the oil and gas sector.
That said, hydrogen does produce and provide that new market for our conventional energy resources, provided the carbon intensity of that product is driven toward zero over time. It should be part of our net-zero futures. We have the resources — and I think our minister has been very clear on this — to produce zero-emission hydrogen, and we can lever the investments that have gone into the conventional energy sector. We can lever that skill set and those skilled trades that are in the conventional energy sector to remain competitive and relevant in a net-zero future.
[Translation]
The Chair: That concludes our first panel. Thank you to our witnesses from Natural Resources Canada, Sébastien Labelle, Director General of the Clean Fuels Branch, and Aaron Hoskin, Senior Manager of Intergovernmental Initiatives. Thank you both. We appreciate your sharing your knowledge. That gives us a better understanding of where Canada is going with this potential. Thank you very much.
For our second panel, from Environment and Climate Change Canada, we have Douglas Nevison, Assistant Deputy Minister of the Climate Change Branch, and Judy Meltzer, Director General of the Carbon Markets Bureau in the Environmental Protection Branch.
Welcome to both of you, and thank you for accepting our invitation. The floor is now yours.
[English]
Judy Meltzer, Director General, Carbon Markets Bureau, Environmental Protection Branch, Environment and Climate Change Canada:
Thank you, Mr. Chair, for the invitation to Environment and Climate Change Canada to appear before your committee and for the opportunity to contribute to your study on hydrogen.
I’m participating from the unceded territory of the Anishinaabe Algonquin Nation.
I would like to begin by speaking to Canada’s first Emissions Reduction Plan, which is of direct relevance to the focus of your study as well as to Canada’s broader efforts in achieving a clean economy.
Launched on March 29, the 2030 Emissions Reduction Plan is the Government of Canada’s next major step in taking action to address climate change and to create sustainable jobs in Canada. The plan includes continued support for the development and use of hydrogen, both to reduce emissions in various sectors and as an important source of economic diversification. An important early deliverable under the Canadian Net-Zero Emissions Accountability Act, it is an evergreen plan that goes sector by sector with the measures needed for Canada to reach its ambitious and achievable emission reduction targets of 40-45% below 2005 levels by 2030 and net-zero emissions by 2050. The act also ensures that the government will continue to be transparent and accountable to Canadians throughout its implementation, with three progress reports required in 2023, 2025 and 2027.
Mr. Chair, from transportation to the oil and gas sector, to heavy industry, agriculture, buildings and waste, every sector in all regions has its role to play in meeting Canada’s 2030 climate target. The plan includes $9.1 billion in new investments and a suite of novel measures to help mobilize Canada towards a truly sustainable economy and being a leading competitor in the global transition to cleaner industries and technologies.
The plan references a variety of ongoing initiatives relevant to hydrogen, including the publication of the proposed clean fuel regulations, the government’s work with key stakeholders on the Hydrogen Strategy for Canada, as well as the investments made to grow the clean-fuel market through the Energy Innovation Program and the $1.5 billion Clean Fuels Fund.
The proposed clean fuel regulations, the final version of which is expected to be published in mid-2022, represents an important part of Canada’s climate plan to reduce emissions, accelerate the use of clean technologies and fuels and create jobs in a diversified economy.
The complementary Clean Fuels Fund is intended to speed up the transition to clean fuels, technologies and processes across Canada and will increase support for domestic production of low-carbon fuels, such as hydrogen and biofuels, and their adoption. The fund is also designed to de-risk the capital investment for building new or retrofitting or expanding existing clean-fuel production facilities.
These investments will also help implement early opportunities identified in the Hydrogen Strategy for Canada by supporting the increased production of clean hydrogen. This domestic growth will position Canada to become a world-leading supplier of hydrogen and hydrogen technologies, generating economic opportunities through exports and direct foreign investment.
The plan also references the clean electricity standard. At the COP26 UN Climate Change Conference in November 2021, the government committed to accelerating its clean energy transformation by working with provinces, territories, industry and other stakeholders to ensure that Canada’s electricity grid achieves net-zero emissions by 2035. Consultation on the scope and design of the clean electricity standard is supported by a recent discussion paper published in March 2022.
While Canada already has one of the cleanest electricity systems in the world, low-carbon intensity hydrogen can help to reduce emissions related to power generation and can help to further green the electricity grid.
In reality, a diverse mix of energy sources is key to affordability and reliability. Canadians expect the electricity that powers their homes, businesses and industries to be clean, reliable and affordable. Current and emerging technologies, including carbon capture, utilization and storage and non-emitting hydrogen blended with natural gas to generate electricity, can help make natural gas an option for low-emitting generation.
With respect to hydrogen specifically, it presents great potential for mass deployment across the economy, where clean hydrogen could lower emissions in sectors such as primary resource extraction, transportation, power generation and manufacturing.
Canada, as one of the top 10 global hydrogen producers — about 4% of the global total — has emerged as a leader in hydrogen and is home to ample feedstock for both clean hydrogen and biofuels.
The Hydrogen Strategy for Canada sets out a path for integrating low-emitting hydrogen across the economy. It is a call to action and lays out an ambitious framework that will reinforce hydrogen as a tool to achieve our goal of net-zero emissions by 2050 and position Canada as a global industrial leader in clean fuels.
Further, as a member of the Hydrogen Council, a global initiative of leading energy, transport and industry companies looking at hydrogen to foster the energy transition, Canada participates in a number of initiatives seeking to advance clean technologies like hydrogen fuel cells. Canada also co-leads a Hydrogen Initiative launched in May 2019, which focuses on commercialization and policies, programs and projects to support the deployment of hydrogen across the economy.
Canada has enormous potential to develop and sell technology to enable Canadian and foreign companies to produce low-emissions-intensity hydrogen. It is estimated that by 2050, Canada’s hydrogen industry could create up to 350,000 jobs, reduce emissions by up to 45 megatonnes per year and create a domestic and export market potential of up to $100 billion.
We have an opportunity both to become a player in technologies such as electrolyzers and a supplier of clean hydrogen for domestic and international markets. These opportunities exist across the country.
Further, as per pillar 7 of the Hydrogen Strategy, implementation of a collaborative, multi-level government effort to facilitate the development of regional hydrogen blueprints to identify specific opportunities and plans for hydrogen production and end use is ongoing. This also intends to identify hydrogen supply chain options at regional and sub-regional levels in Canada.
More generally, hydrogen opportunities in Canada will depend on location and access to grids, pipelines and carbon capture and storage capacity. In addition to investments that will support the growth of electric and hydrogen fuel vehicle technologies announced in Budgets 2019 and 2021, the government is looking to support specific actions that can support greater hydrogen use in stationary applications, for example, boilers, heaters and turbines.
Budget 2021 included a new investment tax credit for capital invested in carbon capture and storage projects, which will also support hydrogen production. The details of this will be forthcoming.
However, we can do more. We know that Canada’s clean tech sector still faces challenges, and many clean tech companies need support to grow and reach the stage where they can compete globally. For example, there is ongoing work to develop codes, standards and regulations to establish a clear, predictable appropriate framework for hydrogen fuel cell vehicles, hydrogen fuelling, storage and related applications. However, there remain gaps in how hydrogen is metered and dispensed, which poses a barrier to retail sales in Canada. Sustained engagement and effort will be needed to address these issues.
While a lot has been achieved, there is much left to do. Nevertheless, the government is confident that Canada is well placed to continue to lead the way in the development of clean technology, and we look forward to the contribution of this committee in helping chart the path forward.
Thank you.
The Chair: Thank you.
Mr. Nevison, do you wish to add anything to the discussion?
Douglas Nevison, Assistant Deputy Minister, Climate Change Branch, Environment and Climate Change Canada: Thank you, Mr. Chair. No, I think I will just be here to help answer any questions that committee members might have on the emissions reduction plan.
The Chair: If I can start, this panel and the panel prior talked about money being available to encourage innovation and encourage the private sector to invest and meet market needs. A comment was made that the match by government by funds is approximately 30%; in other words, you seek 70% investments from some other factor. In that discussion, it was also mentioned that the 70% can come from another government fund.
I’m just wondering about something. Thirty per cent sounds good. I think we all like the private enterprises being a partner — it shows seriousness and you’re spending somebody else’s money — but at the same time, could it be that that 30% will last and another 30% from another fund and you get a bunch of professionals basically shopping around for all those funds to maybe have 80% funded by the government? Is that a possibility; could that occur?
Mr. Nevison: Thank you, chair. That’s an excellent question.
I think the premise is that to reach Canada’s climate goals, mobilizing private capital will be essential. Governments at all levels will not be able to fund the transformation that will be required to meet net-zero emissions by 2050 without private capital.
Governments have a role to play in terms of incentivizing private investment. We are very conscious of the risk that you identified in terms of crowding out private investment through public funding. In the previous group, we talked about the Clean Fuel Fund. I think the Net Zero Accelerator Initiative under the Strategic Innovation Fund was also mentioned as a possible source of federal government resources. We are very conscious across government departments to ensure the overall public contribution, as you noted, does not crowd out private capital in its own right. There are usually what are referred to as stacking limits in terms of how you can take money from one particular fund and add it to another initiative in terms of guarding against that risk you mentioned.
So we do really want to mobilize private capital and use public funds to do so, to crowd in private investment, but your point is a very valid one and one we are very conscious of in terms of designing these funding programs.
The Chair: Thank you.
Senator Anderson: The 2030 emissions-reduction plan states:
At this time there is no reliable replacement to fossil fuel consumption for non-hydro NWT communities or many economic sectors. . . .
It goes on to state that
. . . Ultimately, any deep decarbonization effort in the North will be tied to the availability of zero-carbon technologies that will reliably work in northern climates, the cost of such technologies, the availability of funding to deploy it, and the capacity to maintain such technologies.
What does that mean for the Northwest Territories, and what investment is Canada making to support a move to net-zero decarbonization in the N.W.T., given the very real and significant challenges on ending N.W.T.’s reliance on carbon-emitting fossil fuels?
Mr. Nevison: Thank you, senator. That’s an important question. As you correctly noted, the emission reduction plan highlights the challenges associated with decarbonization in the North.
There are a number of government initiatives that are aimed at helping on that front. For example, in the last budget, there was $350 million to help Northern communities move off diesel. In the emissions reduction plan, there was an extension or enhancement of the Low Carbon Economy Fund that Environment and Climate Change Canada manages. It was a $2.2 billion extension. Also, one of the innovations within that particular programming will be a new Indigenous leadership fund that will help Indigenous communities, in particular, with their energy transitions.
So it is a key challenge and one that the Government of Canada is trying to address.
Senator Anderson: I note that our emissions were 1.7 in 2005, and they were still stagnant in 2019 at 1.7. Is it financially feasible to move to hydrogen given the 1.7 emissions in the N.W.T.?
Ms. Meltzer: Thank you, senator. I’m going to speak to part of that question, building off your last question and Doug’s response.
We know that different regions have different opportunities and different energy profiles and costs. A mixture of investments and regulations will help incentivize reductions that will look different in different regions of the country.
I will note — and speaking with respect to some of the ways in which regulations can help drive that and how some of the proceeds can be used — what we know from, for example, carbon pollution pricing — and the Northwest Territories provides an excellent example of this — incentives can be created by which some of those pocketbook costs can be offset as part of that transition process.
Again, I won’t speak to specific investments, but it is important that the regional context be taken into account. It is certainly the case in terms of our regulations — whether it is through exemptions for remote communities, clean fuel regulations and carbon pollution pricing — that the unique circumstances of the territories, for instance, are taken into account.
Doug, you may have more to say on the investment side.
Mr. Nevison: I think that captures it, Judy. Thank you.
The Chair: To interject, the following question was asked by Senator Anderson: What can we do for the North? There are many reports, including from this committee when we travelled up there, that there isn’t any obvious solution. Sure, there is one mine that is using wind, but it’s often frozen. It’s complicated. They are talking about nuclear, but the numbers are way off, and the time for study is 10 years away.
We talk about the money. The answer you gave us was that there is money available to seek solutions, but in a practical sense, what kind of energy are we talking about and when can they expect an alternative to the diesel generators?
Ms. Meltzer: I can start on that question. It is an important question.
We know that transition is not a consistent and common pathway. It looks different for different communities and different places with different options. We certainly know that urban dwellers potentially have more near-term options, for example, to use public transportation, whereas rural and Northern communities don’t. We know there are unique circumstances in the territories in terms of energy security and distances travelled.
That said, it’s that combination of ensuring that there are incentives driving the technologies that will help ultimately displace some of the fossil-fuel usage, for example, in diesel generation — and our colleagues from NRCan spoke to some examples, and that’s something they’re leading on — that helps industry improve its energy efficiency and create incentives to implement renewable technologies. There are some great examples in the North. Again, our NRCan colleagues have spoken to those.
It’s creating incentives and signals, and recognizing that transition will, in some cases, look different and take more time.
From a regulatory lens, it is important that we design our regulations to try to take those differences into account. I will give two examples. One is under the proposed clean fuel regulations. There is an exemption for remote communities, which recognizes the unique circumstances you were talking about. Similarly, under carbon pollution pricing, certainly under the federal system — and we see that in the systems implemented by the Northwest Territories, as well — there is that recognition that remote communities have an exemption on their fuels used for electricity generation and on aviation fuel used in travel within the territories.
I think it’s a combination of making sure that, just because there are different circumstances and challenges, we don’t stop that incentive because that’s what will drive change but that we try to take it into account as we design the mixture of measures and policies and investments.
The Chair: For those people listening to us in Nunavut this morning, what can they expect with respect to their quality of life relative to energy? Are we five years away for them? Ten years away for them? What confidence can we give them to say, well, we understand your circumstances, but there is a plan B and it’s coming? What sort of expectations should we build for those people?
Ms. Meltzer: Again, these are important questions. The one thing — and we have heard this from stakeholders and communities in the North, including Nunavut — is that the impacts of climate change and addressing and mitigating those risks and the costs of those risks is a top priority. That is one consideration about the extraordinary impacts from climate change that those regions will experience. Prioritizing action, as laid out in the Emissions Reductions Plan, is paramount, in particular to help mitigate the impacts, which are felt more in our northern regions.
There are community-specific technologies, and there are examples. We can follow up, and our NRCan colleagues may be best placed to give the technology-specific examples. We know there has been carbon pollution pricing. The federal system has applied in the territory, and the return of proceeds is designed to ensure affordability and recognize that change takes time. It’s the programs, such as transitioning off diesel, et cetera, for remote communities, that are ultimately going to drive that change. Again, that’s beyond Environment and Climate Change Canada, or at least my area, so I won’t specify timelines around that.
Mr. Nevison: Chair, just in response to your question, there are also opportunities for sharing of information and best practices across communities and regions and groups. For example, the Government of Canada co-chairs a bilateral distinctions-based table with ITK, the Inuit Tapiriit Kanatami, with the Inuit communities. That is an opportunity to share what’s happening on the ground in terms of, as Ms. Meltzer mentioned, not only technological opportunities to improve the quality of life but also resilience and adaptation, which are also incredibly important issues in the North. That is another opportunity to address this very particular challenge in the North.
The Chair: Thank you.
Senator McCallum: Thank you for joining us this morning. Can you give examples of hydrogen success stories in Canada and what made these projects successful?
Ms. Meltzer: Thank you very much for having us and for that question. Again, our NRCan colleagues may be best placed to give you specific and concrete examples, but we can certainly follow up. I would note that what stands out with respect to hydrogen are the opportunities across different sectors. There are examples of each of these that we can follow up with and provide to you. I realize that you and the committee are well aware of these, but it’s in the transportation sector. Fuel will be used in fuel-cell electric vehicles and in fuel-cell electric buses. It is fuel for power generation, whether it is through combustion in a turbine or longer-term storage. It is for heat in industry. We have some good examples of some remarkable progress in our steel sector. Hydrogen will be important in transforming production in cement, steel, manufacturing and other chemicals, and in sectors which typically have been hard to abate. We can follow up with some specific examples, certainly. There is also feedstock for industry and heat for buildings. We note that range of opportunities when we look at hydrogen as an important part of energy transition.
Senator McCallum: When you provide the follow-up, could you cite specific success stories within the Indigenous communities?
Ms. Meltzer: Yes. We will provide that.
Senator McCallum: Thank you.
[Translation]
Senator Carignan: I’m almost embarrassed to ask the same question I asked the previous witnesses from Natural Resources Canada; however, I didn’t get an answer. So I’ll try again with Environment and Climate Change Canada. If we project greenhouse gas production in 2030 and 2050, we should have a good idea of the energy sources used in Canada in 2030 and 2050.
I’m going to ask a question you may have heard before; you may have had time to think about it. Has the department or the government made any projections as to what the sources of energy in Canada will be and what their proportion will be in 2030 and 2050, and how that relates to production?
To draw a conclusion from this percentage calculation, we’d probably need to know what we’re producing or what our oil and gas needs are. Greenhouse gases are being reduced through new technologies for extraction, carbon capture, and so on. Is there a shift? I see that waste produces 7% of greenhouse gases, but I know that on waste sites, there are experimental projects to produce hydrogen. So what would be the proportion of energy use by energy type in 2030 and 2050? We could draw some conclusions from that afterwards.
[English]
Ms. Meltzer: Mr. Nevison may be better placed to speak generally to the question. The question is an important one. Maybe the reason there isn’t a specific answer is we know it will be a mixture. We are ensuring that the incentives, regulations and measures are in place to generate the range of different sources that we know the transition will require. The clean fuels example, or the low-carbon-intensity fuels, have significantly lower emissions over their lifespan than conventional fuels; we know that. We know there are different kinds with different attributes, whether it is ethanol, biodiesel, advanced biofuels, renewables, liquid synthetics, hydrogen. It is a real mixture.
On a positive note, when we look at the clean fuel regulations, as you have heard us explain before, it is technology neutral. It is looking to reduce the carbon intensity emissions across the life cycle of clean fuels. A lot of the credits that will be generated will be coming from emerging technologies by 2030, including applications of hydrogen.
We will, as we finalize those regulations, for example, provide estimates of the proportion of credits or volume of megatonne reductions that will come from different parts of the incentive, including emerging technologies and other forms of compliance. What that means is that we’re not closing the door in advance of what the solution will look like.
One of the reasons we have these important market-based incentives — I would point to carbon pollution pricing and the forthcoming clean fuel regulations — is that they enable those reductions and incentives to work across the economy where they make the most sense, whether it’s for a specific industrial facility or a region.
I know you’re not getting the specificity in the response that you were looking for. Doug may want to add to mine. I’m focusing on the regulatory side. Part of it is because we are creating a range of incentives, and it will take the diversity of the cleaner technologies to deliver the reductions needed.
I will pause there, recognizing that partially responds to your question.
Mr. Nevison: Thank you for the question. It is clear that to reach net-zero emissions as a global goal, all sectors have to get to net-zero emissions by 2050 themselves. What the production profiles lying behind those emissions pathways will look like will depend on a number of factors, including technological advances but also supply-and-demand-type factors.
For example, in the oil and gas sector, a number of forecasters have production forecasts going forward where global demand for oil and gas is declining and, as a result, production would fall in line with that.
In terms of Canadian sources, I would point you to the Canada Energy Regulator for a potential response to your question, as they do production forecasts for various energy sources over different time frames and under different scenarios.
As I said, and as Judy also said, a lot will depend on using the regulations and incentives to help ensure that all sectors of the economy are moving toward net-zero emissions by 2050.
[Translation]
Senator Carignan: Would it be possible to have a witness commitment? Because this information is relevant and helps assess the likelihood of meeting the targets.
The information has to be there somewhere, because if we don’t have a clear picture of what percentage of the energy portfolio will be used in the energy portfolio in 2030-50, I don’t see how we’re going to be able to set credible targets. It’s impossible this information isn’t somewhere at Environment and Climate Change Canada.
[English]
The Chair: Mr. Nevison, could you help us out there, in conjunction with Natural Resources Canada?
Mr. Nevison: Chair, I think we can follow up, as the senator requested, with some publicly available forecasts of oil and gas and energy production over the time frame. I think those are available, and we could put that together, if that would help.
The Chair: If you could.
[Translation]
Senator Carignan: I’m talking about all sources of energy.
[English]
I’m not talking only about oil and gas but also about hydroelectricity and all of the others.
Mr. Nevison: The energy mix in 2050 I believe is what you’re asking for, senator.
The Chair: Can I comment, Mr. Nevison? People like me may be too cynical, but how do you respond to the argument that the emerging markets will find us, this will evolve, and the solution is there; we can’t define it because it is a variety and a mix, and we want the market forces to basically move things around? When I hear that, I call it a big hope. The big hope is that something is going to happen to resolve things for us. Usually in life, there is not a high success rate with that. If you choose well, you do well. I’m a bit cynical when you say emerging markets will be there and everything will work out fine. How do you respond to a cynic like me in that respect?
Mr. Nevison: The climate change imperative and the momentum behind actions to address climate change is growing faster and faster every year. It’s not just coming from the incentives and regulations imposed by governments; companies themselves, for example, are investing in clean technologies. They see business opportunities. They’re being asked by their customers, shareholders, investors and other members of their supply chains to move toward net zero. We’re seeing an increasing number of net-zero commitments from companies across the globe. The incentives, I think, are moving in that direction as well.
As my colleague Ms. Meltzer mentioned, we have certain policy levers at our disposal to help nudge action in that particular area with respect to pricing, regulations and investments. Where I see real optimism is in terms of the reaction and the momentum that’s building behind responding to this particular challenge and the business opportunities that lie behind that.
Senator Sorensen: Thanks very much. I think this will be the easiest question you’ve had so far, but it’s confusing for me.
I would like some quick clarity on grey, blue, green, black, turquoise and brown hydrogen sources. I understand the different colours are related to how they’re produced, but I’m trying to understand. I think I know that green is the best of the best, but is there a scale of what’s the worst of the best and the best of the best? Lastly, which of those might be phased out? I hope it’s the easiest question for you.
Ms. Meltzer: Yes and no. I think our NRCan colleagues answered this. In terms of the colour scheme, we can share a lot of information and details about what each colour means, but in a way, that doesn’t tell the full story of the carbon intensity of different sources, forms of production and processes. We’re focusing on the carbon intensity.
One example is the clean fuel regulations. It’s not about the technology that’s used, for example, to produce hydrogen; it’s about the carbon intensity of the fuel. The lower the carbon intensity, the more credit you get; there is a stronger reward.
I think that’s why you’re hearing a bit of pause about defaulting to more black-and-white colour distinctions. I think our NRCan colleagues touched on this, but we can certainly share a lot of information that outlines this.
We approach that distinction with some caution because it doesn’t tell the full story about different carbon intensities. At the end of the day, from my perspective, the regulatory side is what matters.
I’ll pause there for Doug if he wants to speak to that.
The Chair: So it’s multiple-choice, whatever colour pleases you.
Senator Sorensen: Thank you. That was helpful.
Senator Gignac: Welcome, witnesses.
My question is with regard to the green bond issuance. I think this is your department. Steven Guilbeault has talked about this.
Apparently, the nuclear industry was excluded from the first issuance. The president of the Canadian Nuclear Association has said that we have been, quite frankly, blindsided by the release of the green bond because there was no consultation with the nuclear industry.
When we see what is going on in Europe, given the political tension, Europe wants to get out of Russian gas, and apparently, they want to invest more in nuclear energy. In your department, are you involved in that decision? Maybe you can send me an answer in writing.
The Chair: They have time to answer.
Mr. Nevison: Thanks, senator. I can take that question. The first point I would make is that the exclusion of investments in nuclear energy in no way diminishes the government’s commitment to looking at all possibilities and sources of low-carbon energy. This particular exclusion for the Green Bond Framework reflects market demand. We did thorough consultations with the market, both international and domestic investors, and it’s consistent with market preferences. Most green bond frameworks, if not all green bond frameworks, exclude nuclear energy. That includes countries like France that have very significant nuclear industries.
It was to secure sufficient and appropriate demand and to be included in green bond indices. The exclusion was driven by the preference of the market.
Senator Gignac: If I read between the lines, the door could be opened down the road. If you look at the past, Germany’s dependence on natural gas from Russia is because their Green Party was opposed to the new nuclear plan. Now, the world has turned on a dime in the last month or two. Quite frankly, some people are realizing they might have to have second thoughts regarding the nuclear industry, including in Europe, and investors might have second thoughts as well about maybe whether it’s better to invest in Russia’s oil and gas or in the nuclear industry.
If I read between the lines, it could be that we’re revisiting that decision next time.
Mr. Nevison: The market will evolve over time in response to a wide range of factors, and if the conditions change, the Green Bond Framework will adjust to the market situation. We’ll see where the market goes on these things, but at this stage, in terms of the initial sovereign offering, the guidance from the market was clear in terms of the exclusions.
Senator Gignac: I’m not a lobbyist for the nuclear industry. We are just senators here, but he referred to the lack of consultation to the nuclear industry in Canada. Is it a possibility that you will consult next time before making your decision?
Mr. Nevison: There was significant consultation on the framework beforehand. As I said, the message we received from the market was clear. Yes, we will always be in a position to consult. We’ve heard the concerns from the industry about this particular issue, and consultations will be an ongoing aspect of the program.
Senator Gignac: Thank you.
The Chair: Any other questions from any of our senators? If that is the case, let me close this session.
[Translation]
I’d like to thank the witnesses from Environment and Climate Change Canada, Mr. Nevison, Assistant Deputy Minister of the Climate Change Branch, and Ms. Meltzer, Director General of the Carbon Markets Bureau in the Environmental Protection Branch.
Thank you to you both.
[English]
Thanks to both of you this morning. It’s much appreciated. As you know, this is complicated, and there is a lot to learn, but we have people like you guiding us. Thank you very much. We look forward to meeting you in this study of hydrogen or other matters. Have a good day. Thank you.
(The committee adjourned.)