Environment Committee on Oct. 21st, 2022

[Greg McLean, Conservative, Calgary Centre, AB]

What I'm asking about, Ms. Perez—and I'm sorry to interrupt—is that the whole thing about energy is energy return over energy invested. If it costs 60% of the power just to produce hydrogen and to get hydrogen out, at the end of the day, on the stack of energy options available to society, it is the most energy-consumptive. Would you agree?

[Ivette Vera-Perez]

I would agree that, if we're talking about the round-trip efficiency of a system, it is not the highest round-trip efficiency; however, when you think about the whole picture, efficiency is one of the components.

This is an industry that's scaling up now, so you will argue that efficiency will improve over time and is already improving over time, so that's one point. The other point is that we cannot forget about the robustness and resiliency of the system that we're trying to develop going forward. This is also something that hydrogen brings into the mix—

[Greg McLean, Conservative, Calgary Centre, AB]

Thank you, Ms. Perez. I only have a little bit of time here. I appreciate what you're saying, that as technology develops, it becomes more efficient going forward once you get through it.

I was at the International Energy Agency meetings back in March, and a gentleman named Dr. Andrew Forrest, who is a billionaire from Australia and heads Fortescue Future Industries, said that hydrogen will not be viable as a fuel source for 20 to 30 years and that it's important for governments to de-risk it until that point in time.

In the meantime, de-risking it means a whole bunch of money, like $12 billion off the coast of Newfoundland to produce hydrogen from wind energy, consume power to turn it into either ethanol or ammonia, and then ship it, all of which is very energy-intensive. As a matter of fact, in some cases, it will result in energy lost through the process.

At what point in time do you think this will become more robust so it's not consuming 15 times as much cost as blue hydrogen, which is further developed?

[Ivette Vera-Perez]

That's a good question, and there are good points with a few items here.

Andrew Forrest, at the same time, is very bullish on his capacity to bring in the order of megatons of hydrogen to the EU, and I'll get to the number. I've read an article that he wrote—

[Greg McLean, Conservative, Calgary Centre, AB]

Mr. Forrest is bullish on this as long as somebody else is paying for it. I have noticed that Mr. Forrest hasn't put a dime down for what the government is paying in Newfoundland; and if he has, I haven't seen it, and I would love to see that.

Go ahead.

[Ivette Vera-Perez]

I would have to give you that.

What I wanted to mention is that a lot of what you're saying about government helping to de-risk is, for example, contract for difference, which is the initiative that Germany has come up with. The idea is that the government helps de-risk the difference between what it costs to produce hydrogen today and what the end users are able to pay. Now, the contract for difference itself, that program, is quite complex, which is what I hear from members and people in Germany, but the principle, I think, is quite valid. Now, you would need to think about the—

[The Chair, Liberal, Francis Scarpaleggia]

I'm sorry, but we're going to have to stop there. This is very technical and very involved. I'm sure we could go on for many more minutes, but we'll have to go to Mr. Weiler now for five minutes.

[Patrick Weiler, Liberal, West Vancouver—Sunshine Coast—Sea to Sky Country, BC]

Thank you, Chair.

It's fascinating testimony already, so thanks to the witnesses for being here today.

I want to remain with questions to Ms. Vera-Perez on this general topic.

The Russian invasion of Ukraine has pushed up the price of natural gas right around the world, especially in Europe. We're seeing in Europe now that the price of green hydrogen is cheaper than natural gas. Looking ahead, the thinking was that green hydrogen wouldn't be cost-competitive with blue hydrogen for about 10 years, but with the Russian invasion of Ukraine, I was wondering if you could give us a sense of how that gap might have narrowed with the energy market where it is right now.

[Ivette Vera-Perez]

Quite sadly, the gap keeps narrowing and the energy bills—for those of us who have family in Europe—are quite high right now.

It's not only the war in Russia. It's also climate events and, in general, the possibility of other events that we in Canada cannot control, globally speaking. It's about diversifying the energy supply and the energy mix. I just wanted to make that point, very quickly.

I'm not able to give you a number in terms of how many cents per kilogram cheaper green hydrogen is becoming. Many elements are contributing to hydrogen getting cheaper. A gigafactory was announced in the U.S. by Plug Power, which will be operating next year. France invested $1.2 billion in a gigafactory in their territories. There are many factors influencing it. Now, there's going to be a hydrogen pipeline. It was just announced today in The Financial Times. It will be between Spain and France. Then there's the gas pipe that is not going to be built.

I don't have a number in terms of how many cents this is making green hydrogen more viable, but the gap is narrowing. When you think about it, the biggest factors that influence the price of green hydrogen are the costs of electricity and the costs of electrolyzers.

The capital costs of the electrolyzers and all of these things will go lower as the economies of scale increase. The price of electricity is also a matter of thinking about which jurisdictions you want to start producing the highest volumes first and where you have the best deal—if you will—on the price of electricity. Those are the two big indicators. Also, when the price of natural gas goes up, obviously the economics gets better.

[Patrick Weiler, Liberal, West Vancouver—Sunshine Coast—Sea to Sky Country, BC]

Thanks for that.

You talked about some of the competitiveness concerns with China, the U.S. and Germany. I was hoping you could maybe speak to some of the competitive advantages that Canada has right now. How can we seek to leverage those in the hydrogen economy?

[Ivette Vera-Perez]

Canada has many advantages. I had no intention of being a party-pooper in this statement.

I don't know if this panel knows that Canada is the country that has led the development of the electrolyzer industry. It started at the beginning of the 20th century with a company called Stuart Energy. That company, through many iterations, led to Hydrogenics, to Next Hydrogen—in some ways—and to Optimized Hydrogen today. That know-how is Canadian. A lot of the electrolyzer technology used elsewhere, including some projects that we've looked at in India, for example, were born in Canada.

That's one. Another one, obviously, is the fuel cell industry, which is based on the west coast. Ontario has been the cradle of the electrolyzer industry. The west coast of Canada is the cluster where the fuel cell industry was born.

The know-how, patents and knowledge are here. That's a reason to be proud. That's one of the reasons why I always feel that we should continue to lead. This was the 1987 Canadian hydrogen strategy, but it had a different title.

When I say that we have been leaders in this space, I mean it. We were leaders when nobody was paying too much attention to hydrogen. Now that everybody's paying a lot of attention to hydrogen, we really need to claim our spot.

[Patrick Weiler, Liberal, West Vancouver—Sunshine Coast—Sea to Sky Country, BC]

Quickly, how can we better support those clean-tech companies working in hydrogen, both in Canada and for export opportunities?

[The Chair, Liberal, Francis Scarpaleggia]

I'm sorry, but we're out of time.

[Ivette Vera-Perez]

I'll follow up on it.

[The Chair, Liberal, Francis Scarpaleggia]

That's perfect.

Madame Pauzé, go ahead.

[Monique Pauzé, Bloc, Repentigny, QC]

The International Energy Agency and the Organisation for Economic Co‑operation and Development, or OECD, find that the U.S. plays an important role in bringing renewable energy on a large scale?

I'd like to ask Mr. Kakumanu a first question, and then a second question to Ms. Vera‑Perez.

Mr. Kakuman, in your industry, are governments showing interest in your technology?

[Swapan Kakumanu]

Yes. We are looking at some municipalities in the U.S. that have expressed an interest in using our solution to process their waste. They're basically putting their waste into landfills right now.

[Monique Pauzé, Bloc, Repentigny, QC]

Thank you, Mr. Kakumanu.

Municipalities seem to be following you, but I didn't hear you mention the federal government, so I'm not sure it is present.

Mr. Kakumanu, would you like to add anything?

[Swapan Kakumanu]

We've not been approached by the federal government yet. That is something we are trying to address, that with these kinds of opportunities companies like Fogdog are available with some technologies. We need some support where we can actually.... I totally understand the long-term strategy of hydrogen and the long-term strategy of wind and solar, but what we're trying to say is that there is current low-hanging fruit and that we could get rid of these landfills, which are contributing up to 3°C to our climate temperature. We could get rid of that right now and all that would be required—

[Monique Pauzé, Bloc, Repentigny, QC]

I'm afraid I have to interrupt you. Your notes on this are very informative and interesting.

Ms. Vera‑Perez, you said that the know‑how is Canadian, that the patents are Canadian, but when I read the document you sent us, it seems that the money isn't there.

Could you elaborate on that?

Why does the federal government not seem to think that green hydrogen could help us achieve net zero emissions?

[Ivette Vera-Perez]

I do believe the federal government is very interested. I do believe that a lot of what we're lacking or what we're needing is around funding that is dedicated to help the scale-up of a new industry to the scale that we're talking about.

Here we're developing a new industry at a very large scale. There needs to be that push so that industry gets on. Then the other aspect would be regulatory.

[The Chair, Liberal, Francis Scarpaleggia]

Thank you.

Ms. Collins, go ahead.

[Laurel Collins, NDP, Victoria, BC]

Thank you, Mr. Chair.

I wanted to continue with my questions to Mr. Ian Robertson.

We've had a lot of conversations about modernizing our grid and grid connections. Is there any concern about grid capacity with the additional energy required for shore power?

[Ian Robertson]

I'm very pleased to say that we've had very good conversations with BC Hydro and they've confirmed that there is sufficient power on the island, specifically within the Victoria area, to accommodate the request, the technology that we would like to employ.

[Laurel Collins, NDP, Victoria, BC]

Wonderful.

You talked about the fact that the provincial government has made commitments and the cruise industry has made commitments. I hear from constituents all the time about how our community really wants to see shore power here.

What is the level of commitments that you've heard from the cruise industry, etc., and what would you be looking for from the federal government?