Natural Resources Committee on May 14th, 2007

[The Chair, Conservative, Lee Richardson]

Ladies and gentlemen, I call to order meeting number 49 of the Standing Committee on Natural Resources. Today we continue our discussion on our study of the greening of electricity consumption in Canada, on the use of coal and towards a clean technology.

Appearing from the Department of Natural Resources today, we have Graham Campbell, director general of the Office of Energy Research and Development; and John Marrone, who is director general of the CANMET Energy Technology Centre here in Ottawa.

Also appearing will be George White, chairman of the Coal Association of Canada, and maybe I'll give Sherritt International Corporation a plug too while we're at it. From the Canadian Clean Power Coalition, we have David Lewin, chairman.

I think we'll begin with the department. Sharing the first 10 minutes will be Graham Campbell, and we'll begin with John Marrone.

John, go ahead, please.

[John Marrone, Director General, CANMET Energy Technology Centre - Ottawa, Department of Natural Resources]

Thank you very much, Mr. Chair.

Honourable members of Parliament, ladies and gentlemen, it is my pleasure to be here today, along with my colleague from Natural Resources Canada, Graham Campbell, who, as was mentioned earlier, is the director general of the Office of Energy Research and Development.

Together, our organizations are the main engines of energy, science, and technology at Natural Resources Canada. As you can see from the slides, this has been going on for quite some time. This is our 100th anniversary of energy, science, and technology, serving the government and people of Canada.

We are here at your invitation to talk about the exciting and emerging topic of clean coal and how it can help to green Canada's electricity supply.

I'd like to get right into it. Why clean coal? If you look at the first slide, I have come up with five points. One is that at present, Canada has almost 17,000 megawatts of coal-fired electricity-generating facilities located in six provinces. We depend on coal to provide a large percentage—18% of our national supply of electricity—and coal is an important part of the energy mix in all of these provinces, but especially in Alberta, Nova Scotia, and Saskatchewan, where coal is the dominant fuel for electricity generation.

Another reason is that Canada has large proven reserves of coal. By one estimate, we have over 200 years' worth of proven coal reserves, and maybe even 1,000 years' worth.

The third point is that it's inexpensive and that the price of coal is much less volatile than, let's say, natural gas.

The fourth point is that this huge resource presents a major challenge, however. Conventional coal-fired power plants contribute significantly to emissions that cause smog and acid rain. With clean coal technology, this fuel can be used in an environmentally acceptable manner.

Finally, the Canadian Electrical Association expects that over the next 20 years, Canada will require 20,000 megawatts of new capacity per decade to meet load growth and replacement of the retiring generating units. So it is important that clean coal technologies be developed in time to replace the existing capacity.

What is clean coal? Modern coal-fired power plants using today's commercially available technology are already much less polluting; however, in light of climate change, clean coal power generation requires that CO₂, carbon dioxide, generated during combustion is also captured, compressed, and safely stored deep in geological formations. When we speak of clean coal, we are referring to capturing nearly all of the greenhouse gases and the remaining emissions from coal-fired electric power plants. We call it near-zero emissions.

Several transformative technologies have been identified in our technology road map to achieve this, including post-combustion capture, which is the capturing of carbon dioxide from flue gases using an absorbing material to selectively absorb the CO₂. The relatively pure CO₂ is later released from the absorbing material when the material is heated. The CO₂ is then compressed and stored.

The second major technology is oxy-fuel combustion, which is burning fuel in oxygen instead of air, resulting in a highly concentrated stream of CO₂ that is then compressed and stored.

The third main technology is pre-combustion capture, or integrated gasification combined cycle. This involves conversion of coal to a synthetic gas. That synthetic gas is composed of hydrogen and carbon dioxide. The carbon dioxide is separated through a high-temperature filter and compressed and stored. The hydrogen then goes on, of course, to be burned in the gas turbine, which is a turbine very similar to an airplane engine. Steam comes out of that, which pushes a steam turbine. So both turbines generate electricity.

Clean coal research is ongoing throughout the world, but the focus has not included the utilization of low-ranked coals, such as the Canadian sub-bituminous and lignite varieties. An opportunity exists for Canada to take a leadership role with respect to these types of coals, to provide utilities with a powerful option to meet Canada's energy needs and create a highly exportable technology. Canada's development of these new technologies not only improves our own air quality, with all the related health benefits, but also contributes to the global effort to reduce greenhouse gas emissions.

NRCan has been working with industry for over 13 years to develop the basic technology for oxy-fuel combustion of coal, coal gasification, and the new technology you may have read about recently, thermoenergy integrated power system, or TIPS for short, which is a new form of oxy-fuel combustion. Our scientists are the world's leading experts in developing clean coal technologies.

Ultimately, this technology is expected to produce not just electricity, but also a panoply of chemicals, including hydrogen, all from coal and all with low emissions.

Regardless of the technology that is chosen to capture the CO₂, this gas will have to be safely stored in geological formations. Do we have enough capacity in Canada to store all this CO₂? The answer is that we have plenty of capacity. We have up to 800 years' capacity at today's rate of production.

NRCan's leadership in this file extends to CO₂ capture and storage as well. Our sister laboratory in Devon, Alberta, has been supervising the federal investment in the Weyburn-Midale CO₂ monitoring and geological storage project in southeast Saskatchewan, where we are studying the injection aspects of geological storage in scientific detail.

We have also recently completed Canada's clean coal technology road map, which identified clean coal technology pathways for capturing CO₂. I brought copies with me today for your convenience, but it can also be downloaded from our website.

This road map represents the collective wisdom of over 120 stakeholders and practitioners, including the technology suppliers and the utilities as well as government stakeholders. It defines the most likely technology pathways to achieve Canada's need for clean coal by 2025.

I would like to conclude my portion of the presentation by saying that our department has already started to move forward on this technology road map. Canada and Alberta have established the Canada-Alberta ecoENERGY Carbon Capture and Storage Task Force, an external panel of experts, to assess the economic, technical, and regulatory hurdles that lie on the road to large-scale implementation of this technology. This technology is necessary for clean coal. They will report back with recommendations later this year, in November.

[Graham Campbell, Director General, Office of Energy Research and Development, Department of Natural Resources]

Thank you very much, John.

On slide 7 I'll pick up the briefing from there, Chair.

While there are certainly incremental gains to be made in the performance of today's technologies, we believe that a fundamental change in technology is needed to make significant progress toward meeting the green challenge. We see our science and technology vision as an emissions-free electricity sector in Canada. Our mission is to develop and demonstrate new integrated technology solutions to eliminate all pollutants from fossil fuel-based applications, including power generation, oil sands operations, hydrogen production and cogeneration facilities.

Our approach at NRCan is to work in close partnership with industry, the provinces and research institutes across the country. And, since only a small fraction of the world's research and development is done in Canada, we also work internationally through the International Energy Agency and international partnerships such as the Carbon Sequestration Leadership Forum.

On slide 8, we talk about NRCan leading much of Canada's work in clean coal R and D, providing funding, providing support for networks, and mobilizing the R and D capacity in NRCan's CANMET Energy Technology Centre, other federal and provincial departments, and research institutes and universities.

We invest annually on the order of $5 million in clean coal and $8 million in CO₂ capture and storage. These are important areas for us, making up 13% of our total portfolio.

There are three broad areas of research we're pursuing now. The first is to maximize the amount of energy generated per unit of coal, in other words, maximizing the overall generation efficiency of the system. Second is reducing and eventually eliminating emissions from the overall system, with our long-term vision and goal that of zero-emission systems. Third is maximizing the careful handling and productive use of the by-products in order to drive economic benefits from the process overall, such as using the captured CO₂ for enhanced oil recovery or capturing the hydrogen produced by the system for transportation purposes. This requires an approach that takes account of the fuel itself, the core technological process, the emission products, and also the valuable by-products in a fully comprehensive manner. In this regard, we have closely followed the advice of the national energy panel on the sustainable S and T strategy to adopt an energy systems approach for the purpose of designing our research and demonstration programs.

The government recognizes that one of Canada's most important challenges, and also an opportunity, is to be a clean energy superpower. This means we must use all forms of energy efficiently, recognizing that the greatest source of untapped energy is the energy we waste; that we need to increase our use of renewable energy in all forms; and that a concerted effort is essential to develop new technologies to make conventional energy cleaner.

To help achieve this goal, part of the new package of ecoACTION initiatives announced recently provides targeted funding for new technology. The ecoENERGY technology initiative, announced in mid-January, will provide $230 million over the next four years to support the search for long-term technology solutions, thereby reducing and, hopefully, eliminating air pollutants and GHGs from energy production and use. The goal is to foster development and demonstration of the next generation of clean technologies to break through to emissions-free production in energy end use.

Funding for further work on clean coal and CO₂ capture and storage has been earmarked in the clean electricity portfolio within this package. Our priorities there include important areas for Canada, such as clean coal and CO₂ capture and storage, as we've already mentioned, and also distributed generation and next generation nuclear systems.

On slide 9, we talk about projects.

The power utilities in Canada are also pushing ahead with studies to look into the next generation of clean coal technologies that are well-matched to quality and properties of Canadian coal.

The Canadian Clean Power Coalition, for example,

a group of power utilities in Alberta led by EPCOR Corporation, is doing a feasibility study of technologies for converting Alberta's sub-bituminous coal through gasification to combustible synthetic gas other by-products, with CO2 capture built into the process.

Saskatchewan Power Corporation has studied an oxy-fuel system which uses oxygen in place of air for combustion of Saskatchewan's lignite coal, also with effective capture of the CO2.

If projects such as these go ahead, Canada will take a world-leading position in the latest development in clean coal and CO2 capture technology.

Let me briefly wrap up our opening presentation today by underlining a few key points.

First, our goal is to work towards eventually achieving near-zero emissions from coal-fired plants, including all pollutants. Excellent progress is being made by Canadian researchers on the technology front through the development of next generation technologies, which are well suited to the needs of Canadian coal. If the results of the feasibility studies I've mentioned are positive, then there are emerging demonstration projects that will move Canada to the leading edge of clean coal technology, positioning our companies well to take advantage of commercial opportunities abroad.

Lastly, technology development is definitely a team game, and we highly value our partners at home and abroad.

I hope that we have addressed the committee's needs for an update on the exciting developments in clean coal technology and our initiatives underway now in the Department to move Canada ahead toward our long-term environmental goals of emissions-free electricity production.

We thank you for the opportunity to meet with the committee today and we look forward to any questions you may have or any follow-up information you may require.

Thank you very much.

[The Chair, Conservative, Lee Richardson]

Thank you, Mr. Campbell and Mr. Marrone.

I note that you've attached several charts, graphs, and further information with your submission. That will be very helpful. I thank you. It's hard not to be looking at that while I'm listening to the questions here.

We'll begin with Mr. Tonks.

[Alan Tonks, Liberal, York South—Weston, ON]

Thank you, Mr. Chairman.

Mr. Marrone and Mr. Campbell, thank you. You've given a more scientific and technological overview; I'm going to bounce some political questions at you, and you can digest them and put them back in terms of how you would like to steer this committee in the direction of higher utilization of clean coal technology.

My first question is related to the situation in Ontario. As you know, the premier has announced that they're looking at nuclear alternatives with respect to phasing out debilitating present technology, coal-fired power generating plants. From your perspective, is there a serious acknowledgement on the part of Ontario of what you are doing, and could those plants be retrofitted? Could a new paradigm, based on your research, be used to factor clean coal science into the strategic solution that the Ontario government seems to be pursuing? I don't mean to take the Ontario government as the singular example, but it's the one I'm most familiar with, Mr. Chairman.

[John Marrone]

Thank you for the question.

The feasibility of retrofitting was one of the first things we looked at. In all cases of all these major technologies we described, it would require a major change in how the plant works--major changes in equipment, of space that was never conceived for things to go to.

We commissioned a study to actually look at what it would cost. It just becomes infeasible with the old plants, so we started focusing our technology on new plants. With new plants it's feasible, but with retrofitting old plants it's very difficult. If you can imagine, it's not just capturing a few percentages of one gas or another; it's taking virtually everything that's coming out of that plant and doing something with it, so it's a major change in the way they work.

[Alan Tonks, Liberal, York South—Weston, ON]

So you don't think there's any percentage of the present plant capacity that can be retrofitted? It's got to be new plants?

[John Marrone]

I think the plants today can be retrofitted to capture, say, SOx and NOx particulates--all these things that are in relatively small quantities in the gas. If you're asking them to also capture carbon dioxide, it would really be very difficult to do.

[Alan Tonks, Liberal, York South—Weston, ON]

Okay. I'm going to move from that, Mr. Chairman.

In the United States there is what is called FutureGen, a strategic process through private enterprise and I think the federal government. It's the generation of electricity, but also the production of hydrogen, which I think is important in terms of the next threshold, which is preparing for the hydrogen technological generation. How does the FutureGen process compare, and what stage is it at in terms of where your research is?

[Graham Campbell]

Thank you, Mr. Tonks.

We've been following the FutureGen project very carefully since its beginning. Just a thumbnail sketch, it's essentially a project to generate hydrogen for the purposes of furthering the hydrogen economy plus electricity. It includes CO₂ capture and storage.

You're correct to say that the sponsors are the U.S. DOE, plus a consortium of U.S. power generation utilities and coal companies that have come together around the project.

Clearly, that's a project well matched to U.S. needs and purposes, and there may well be some opportunities for exchange of information and collaboration, and so on. But when scarce resources present themselves, it's important that we dedicate and aim our resources where they're best suited. We think the focused initiatives, either that are running in our labs or that are running in the projects that I briefly talked about today, are certainly important, top-of-the-page considerations.

The news from FutureGen just recently too--I heard last week--is that there has been some cost escalation in the project beyond what was originally anticipated. So I think this is challenging the moving forward. It sounds as if it is moving forward fine, but I think cost escalations are part of the current lexicon, if you like.

There are four sites that have been selected for pre-screening, two in Illinois and two in Texas. The process over the course of the next few months will be to try to make a choice, difficult though it may be, out of those four candidate locations that are on the books now.

We're monitoring very carefully. We're in contact with our colleagues in the U.S. Department of Energy. At this time, we're keeping an eye on it in the hopes that it will mature and that we'll be able to learn something from it in due course.

It's a very important project for the U.S. electricity industry, and for the hydrogen side of the equation as well.

[Alan Tonks, Liberal, York South—Weston, ON]

Good.

I have one final question. Are the two approaches looking at the same type of coal that we have in Canada and the United States?

[Graham Campbell]

I should have mentioned that. I apologize.

Typically, they're looking at a better quality coal that they have to work with in the U.S. And the core technology to the FutureGen project is gasification technology. So there are similarities, certainly, to our interest in gasification that we're working on in Canada, but the coal properties are somewhat different in terms of their resource versus ours.

[Alan Tonks, Liberal, York South—Weston, ON]

Good.

Thanks.

[The Chair, Conservative, Lee Richardson]

Great.

Thank you, Mr. Tonks.

We're going to start with Monsieur Ouellet today.

[Christian Ouellet, Bloc, Brome—Missisquoi, QC]

Thank you, Mr. Chairman.

The technology for liquefying coal to ensure better combustion, from which CO2 can be recovered, is not new. I remember when I was giving classes at Concordia University, 15 or 20 years ago, this was already on the drawing board. People have been talking about this for 15 or 20 years.

How much time do you think it will take to be ready to build the first prototype in Canada? I am talking about a prototype.

[John Marrone]

I didn't understand the first part of your question.

[Christian Ouellet, Bloc, Brome—Missisquoi, QC]

I was saying that it already exists. This type of project has been on the drawing table for the last 15 or 20 years. How long will it take us to be ready to build a prototype in Canada?

[John Marrone]

If I understand correctly, you're talking about polygeneration.

[Christian Ouellet, Bloc, Brome—Missisquoi, QC]

I'm talking about combustion of liquefied coal to produce electricity.

[John Marrone]

Okay. We believe that this will be possible around 2015. That is what the clean coal technology road map indicates.

[Christian Ouellet, Bloc, Brome—Missisquoi, QC]

In what year do you think that this kind of technology will mushroom? The prototype will be there for five years. So, this takes us to 2020. In the meantime, we will continue to build dirty coal power plants.

[John Marrone]

First, typically, the decision is made between five and seven years prior to construction. They are now well placed to make such decisions. At last two companies have decided to test two different types of technologies that will be in place around 2012. It can't go much quicker than that. This is simply the time needed to do the environmental studies and all the other things that need to be done prior to construction. However, immediately after that, the companies will easily be able to make the decisions, once they will have studied and tested all the technologies on a large scale, to reproduce this in all the other plants that will be built.

[Christian Ouellet, Bloc, Brome—Missisquoi, QC]

Starting from 2020?

[John Marrone]

Starting in 2020, yes.

[Christian Ouellet, Bloc, Brome—Missisquoi, QC]

So why is such a small amount of funding allocated to research? Each year, NRCan invests $5 million in clean coal research. Five million dollars is nothing. Why?