Natural Resources Committee on April 26th, 2021

[Dane Lloyd, Conservative, Sturgeon River—Parkland, AB]

I'm just so worried that we have this great resource in our country. We have the best carbon capture in the world. We've invested billions of dollars into developing it and it's sequestering carbon right now.

Yes, we see that there has been a tax credit in the budget. I'm just concerned that we are picking winners and losers here and we're excluding our low-carbon oil and gas industry, which I think has a very strong future in this country.

Thank you, Mr. Chair.

[The Chair, Liberal, James Maloney]

Thank you, Mr. Lloyd.

We'll move on to Mr. May.

[Bryan May, Liberal, Cambridge, ON]

Thank you, Mr. Chair.

I wanted to come back around to Ms. Johnson and Mr. Hoskin. I'm very excited about the prospect of hydrogen. I'm the member of Parliament for Cambridge, right smack dab in the middle of Waterloo region. I attended a virtual town hall that was put on by Sustainable Waterloo Region on Thursday. Developing a hydrogen hub was one of the top priorities identified in this town hall. That, combined with the fact that I have Toyota in my backyard and their focus for the last number of years has been on moving away from EV to pursue hydrogen options for vehicles means that in this region there's a lot going on in this area. I'm very pleased to be a part of this committee under this Parliament, as I'm learning a lot more about the other end of this, and not just on the ground, but in terms of how this process works.

My thought with the federal government's strategy on hydrogen is that it's like the Wayne Gretzky line that you skate to where the puck is going to be, not to where it is right now. I'm wondering if maybe you can speak a little more about the conversation you had with MP Simard, who is focused on the colour scheme and grey hydrogen. I understand that this is sort of what we're producing, but this isn't where the puck is going to be. We're looking at focusing not just on a colour issue, but on the low-carbon side. I really want to open the floor to you to maybe clear that up a bit.

[Mollie Johnson]

Thanks very much.

When we talk about the potential for low-carbon-intensity hydrogen in Canada, there are a number of regions in our country. I think that's one of the opportunities: that hydrogen clean fuels, when we talk to our provincial and territorial counterparts, are an area where everybody sees an opportunity to buy in, where everybody sees an opportunity for a future for energy for our country. Waterloo, Ontario, and Quebec see opportunities, as do the Atlantic regions, with their vast electricity and clean power, and also British Columbia, and then, as we've been talking about with agriculture, we have British Columbia forestry and the agriculture in our Prairie provinces. It is where we are headed.

When we talk about green hydrogen, it really is based on the electrolysis and water-based process. I'm going to pass it over to Aaron, though, to talk a bit about the grey to blue to green and what we're talking about in terms of a carbon intensity pathway in that regard.

[Dr. Aaron Hoskin]

Sure. Thank you.

Maybe we'll step back and just do a bit of the fundamentals. You can produce hydrogen in a number of different ways. By taking natural gas and hitting it with steam at a high temperature, you produce hydrogen and CO2. That's traditional grey hydrogen. If you add some form of carbon abatement to that, then that's blue hydrogen.

Again, the strategy itself doesn't focus on colours, but it does focus on driving down the carbon intensity of that hydrogen over time, regardless of the production pathway. We know that whether it's going to be used domestically as part of our path to net zero or internationally as part of more than 30 different countries' path to net zero, that carbon intensity has to be driven down over time, whether that's through clean electricity or through converting natural gas or petroleum with carbon abatement to very low-carbon-intensity hydrogen over time. All of these options are an opportunity.

That said, we know that right now the supply of low-carbon-intensity hydrogen in Canada is pretty low, so we need to grow the supply of clean hydrogen while we also grow the demand for clean hydrogen. The two need to grow together. Globally, the same holds true.

As we grow the demand for these fuels, we can concurrently drive down the carbon intensity of the pathway. The two need to happen together. That's kind of what the strategy focus is on: ensuring that both work together and that over time, through innovation— through cleaning up the power grid, for instance—the carbon intensity is driven down.

[Bryan May, Liberal, Cambridge, ON]

That's excellent.

Ms. Littlejohns, you spoke about hydrogen in your opening as well. Do you want to elaborate on the role that the NRC has in this as well?

[Dr. Jennifer Littlejohns]

Yes, I'm happy to. Thank you for the question.

The National Research Council has a focus on what we're calling “green hydrogen” in this conversation, which is the production of hydrogen from renewable energy specifically. The role of the NRC is really to look at emerging technologies and where we're heading in the future. We're looking at barriers to more widespread electrochemical processes for hydrogen production. We're looking to drive down costs through development of new materials and catalysts and activities like that.

[Bryan May, Liberal, Cambridge, ON]

What are some of those barriers right now?

[The Chair, Liberal, James Maloney]

Thanks, Bryan. I'm going to have to stop you there, unfortunately.

[Bryan May, Liberal, Cambridge, ON]

That's all right. Thank you, Mr. Chair.

[The Chair, Liberal, James Maloney]

Nice try, though.

Mr. Simard, we'll go over to you for two and a half minutes.

[Mario Simard, Bloc, Jonquière, QC]

Thank you, Mr. Chair.

I would like to have a simple answer.

Is the government's hydrogen strategy part of the green recovery and the $17.6 billion announced in the budget?

I would like a simple answer, either from Ms. Johnson or Mr. Moffet. Yes or no?

[John Moffet]

Yes.

[Mollie Johnson]

Yes.

[Mario Simard, Bloc, Jonquière, QC]

Okay.

Thank you, Mr. Moffet.

So the hydrogen strategy is part of the green recovery. Now, in your strategy, which type of hydrogen will you support financially? Earlier, Mr. Hoskin said it's not about colour codes, but it matters a lot if we're talking about a green recovery. Let me repeat what I said earlier. One tonne of grey hydrogen produces between 10 and 11 tonnes of CO2. According to most experts, it is not a transitional form of energy. In your green recovery plan, if you only support grey hydrogen, I think we have a problem.

[Mollie Johnson]

It is not focused on grey hydrogen. It's focused on the production of low-carbon-intensity hydrogen, which will be either hydrogen produced with carbon capture and storage—which is set out in budget 2021—or green hydrogen. That would be the pathway through which the government will be supporting this in the strengthened climate plan.

[Mario Simard, Bloc, Jonquière, QC]

Ms. Johnson, by saying that, I'm sorry to tell you, but you have just disqualified grey hydrogen, which has a considerable carbon footprint. If I am to believe everything the experts say, grey hydrogen would not qualify as part of a green recovery plan.

Have you already projected the type of hydrogen you will support under the strategy?

[Mollie Johnson]

Maybe just to differentiate, the hydrogen strategy for Canada sets out the pathway to 2030 and 2050 to take advantage of the opportunities that we will be moving forward with. When we talk about the trillion-dollar market and the job opportunities, that's where we want to get to by 2050. The fund that would be enabling that is the clean fuels fund, which is the $1.5 billion.

As the government is setting up and structuring this, I note that we're still working on the program design to move that forward, but the objective is to be supporting low-carbon intensity. There are the tax measures. There is the clean fuel standard. There are all the approaches whereby the government is moving towards lower-carbon-intensity pieces moving forward.

With regard to your question about disqualifying grey hydrogen, we have all of these mechanisms on the regulatory side that are moving forward to try to find opportunities to move towards cleaner sources of energy. This is part of that package.

[The Chair, Liberal, James Maloney]

Thank you, Ms. Johnson. Thank you, Mr. Simard.

Mr. Cannings, we'll go over to you.

[Richard Cannings, NDP, South Okanagan—West Kootenay, BC]

Thank you.

I think I'll go back to Mr. Jurgutis again with a more general question about agriculture and the concerns that many Canadians have.

The pandemic has really highlighted our food security in the world. Many Canadians are concerned about using agricultural land, using agricultural products, for fuels, no matter how clean they might be, when we should be using that land and those products for food. It's a real concern for many people.

I'd like to know what the clean fuel standard or any of these government programs might be doing to drive up that percentage of our agricultural production into fuel production rather than into food. What percentage is it at now? What percentage is it in the United States, for instance? Where are we headed with this?

I think we're all in favour of clean fuels and we're all in favour of converting forestry waste and landfill waste to fuel. I think that makes sense to most of us. However, using agricultural land and food to create fuel is something that a lot of people are very concerned about. I just wonder if there's any projection on those percentages.

[Steven Jurgutis]

Thank you for the question.

Ensuring safe, quality food remains a priority for agricultural production in Canada. Canadian farmers have long grown food and raised commodities for a range of different end uses, including energy use, without compromising food security for Canadians and for customers around the world as well. It's not as much a debate about food versus fuel but about how to have that balance of food and fuel.

In Canada, we're not expecting the clean fuel regulations to drive any shift in land use or crop production. We don't expect a change in the price of agricultural commodities due to the increased demand for low-carbon fuels either. We anticipate that there will just be more domestic marketing opportunities, which means some Canadian grains that would normally be exported could be processed in Canada, for example, with value-added jobs that improve Canadian incomes.

Also, analysis is showing that we don't have any measurable impact on food prices for Canadians, so I think that's another important consideration.

As you mentioned, crops such as corn and canola will continue to be transformed into low-carbon fuels, but increasingly there are more agricultural by-products, such as animal fats, that are important feedstocks for biofuels and biodiesel. These products would otherwise be discarded, so I think that's another way to help look for opportunities to contribute to more of a circular economy, and that's more the direction things are heading.

[The Chair, Liberal, James Maloney]

Thank you, Mr. Jurgutis; and thanks, Mr. Cannings.

We'll go over to Mr. Zimmer.

[Bob Zimmer, Conservative, Prince George—Peace River—Northern Rockies, BC]

To our witnesses, thank you again for coming.

I want to follow along the same line as my colleague Mr. Lloyd. I represent an area in northern B.C., and we have a whole bunch of natural gas. Conservative estimates are 200-plus years of supply at our current export levels and current domestic consumption levels, yet we have this focus on renewable energies. That's laudable, but I would just say that it seems we're overlooking the obvious. We have this huge potential to reduce global emissions, if it's realized, to get our natural gas to markets that are using higher-emitting sources of energy.

I see this as sort of strange. Why would we develop a bionatural gas or renewable natural gas when we have fields of this stuff for the next couple of hundred years? It's a bit of a mystery to me. I could understand maybe blending some of these renewable forms of fuels to make that more efficient. That makes sense to me.

I will get to questions.

Following along the lines of what Mr. Cannings has said, I was on the agriculture committee for four years prior to this and saw the pressures already on food crops to be used for biofuels. That's a concern. What you're all saying here on the panel today is that there's going to be a dramatic increase, or there would have to be a dramatic increase, in biofuel production to really make a dent. That would mean a dramatic increase in the shift from use of food crops for biofuel crops. For Steven from Ag Canada to say it's not going to have any impact, to me that seems strange.

I have a question about the use of wood waste for fuels. We've all seen the potential. We've seen the burn piles that are often set fire to after forestry has come in and taken timber and different things off those sections of land. The biggest challenge has been to get those residual elements to a place where you can process them to produce something efficiently.

In the example I would use, we have burn piles that are 200 miles up the highway from where I live, but to truck them all the way down to a facility that could even do anything with them would probably use up any advantage you would ever gain by doing so.

My question is about the efficiency of using biofuels, especially this biomass that's normally in burn piles and would be considered wood waste, almost unusable wood waste at this point. How efficient would that process be, and what are the plans to make that an efficient process?

[Mollie Johnson]

On the opportunities around growing biofuels at this point in time, I would just note that with world markets increasingly demanding clean energy sources when they're looking to invest, building more clean fuels with more electrification is going to help Canadian natural gas, Canadian oil and gas, become more competitive, because it's going to lower the inputs as they're being produced. Therefore, I think there are co-benefits to some of—

[Mario Simard, Bloc, Jonquière, QC]

I'm sorry, Mr. Chair. We lost the interpretation. I think the sound quality is a problem.