Natural Resources Committee on April 26th, 2021

[Greg McLean, Conservative, Calgary Centre, AB]

Thank you. I'll go to the National Research Council now.

Ms. Littlejohns, we talk about the life-cycle analysis. I'm glad you're involved in that; that you have experience in it. Can we talk about the life-cycle analysis in the short term here? Let's go with the next 10 years—so I guess we'll call it the medium term—of the greenhouse gas emissions involved in producing biofuels, and then the greenhouse gas emissions in constructing the facilities that will be used in producing biofuels. Can you give us some enlightenment on that, please?

[The Chair, Liberal, James Maloney]

You're going to have to do it very quickly. We're right on our time.

[Dr. Jennifer Littlejohns]

Specifically, the NRC typically conducts life-cycle analyses on specific situations to understand the GHG impact of gathering feedstocks to a specific location to make decisions on the scale and location of a facility. A broad question like that would be best answered by somebody making the larger policy decisions, rather than—

[Greg McLean, Conservative, Calgary Centre, AB]

Yet that's your job.

[The Chair, Liberal, James Maloney]

Thanks, Mr. McLean. We've moving to Mr. Weiler.

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

Thank you, Mr. Chair.

I'd like to thank all the witnesses for joining today's discussion. There's a lot to cover, lots of different areas.

I'd like to start with some questions for Ms. Johnson and Dr. Hoskin. In the budget this year we announced a $1.5-billion clean fuel standard. There were also a few other very large investments in this budget, including the net zero accelerator fund and some support for clean tech. I'm wondering if you could tell me how this fund and these other two funds are going to support the production and distribution of low-carbon and zero-emissions fuels.

[Mollie Johnson]

I will start, and then I'll pass it over to Dr. Hoskin.

As Mr. Moffet laid out, the objective of the clean fuels fund is to complement and help build that domestic supply of clean fuels within Canada so that we are in a position to build that to ensure that Canadians have access to clean fuels within the market. There's also the net zero accelerator; the $1.5 billion within the clean fuels fund. Our objective is to try to support the growth of supply and demand together.

We also know that building the domestic supply is the best way for us to have a capacity to support the export side, the supply and demand of global markets as well. Many jurisdictions want to buy from Canada because we're seen as a reliable trading partner. Building that production is going to be a great opportunity for us.

The next piece is with the $8 billion in the net zero accelerator. That is also going to support the government in looking at those high-scale opportunities that will support a very quick transition of large emitters in helping them drive down their emissions.

I'll pause there.

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

Thank you, Ms. Johnson.

I appreciate the shout-out to some of the leading clean-tech companies. One of them you mentioned, Carbon Engineering, is in my riding and is doing some very interesting work with direct air capture into fuels. Also, it's working on grants with NSERC on looking at green hydrogen as well, and some of the processes there.

With the clean fuels fund, I understand it's $1.5 billion overall, but what's the structure of that fund going to be, loans or grants? How will companies be able to access that to do what you just mentioned in building supply and demand in the country?

[Mollie Johnson]

We're in the process of working on program design right now, but we have had experience with this in the past. I'll pass it over to Dr. Hoskin to talk a little about how we're going to be building that, and the opportunities. It will be a competitive process. There will be opportunities.

[Dr. Aaron Hoskin, Senior Manager, Intergovernmental Initiative, Fuels Diversification Division, Department of Natural Resources]

Thank you.

As with many of our other programs, Natural Resources Canada projects, as Mollie said, will be solicited by a competitive process and then enter into a contribution agreement whereby Canada shares the cost of the project with the private sector or with indigenous organizations. That will likely be repayable. If any profit is generated from the revenue or any revenue is generated from the facilities built, that would be repayable over a certain time frame.

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

Great. Thank you so much for that.

I would like to talk specifically about hydrogen here because, as was mentioned, it's definitely something that has a lot of buzz right now. There are countries all around the world that are investing in their own hydrogen strategies. Canada has its own hydrogen strategy as of December of last year.

Ms. Johnson, I was hoping you could walk us through the strategy, the different types, and where you see the competitive advantage for Canada in hydrogen, particularly with some of the export strategy you mentioned in your last answer.

[Mollie Johnson]

There are maybe a couple of things about the hydrogen strategy. We really see this as a call to action for all of Canada in terms of the opportunities for our nation to move forward and catalyze our hydrogen opportunity.

We're already known worldwide as being a leader in hydrogen technology. B.C.'s Lower Mainland has about 50 clean-tech companies that are known worldwide for the work they do. When we're meeting with our European partners and other jurisdictions, it is Canadian technology that is out there.

The hydrogen strategy, I think in about eight areas, sets out 32 recommendations of the things we need to be doing to capture that advantage. It's everything from codes and standards so that we can ensure, when you're going to a fuelling station, that you're able to plug in and get what you need, and ensure that's not just domestic but is also international and that we're working with everybody I mentioned, those international partnerships and multilateral organizations. We need to be doing that work together.

It's ensuring that we are creating those opportunities to secure foreign direct investment. We have partnerships with jurisdictions like Germany, Portugal, the European Union and Japan. We're building government-to-government relationships to ensure that we are creating the right structures and also focusing on the business-to-business opportunities, because we do want to be building the right market and relationships for Canada as well.

There are many other pillars of the hydrogen strategy, but it really is trying to ensure that we are securing the opportunity to grow this market by 2030 and 2050, building on Canada's natural advantage, which is the know-how of our energy sector and the natural resource base that we have, and bringing all of that together so that we're able to grow a secure energy supply for the future.

[The Chair, Liberal, James Maloney]

Thanks, Ms. Johnson. Thanks, Mr. Weiler.

Mr. Simard, we go over to you.

[Mario Simard, Bloc, Jonquière, QC]

Thank you very much, Mr. Chair.

My thanks to the witnesses for their presentations.

My question is for you, Ms. Johnson. I talked to a number of experts about the so-called grey hydrogen. I haven't heard from any of them that it's a transitional form of energy. It is important to note that producing one tonne of grey hydrogen generally means releasing 10 to 11 tonnes of CO2. So a number of people think—and I tend to agree with them—that this strategy provides opportunities for the oil industry. Actually, that's what I'm gathering from your answer because your 32 recommendations are seeking foreign outlets for this much-touted hydrogen strategy.

Basically, my question is quite simple. On which scientific study are you basing your presentation of grey hydrogen as a solution for a transition to a low-carbon economy?

[Mollie Johnson]

With regard to the colours of hydrogen and the approach for the hydrogen that's being produced in Canada right now, it is, if we use the colour code, grey hydrogen. We're also producing blue hydrogen. We also have some of the largest electrolyzers in the world and plan to build more in Varennes that will produce green hydrogen.

Our objective, as part of this transformation or transition pathway, is to move towards the lowest carbon intensity of hydrogen, and that's how we move forward. The price points right now—and Dr. Hoskin can speak to this more—for the cleanest hydrogen, the green hydrogen and the blue hydrogen, are more expensive, but we know that over time, as more is produced and as technology advances, it is going to come down, and that's what really gets us to its being a viable transition strategy.

In the hydrogen strategy for Canada, our focus is on carbon intensity and reducing carbon intensity, and when we talk about hydrogen that is being produced from oil and gas, it really is with carbon capture and storage, so it is to reduce that carbon intensity and build on the strength of our energy sector in that way.

I'm happy to turn it over to Aaron to provide more details, if that's helpful.

[Dr. Aaron Hoskin]

As Mollie mentioned, Canada has opportunities to produce very low-carbon, low-cost hydrogen between now and 2030 or 2040 and 2050. A number of investments made in the budget this year will also support significant investments in carbon capture, utilization and storage. The tax breaks for green hydrogen production equipment, as well as tax breaks for CCUS, will all help to drive down the cost of clean hydrogen production.

The strategy doesn't focus on colours, as Mollie mentioned, and we're working internationally to develop an international standard for carbon intensity that will be recognized around the world. It's an international methodology to determine the carbon intensity, so that as hydrogen becomes a globally traded commodity, we're all using the same starting point.

You can't standardize colours, but you can standardize the methodology to determine the life cycle and carbon intensity of hydrogen. Canada has all of the advantages for every pathway to produce low-cost, low-carbon hydrogen.

[Mario Simard, Bloc, Jonquière, QC]

I'm a little confused because, based on your answer, my understanding is that you have no indication that grey hydrogen is a transitional form of energy and you have no indication to that effect from scientists.

I am not a scientist. When I wanted to learn about this, the first thing I did was to ask people who know about it. I was told that a number of people did not consider grey hydrogen to be a transitional form of energy.

First, has the department ever conducted or commissioned this type of study to find out whether grey hydrogen could be considered a transitional form of energy?

Second, if I understand your reasoning correctly, you are saying that we will go through grey hydrogen because it is easy to market and it may make green hydrogen competitive. This is what I understood earlier. The process gets to a level of abstraction, to use a ten-dollar word, which I think is quite high.

To be clear, I would like to know whether you have had any studies clearly demonstrating that grey hydrogen is a transitional form of energy. Does the department have that sort of study, and is that part of your reflection on your wonderful hydrogen strategy?

[Mollie Johnson]

I'll pass this over to Aaron. There have been many studies, and he can run you through them.

[Dr. Aaron Hoskin]

I was the lead on the development of the hydrogen strategy. The strategy itself was more than three years of work, with more than 15 different studies that looked at production pathways across the country. It looked at end-use opportunities and supply chain requirements across the country.

All of these studies culminated last summer. We had 14 targeted stakeholder sessions where we spoke to more than 1,500 experts across the entire hydrogen value chain, from production to distribution to end use to codes to standards to awareness. All of those studies were rolled into the development and finalization of the hydrogen strategy.

As Mollie mentioned, the strategy doesn't focus on colour, but it does focus on carbon intensity.

Mr. Simard, the carbon—

[Mario Simard, Bloc, Jonquière, QC]

Sorry, Mr. Hoskin, I just want to—

[The Chair, Liberal, James Maloney]

I'm going to have to stop you there, Mr. Simard.

[Mario Simard, Bloc, Jonquière, QC]

Do you or do you not—

[The Chair, Liberal, James Maloney]

Mr. Simard, I was going to let him finish his answer, but unfortunately, we're out of time. We'll have to move to Mr. Cannings.

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

Good morning, and thank you to the witnesses for being here today. There's so much interesting material here, and I'm having trouble figuring out where to begin.

I'll begin with Mr. Jurgutis to get some clarification on some figures you had right off the top about canola exports to Europe. They were about the percentage of our canola exports and what they were used for. I was a bit surprised by the numbers and I want to make sure I got that right.

Could you expand on that?

[Steven Jurgutis]

As part of the opening comments I had, Canada's exports of canola seeds to the EU were at about $1.3 billion in 2020. A large portion of that was used in biodiesel production, primarily in France, Germany, Belgium and Portugal.