Natural Resources Committee on April 26th, 2021

[Jeremy Patzer, Conservative, Cypress Hills—Grasslands, SK]

Based on what you just said, we don't have to increase the canola and corn we're growing in Canada as of right now to meet this growing demand that you suggest is there for biofuels. We're looking to expand and grow the biofuel industry, but you're saying we don't have to grow any more acres of canola and corn. Is that correct?

[Steven Jurgutis]

What I would say is that there could be opportunities there, and ultimately I think some of those are going to be decisions that will be made by producers in terms of what they see as opportunities to sell their crops. In terms of what we're seeing, we're not anticipating necessarily a larger footprint of those products being used as sources for clean fuel.

I see my colleague Dr. Hoskin has his hand up. He might want to add something as well.

[Dr. Aaron Hoskin]

I think it's important to also note that the type of biofuels that we're looking at are advanced biofuels that can take the by-product, so yes, you can harvest all of your food crops, and the leftover waste or crop pieces can also be converted to advanced ethanol and advanced biodiesel. It's not just about the beans or the corn; it's what's left over after that food is used and distributed as a food product. There's still agricultural waste that's there that can be converted to biofuels.

[Jeremy Patzer, Conservative, Cypress Hills—Grasslands, SK]

Do we have the plants in place right now to create ethanol, or is that what we're talking about here? Do we have the capacity right now to convert waste into ethanol?

[Steven Jurgutis]

As I mentioned earlier in my comments, a number of opportunities and facilities for certain things already exist in the country. I think part of the funding and programs that are in place now are also to help facilitate that as well, to create greater opportunity within Canada to have more of that value-added product happen here, particularly with what would be thought of as food waste. Part of that is to look to encourage a bit more of a circular economy as well.

There are some in place, and increasingly those are the areas that we're looking at to make continued investments to be able to take advantage of that further.

[Jeremy Patzer, Conservative, Cypress Hills—Grasslands, SK]

Do you know—

[The Chair, Liberal, James Maloney]

That's time, Mr. Patzer.

[Jeremy Patzer, Conservative, Cypress Hills—Grasslands, SK]

Can I have one quick question?

[The Chair, Liberal, James Maloney]

We're already a bit over time. We have to move on. Sorry.

Next is Mr. Serré or Ms. Jones. I'm not honestly sure.

[Marc Serré, Liberal, Nickel Belt, ON]

I can take it, Mr. Chair.

[The Chair, Liberal, James Maloney]

Okay, it's all yours.

[Marc Serré, Liberal, Nickel Belt, ON]

Thank you.

I want to go back to what we talked about earlier, low-carbon fuel and gas that's excluded from the government's emission reduction fund and the tax measures for the carbon capture strategy. I'll be asking my question to Dr. Hoskin.

With regard to the net zero accelerator with the huge $8 billion, when we look at clean-fuel tech, we see we're not supporting cleaner oil and gas in this transition. I wonder, Dr. Hoskin, if you could clarify the government's position on this, please.

[Dr. Aaron Hoskin]

Absolutely. You're exactly correct. Many of the investments that are being made and announced in budget 2021 are really about driving down emissions from our conventional oil and gas sector.

The carbon capture, utilization and storage tax credit, the CCUS investments for RD&D, will ensure that the next generation of CCUS plants are up and running and are effective and efficient, and it will also be significant in driving down emissions from our conventional oil and gas sector.

As you mentioned, there is also the investment of $8 billion in the net zero accelerator, which is meant to drive down emissions. The department also delivers the emissions reduction fund, which is driving down methane emissions from a number of facilities on Canada's west and on the east coast as well.

There are a number of programs already in place. We mentioned that getting the supply of low-carbon-intensity hydrogen up in Canada inherently drives down the emissions of our conventional oil and gas sector as well. Hydrogen is a key component of oil sands upgrading, for instance, so as that carbon intensity is driven down, it drives down the emissions of our conventional oil and gas sector.

Blending of hydrogen in the natural gas stream is also a mechanism to drive down the carbon intensity of Canada's natural gas system. You can produce hydrogen from natural gas, so it provides a new competitive market for Canada's natural gas reserves, but then blending it into the natural gas stream provides a mechanism to basically decarbonize our natural gas stream. There are many opportunities.

[Marc Serré, Liberal, Nickel Belt, ON]

Thank you, Mr. Hoskin.

We heard Mr. Simard express his concern about green hydrogen, the colours, and everything else that was not necessary for the transition.

Mr. Hoskin, could you tell us more about the transition with respect to hydrogen?

[Dr. Aaron Hoskin]

I'll quantify a bit what the hydrogen strategy points to, and what some of the analysis that was done for the strategy points to as well.

Right now, grey hydrogen, conventional hydrogen production in Canada, has about 100 grams of CO2 produced per megajoule of hydrogen. If you add carbon abatement to that, meaning carbon capture utilization and storage, the carbon intensity is driven down to 31 grams per megajoule. That's a 60% reduction.

If you go to electrolysis and if your electricity grid is clean and zero-emitting, as 80% of Canada's grid is, then that can be as low as 10 grams per megajoule or even less. That's current carbon intensity. As improvements and efficiency of CCUS grow, that carbon intensity of conventional hydrogen production with CCUS will also be driven down.

The strategy itself points to how the carbon intensity of Canada's overall mix has to be driven down over time. Near term, we're looking at 36.4 grams of CO2 per megajoule. That's a mixture of conventional and low-carbon production.

Over time, as I mentioned before, as we approach net zero, then that carbon intensity needs to be driven down toward zero. We know that electrification is part of that and the amount of renewable energy that is used to produce the hydrogen is part of that. The advancements in CCUS that will be made through investments that are being made in RD&D will also drive down that carbon intensity over time.

[Marc Serré, Liberal, Nickel Belt, ON]

How much time do I have?

[The Chair, Liberal, James Maloney]

You have about 30 seconds.

[Marc Serré, Liberal, Nickel Belt, ON]

Thank you to the witnesses for all the work you've done. We're going to continue this conversation, because it's hugely important for the economy and the investments made in Canada, as indicated earlier.

[The Chair, Liberal, James Maloney]

Next we have Mr. Simard.

[Mario Simard, Bloc, Jonquière, QC]

Thank you, Mr. Chair.

I'm quite surprised by what I've just heard, because we have seen this movie before.

Streamlining the process to reduce the carbon footprint of oil through research and development reminds me of what happened in the early 1970s with oil from the tar sands. We didn't have the technology to extract it. We had to invest massive amounts of capital to do so.

We have a major problem. When I look at the European Commission's strategy and the German government's strategy, they always talk about renewable hydrogen. In your strategy—I had a quick look in the document you released—the word “oil” appears 15 times. That gives me the impression that the objective of your hydrogen strategy is to find opportunities for the oil and gas sector. In this sense, one issue seems essential to me.

In your strategy, have you ever thought about prioritizing a specific type of hydrogen, one that would perhaps have a smaller carbon footprint and one that doesn't involve a lot of capital investment in research and development, to do what we call greenwashing the oil and gas industry?

Mr. Hoskin, does this strategy prioritize a certain type of hydrogen?

[Dr. Aaron Hoskin]

The strategy prioritizes low-carbon hydrogen regardless of production pathway, whether that's using natural gas or petroleum with carbon abatement. As I mentioned, we actually know now that there are technologies and companies that can produce very low, almost-net-zero hydrogen by using petroleum with carbon abatement. That technology exists in Canada now.

Similarly, we can leverage our renewable electricity—our very low-emitting grid on the east coast, for instance—to produce almost net-zero hydrogen now. The difference is the price point of that.

Also, we know that in the long term, given the fact that Canada has also committed to prioritizing small modular reactors, there are opportunities to link clean electricity produced from nuclear reactors to produce very low-carbon hydrogen as well.

All of these production pathways are what the strategy focuses on, not looking at one pathway over another, but looking—

[Mario Simard, Bloc, Jonquière, QC]

I'm sorry to interrupt you, but I don't have much time.

So if I understand you correctly—

[The Chair, Liberal, James Maloney]

In fact, you have no time. I'm sorry about that, Mr. Simard.

Mr. Cannings is next.

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

Thanks again.

I'm not sure if Ms. Johnson's technical problems have been solved. Perhaps she can give this a try. If not, Mr. Hoskin can. It's regarding hydrogen as well.

I was talking to someone in the hydrogen sector recently. She pointed out that one of their problems is that they.... As we know, Canada leads the way in hydrogen technologies in the world, but to really advance those to the next step, we have to build out an infrastructure to move that hydrogen around to make it available to industries, to trucking or to whatever sector is using it. She likened it to the business of developing new computers: If we don't have any electricity infrastructure, any electricity grid, they're useless.

Where she thought the government could really make a big difference was to make the big investments in hydrogen infrastructure so that we could roll out those benefits quickly and broadly across the landscape. I'm wondering if somebody could comment on that.

[Mollie Johnson]

Mr. Chair, we hear and understand that same challenge as well, which is why this strategy recommends taking a hubs approach. This is why we look at trying to place and grow our hydrogen economy around hubs or nodes. There are different ways that folks talk about this.

The government announced a first investment in Alberta's industrial heartland earlier. What the hub concept means is that you're going to look at growing supply and demand at the same time. You're going to build on existing infrastructure and look at opportunities so that you have your production and your transportation all happening together. It really is in that hub approach where we're starting to bring folks together to think about where we need to be, not just today but in five, 10, 20, 30 years.

You can think about this a little bit like the gateway concept we had in the ports previously. It's thinking about how we need to be, as you say, bringing the whole economy together to capitalize on these opportunities.