Natural Resources Committee on May 14th, 2021

[The Chair, Liberal, James Maloney]

I will call this meeting to order.

Thank you, Madam Clerk. I also thank all of our members and our witnesses today.

I have a few housekeeping items before we jump in.

This is meeting number 27 of the Standing Committee on Natural Resources. Many if not all of you have been here before, but I'm not sure you've appeared before this committee in a virtual setting, so things are a little different. We all have headsets, which serve the dual purpose of helping those of us with really long hair and helping us to communicate with each other.

Because it's a virtual setting, I would ask everybody to be patient. Make sure the person who you are communicating with at the time finishes speaking before you start speaking. Doing that helps the interpreters. On that point, I would encourage everybody to speak in either or both official languages. There is an interpretation button at the bottom of your screen.

We'll start with opening remarks for up to five minutes for each group, with the emphasis on “up to”. I will have to interrupt people from time to time if we are going over time. Then we will get into questions after all the panel groups have finished making their opening remarks.

We have the Canadian Biogas Association, the Canadian Gas Association, the Canadian Hydrogen and Fuel Cell Association, H2 V Énergies Inc., Hydrogen In Motion Inc., and Unilia Canada Fuel Cells Inc.

Thank you for joining us.

We will proceed in that order, starting with Jennifer Green, executive director of Canadian Biogas Association.

You have five minutes. The floor is yours.

[Jennifer Green, Executive Director, Canadian Biogas Association]

Thank you very much for the opportunity to appear before the committee as you undertake this very important study.

The Canadian Biogas Association speaks for Canada's biogas and renewable natural gas opportunity. We represent more than 150 farmers, municipalities, technology developers, consultants, utilities and other sector organizations with an interest in reducing more greenhouse gas emissions and tapping more clean energy from Canada's biogas and RNG resources.

Biogas is Canada's quiet achiever. There are currently 279 biogas projects operating across Canada. These projects capture methane from organic waste collected from farms, landfills, waste water treatment plants and municipal green bin programs and turn it into reliable and clean energy. How much energy exactly? In 2020, our sector produced biogas that was converted into six million gigajoules of energy through renewable natural gas, 260 million cubic metres of biogas for heat and on-site use and 196 megawatts of clean electricity capacity. This is the equivalent of roughly 400 million square metres of solar panels or more than 13 large hydro dams, and there are more projects in development.

Our recent 2020 market report shows that Canada is only tapping 13% of its easily available biogas resources. The question is, how can we create the right policy signals to drive the private investment needed to tap the remaining 87%?

First, let me be clear about the benefits of tapping this remaining 87%. Biogas generates economic opportunities in every part of Canada, including in both urban and rural areas, particularly in agriculture and municipal sectors, two sectors hit especially hard by the pandemic. Our 2013 modelling suggests that growing the number of biogas projects just five times would generate almost 20,000 long- and short-term jobs and produce $21 billion in economic benefits.

Biogas also supports Canada's pathway to net zero. The recent models completed by the Canadian Institute for Climate Choices show that biogas is part of every single scenario for reaching our 2050 net-zero targets. Meanwhile, blending just 5% renewable natural gas into Canada's existing natural gas distribution system could reduce emissions by 14 megatonnes by 2030. For comparison, British Columbia is targeting a 15% blend of renewable gases by 2030 and Quebec is targeting a 10% blend. Right now, Canada is capturing only a small sliver of these benefits.

What are the opportunities to advance the biogas and RNG industry in Canada? Two things in particular have driven the growth of Canadian biogas over the last decade: first, provincial mandates and programs that incentivize clean electricity and clean natural gas, and second, federal funding programs that help projects overcome capital costs. We anticipate that the rising federal price on pollution will drive new biogas opportunities, though not until closer to 2030 and beyond, when the cost of biogas becomes more competitive with conventional natural gas.

Going forward, we see one major opportunity for the federal government to drive the biogas industry, and that is to drive domestic demand through a federally mandated minimum renewable blend for Canada's natural gas distribution networks. As mentioned, two provinces have established provincial regulations in this regard. It was also recently supported as a policy proposal by Canada's environmental NGO community, as well as offered in the Leader of the Opposition's climate plan. Such a regulation would be similar to the renewable fuels regulation introduced by the Government of Canada in 2010, which requires a minimum countrywide renewable blend for gasoline and diesel. That regulation has been instrumental in growing Canada's liquid biofuels industry and is responsible for significant greenhouse gas reductions.

Thank you so much for the opportunity. I'm ready for any questions.

[The Chair, Liberal, James Maloney]

Thank you very much.

Next up, with the Canadian Gas Association, is a familiar face, Timothy Egan, and Christopher Smillie.

Tim, I suspect you're going to start us off.

[Timothy Egan, President and Chief Executive Officer, Canadian Gas Association]

I am, Mr. Chair. Thank you very much for the opportunity to participate today.

The Canadian Gas Association is, as many of you know, the voice of Canada’s natural gas delivery industry. Our membership includes utilities and transmission companies, equipment manufacturers and suppliers to the industry. Our members are active in eight provinces and one territory. Combined, we meet roughly 35% of Canada’s energy needs through a network of underground infrastructure. We provide over 20 million Canadians with what is the most affordable, reliable energy service offering available.

Our infrastructure delivers gaseous energy, and increasingly that includes renewable natural gas and hydrogen. Our member utilities are Canadian companies based in communities in your constituencies across the country. We want Canadians to benefit from the energy services we deliver today and in the future. By leveraging our energy infrastructure, we offer some of the most cost-effective options available to help the Government of Canada meet its greenhouse gas emission reduction targets.

Four of our members appeared before the committee on April 30: Énergir, Enbridge, Gazifère and Fortis Inc. They outlined the ambition and level of activity under way in their respective provinces.

For us, as the national association, we're working to support members’ goals in all the provinces in which we're active. We're focused on three key priorities. One, we are designing strategic renewable gas programming and policy support for RNG and hydrogen through public-private funding partnerships. This includes a request for federal leadership to commit to purchasing RNG, and in the future hydrogen, for federal buildings across Canada. Two, we are supporting new RNG and hydrogen technology solutions through initiatives like CGA’s natural gas innovation fund. Three, we are working with member companies to modernize provincial regulatory and legislative frameworks that govern investments that CGA members can make.

In 2020, we turned to our members to solicit project concepts to support our economy and contribute to getting people back to work. All told, we created a list of nearly 70 projects in four areas: green building retrofits, alternative transportation, LNG, and infrastructure and renewable gases. Specific to renewable gases, we mentioned over 21 projects across five provinces. That number is ever increasing and points to the opportunity that Canada has to partner with industry to deploy large-scale renewable gas deployment opportunities.

When our companies appeared before your committee on April 30, you heard about programs under way that deliver RNG to customers. Many of our other members are working in the field as well. ATCO in Alberta is piloting hydrogen and recently announced a partnership with Suncor. Heritage Gas in Nova Scotia is also targeting hydrogen as a key component of its future gas supply in the province.

Globally, governments and industry are realizing the need for gaseous energy infrastructure to meet the growing energy needs of the world. Here in Canada, as we note, recent programming and policy documents support renewable gas development, including the national hydrogen strategy, proposed funding in budget 2021 for carbon capture and storage and the $1.5-billion clean fuels fund.

What do we need to deliver on what is being asked?

First, it's essential that legislative and regulatory frameworks in the provinces allow for investment in low-emission projects like RNG and hydrogen. Specifically, we're looking at a process to adjust legislative frameworks that govern utility investments so that regulators can consider emissions reductions goals in their decision-making framework. At present, they're focused strictly on the lowest cost for customers. If governments want energy delivery companies—and this applies to electric utilities and gas utilities—to deliver on emission reduction targets, the regulatory regime governing utilities will have to be adjusted.

Second, Canada requires more public-private co-operation on clean-tech development. We created an excellent opportunity for such co-operation when we launched the NGIF four years ago as a granting vehicle for new technology start-ups using industry dollars. Governments quickly advised they wanted to partner with us, recognizing the industry leadership.

Recently, we built on that original grant fund and created two new entities: a clean-tech ventures fund and the NGIF Emissions Testing Centre. The investments made through the venture fund will improve environmental performance while building the value of natural gas to meet the ongoing needs of Canada’s energy system. The venture fund has an initial investment of $35 million from seven leading companies across the value chain. There is significant opportunity for deeper co-operation so that such market-driven innovation can deliver on the best results for environmental performance.

Third, we need policy leadership from all levels of government that is technology neutral. Government shouldn't pick which energy pathway or technology it thinks best to deliver on its emissions reduction goals. Currently, the Canada Infrastructure Bank prohibits RNG buses and focuses exclusively on hydrogen and battery buses. It's an example of the kind of intervention that needs to change.

To make the point on transportation, RNG is a promising solution in municipal and other fleet applications. We note Canada's first carbon-neutral bus fuelled by RNG in Hamilton, Ontario, and TransLink's recent announcement of 25 CNG buses in B.C.

These announcements mean significant greenhouse gas abatement and reduction in operating costs from the traditional diesel buses you see every day.

[The Chair, Liberal, James Maloney]

I'll ask you to wrap up.

You're in summary. I spoke too soon. Go ahead.

[Timothy Egan]

There is significant opportunity in the industry to deliver on emission reductions. We're home to leading technology companies and an industry that has a proud record of continuous improvement. Ultimately, we're about ensuring that Canadians, in their homes and businesses, have the affordable, clean, reliable energy they need.

Looking forward, we must be transparent about the cost of emerging fuels and technologies and work with all interested parties to find the most cost-effective and efficient ways to deliver on the goals that have been set.

Thank you.

[The Chair, Liberal, James Maloney]

Thank you.

Next, we have Mark Kirby, president and CEO of the Canadian Hydrogen and Fuel Cell Association.

[Mark Kirby, President and Chief Executive Officer, Canadian Hydrogen and Fuel Cell Association]

Mr. Chair, honourable members and guests, thank you for the opportunity to speak before you. I join you from North Vancouver, the traditional and unceded territory of the Coast Salish people, the Squamish, Musqueam and Tsleil-Waututh.

I lead the CHFCA, the voice of Canada's fast-growing hydrogen and fuel cell sector. In 2017 the sector employed 2,500 skilled workers, invested $100 million per year in research, and sold $200 million of products and services, 90% of which were exports. Today, I'm not sure. In the past year, membership has more than doubled. Major energy and industrial companies have joined. Research spending has increased. Significant projects are under way in Canada and internationally, with over $300 billion of investment in hydrogen projects through 2030 announced worldwide and growing.

Canadian companies are claiming a good share of that, selling fuel cells, electrolyzers, technology and services. As a result, hundreds of millions in investments have flowed into sector companies; order sheets are full and companies are hiring. We've established branches in Quebec and B.C. due to demand. So I'm pretty bullish about prospects for my members, and I'm also excited about the broader economic potential for Canada. B.C. is seeing vehicle deployments. Quebec and Alberta are attracting investment based on their ability to produce low-cost clean hydrogen for biochemical and biofuel production, iron ore reduction, and rail, bus and truck projects, and we're just starting to scratch the surface of the potential for exports of hydrogen and clean chemicals.

We will also see environmental benefits. Canadians know they need to stop burning fossil fuels and start burning clean fuels, such as clean power, biofuels and clean hydrogen, or that if they do continue to burn fossil fuels, they need to ensure that all carbon emissions are managed through carbon capture, use or storage, i.e., CCUS. Those are the choices: electricity, biofuels, CCUS and hydrogen. Canadians should be free to decide which choice provides them with the best economics and operational efficiency. All options are needed. Hydrogen will play a big role, and we'll need to scale up hydrogen production by at least an order of magnitude. The key thing is that government should ensure that Canadians have access to the cleanest and lowest-cost hydrogen in the world.

There is a good reason for that. Hydrogen is essential to decarbonize tough sectors like heating and heavy transportation. It is needed for the build-out of clean power and biofuels. It represents an economic opportunity, and the availability of clean hydrogen will attract investment.

There are three points I would like to clarify.

First, the CHFCA supports clean hydrogen, i.e., that produced with low or no GHG emissions. That is what all new capacity will be, so a choice to go with hydrogen will be a choice to go net zero. CHFCA has leading companies engaged in the production of clean hydrogen from virtually every energy source: clean power, nuclear, biomass, waste and fossil fuels with carbon management to prevent CO2 emissions. While a discussion of pathways is healthy and standards are needed, my members all agree that all pathways, including fossil fuel-derived clean hydrogen, are essential. Anything else will needlessly drive up cost, create scarcity and slow our transition to net zero.

Second, fuel cell vehicles and battery vehicles are both zero-emission electric vehicles. Batteries and fuel cells are complementary, working together to provide a complete alternative to gasoline or diesel internal combustion engines for all transportation applications: light duty, heavy duty, ground, air or marine. We need both and fuelling infrastructure for both.

Similarly, electric heat and heat from net-zero gaseous fuels also complement each other to provide a complete and cost-effective net-zero alternative to fossil fuel and natural gas for homes, buildings and industrial heat. Both are needed.

As you have heard, hydrogen is enjoying unprecedented support federally and provincially and across party lines. The federal government released the hydrogen strategy for Canada, underpinned by the revised climate plan, with policy measures and significant funding. The Conservative Party's climate plan, while it differs, is consistent in supporting hydrogen.

My association applauds the positive actions and is encouraging Canada's industrial sector to bring forward meaningful projects, but there is more we can and should do to ensure the rapid adoption of hydrogen and other clean fuels. I am sure it will surprise no one that the CHFCA has a list of recommendations such as increasing research funding, broadening Infrastructure Canada's 5,000 zero-emission bus program to include trucks, creating earmarks for hydrogen, making federal buildings net zero, etc., but I'd like to highlight three.

First, focus on net zero. While the price on carbon and the clean fuel standard are important measures, they are geared to emissions reductions. We need policy geared to net-zero technologies such as zero-emission vehicles and net-zero heating, including a deadline perhaps to make gaseous heating fuels net zero by using hydrogen and renewable natural gas.

Second, hydrogen distribution costs are a challenge. We need to sidestep that by developing hydrogen hubs. I'm happy to talk further about what that means.

Three, we need the private sector engaged to provide the billions required to build hydrogen infrastructure, and they will, because the business case is there. The biggest barrier, however, is demand risk, and that is a perfect place for a government to assist with policies proven in other jurisdictions. Again, I'm happy to discuss that further.

Thank you for your attention. I look forward to questions.

[The Chair, Liberal, James Maloney]

Thank you, Mr. Kirby.

Next we have, from H2 V Énergies Inc., Mr. Normand Goyette, president and CEO.

[Normand Goyette, President and Chief Executive Officer, H2 V Energies Inc.]

Mr. Chair, and ladies and gentlemen of the Standing Committee on Natural Resources, good afternoon. Thank you for having me here today.

H2 V Energies is in business to become a world leader in the mass production of carbon-neutral green biohydrogen from renewable biomass as of the second quarter of 2024. The plant will produce close to 50,000 tons of green biohydrogen annually, as well as 953,000 tons of food-grade biogenic CO2 for beverages and other things as a co-product. The production of CO2 is economically valuable because it represents only 3% of the North American market; it is a niche market.

H2 V Energies will eliminate 730,000 tons of waste annually, that is, municipal solid waste, mixed paper, non-recyclable plastics as soon as the legislation permits it, fresh and buried bark, and renewable biomass in general.

Capital investment for the plant is in the order of about $1 billion. The technology is Canadian, from OMNI Conversion Technologies, an Ottawa firm. It is a proven, patented, certified and risk-free technology, and it requires no scaling up.

According to our experts, a life cycle analysis, not including plant construction, will give no GHG emissions, or even negative values based on our initial calculations. Moreover, we will create 1,150 construction jobs and 100 mostly high-level jobs in operating the plant.

Our main advantage is undoubtedly the fact that the process requires 5.25 times less electricity than water electrolysis processes to produce an equivalent ton of green hydrogen. When the plant is operation, the annual economic benefits will be approximately $200 million, that is, $131 million for the two levels of government and $70 million reinvested in the regional circular economy.

H2 V Energies is a shovel-ready project, an innovative, practical application of Canadian technology. The process is omnivorous because it can process any type of organic material, such as renewable biomass and municipal solid waste, apart from metals and glass. The process is exportable because it requires little electricity and not all countries are as privileged as Canada in terms of producing hydroelectricity. The target markets are listed in our brief, which I invite you to consult.

To become a world leader in green hydrogen production, Canada must decide now to invest in infrastructure to support the establishment of green hydrogen mass production plants such as the H2 V project. Infrastructure needs exist both for systems based on the capture and safe release of hydrogen by an organic compound and for the tank cars necessary for the safe transport of hydrogen in the organic solution or for the transport of liquefied biogenic CO2, for rail and maritime supply pipelines, or for storage tanks at plant sites.

Such infrastructure is needed for us, for Canada, to be the first to export zero-emission hydrogen to ports in Europe. By meeting the markets demands of Europe or California, Canada can establish its leadership: we can be the first to meet these market demands for zero- or low-carbon intensity hydrogen.

The Canada-Germany agreement of March 2021 states that Germany is in favour of massive imports of green hydrogen from Canada. One should remember that Canada's trade deficit with Germany is over $ 10.8 billion. By 2050, Rotterdam will represent an import market of 18 million tons per year for green hydrogen.

May I draw your attention to the section of the brief on the dehydrogenation hubs currently being built to release such quantities of green hydrogen in receiving countries. Canada must make its efforts in this area a priority. We need to be turning the Canadian corner and leading the way today, now. Let's be the first to export green hydrogen, made in Canada and produced by H2 V Energies, to the European and Californian markets. Let's make sure we put the needed infrastructure in place, because 2024 is just around the corner. With strong and coordinated leadership, we will make Canada a true leader in the production and export of this energy.

In conclusion, in our view, at the current stage of our project, two messages are key.

First, the benefits of green hydrogen will not be apparent without an industrial phase of mass production. That is what we hope to achieve with the support of governments.

Substantial local use and massive international exports will only happen if initiatives such as ours are supported by strong political will today. The race is on, and we can win it.

Thank you for your attention.

[The Chair, Liberal, James Maloney]

Thank you very much, Mr. Goyette.

Next we have, from Hydrogen in Motion, president and CEO Grace Quan.

[Grace Quan, President and Chief Executive Officer, Hydrogen In Motion Inc.]

Good afternoon, committee members. Thank you for inviting me to this very interesting discussion.

Hydrogen in Motion is an SME that has developed a revolutionary nanomaterial that stores hydrogen under low pressure, and we're currently upscaling our technology for commercial launch. I hope with my testimony to give the committee an insider view of the challenges for SMEs in the Canadian hydrogen economy, as well as ideas on how to address some of these challenges and implement a consolidated hydrogen platform across Canada.

As you know, the recent budget announced a target of 40% reduction of CO2, which is equivalent to 293 megatonnes, by 2030. In the hydrogen strategy, it's identified that hydrogen can abate 190 million megatonnes of GHG, so hydrogen is obviously a key to meeting Canada's GHG target. That's why we're all invited to this discussion.

Canada has real expertise in hydrogen technology, with Ballard leading the way as a pioneer and with many companies generating hydrogen using different technologies, as Mark mentioned, including electrolysis and biomass and waste gas reformation. However, the committee might not know that Canadian SMEs are actually pushing the envelope with even more innovative technologies, such as injecting oxygen into old oil wells to release hydrogen and alkalizing sea-water. Moreover, there are other innovations in the supply chain, such as my own unique solid state hydrogen storage technology and improvements in fuel cell technology.

All this to say there are many companies in the hydrogen supply chain. However, how do we put all these diverse technologies together and maximize them?

One concept is a system of hydrogen hubs in a pan-Canadian multimodal low-pressure hydrogen-refuelling rail transport network. The concept is a hydrogen electric retrofit of 40 locomotives, which is 1% of the total. These 40 locomotives would use four million kilograms of hydrogen per annum at a fuel cost of $50 million a year. This would replace 4.5 million gallons of diesel and 46,000 tonnes of CO2 a year.

The challenge is that hydrogen fuel costs are double what the railways are paying right now, so we need to bring the cost of the fuel down. We can do this by exploring different ways of generating, storing, transporting and distributing hydrogen because that's where the majority of the cost is.

These hubs would be multimodal refuelling centres and innovation hubs, getting hydrogen generated from local sources using SMEs with specific expertise in the hydrogen supply chain. The total estimated cost for the project is $500 million, but this project would connect the country with a multimodal station and provide hydrogen for rail, heavy-duty trucks, fleets and remote communities. It could grow the North American network.

We need your help to champion how we can implement this in your constituencies. I have spoken to many members of CHFCA and Canadian railways and they have indicated their enthusiastic support for the concept.

How do we make this happen?

First and foremost, of course, there's funding. The Canadian grants and contributions program, with its 50% matching requirement, is very dilutive from the perspective of a Canadian SME. Within two or three rounds a company is no longer Canadian, and that's why you see many SMEs. Canada has one of the highest educated populations in the world but very few MNEs, very few large corporations.

I would suggest there is a better way to innovate and grow the Canadian hydrogen supply chain. One way is to provide a buyer for the product and take the risk out of the equation. The industry is growing, but it is doing so slowly because supply and demand are not matched. A Crown corporation similar to Petro-Canada could channel funding, share key data between industry and government and level out the demand and supply chain. This could provide sustained growth for the hubs and support innovation, job creation and economic expansion.

Other mechanisms that could be deployed in the short term are fiscal tools that are already available. As a former senior adviser to the Treasury Board, I am familiar with the process, and I think some of these tools can be implemented fairly easily. One is targeted grants and contributions for hydrogen. Another is exemptions to the stacking limits. Loans from regional development agencies have a stacking limit. Companies have to pay them back, so why are they even included in the stacking limits at all? Another is indirect funding such as tradable carbon credits, but regulations such as zero emission are the number one driver for conversion to hydrogen technologies.

In summation, from my perspective as a CEO working in the industry for the last nine years, I think these recommendations would greatly assist in developing the innovative companies in the hydrogen supply chain and provide Canada with a platform for hydrogen that we can use across the country and leverage. Similar to Silicon Valley, we could create a hydrogen hub and get the commensurate benefit of jobs and innovation growth for Canada.

This is the end of my testimony. I welcome your input and questions. Thank you.

[The Chair, Liberal, James Maloney]

Thank you very much.

Last but not least, from Unilia Canada Fuel Cells Inc., we have Robert Artibise.

Sir, you have the floor for five minutes.

[Robert Artibise, Vice-President, Technology, Corporate, and General Manager, Canada, Unilia Canada Fuel Cells Inc.]

Thank you. Good morning and good afternoon, members of Parliament and members in our audience. It is a pleasure to be here today.

I thank you for giving me this opportunity to share my thoughts on the challenges and opportunities for the low-carbon and renewable fuels industry in Canada. My name is Robert Artibise, and I'm the vice-president of technology for an international hydrogen fuel cell stack engineering and manufacturing company named Unilia Fuel Cells.

Fuel cell technology can and is being used in many applications. At Unilia, our focus is on medium-duty and heavy-duty vehicle electrification. I'm an engineer by training and have been working directly in the automotive fuel cell industry for over 20 years.

The focus of my comments today will be on the impact of scale-up. Over the past 25 years, fuel cells have gone from research and development to deployment. As a new company to the industry, Unilia is led by a team of experts who are industry veterans. The average fuel cell experience for an employee at our Burnaby, British Columbia, location is between 15 years and 20 years.

This knowledge, coupled with the passion to deliver products, has enabled Unilia to grow from establishing a company in September 2017 to commissioning a state-of-the-art product and technology development centre in Burnaby, British Columbia, in March 2020, as well as having a fuel cell stack production facility in Shanghai, China, and Guangdong, China, capable of an annual production of 5,000 stacks per year. After launching our first product line last summer, in 2020, Unilia will be delivering our thousandth stack later next week.

In September 2020, Unilia was proud to announce that Refire purchased an equity stake, making Unilia part of the Refire group of companies.

Since founding Refire in 2015, the company has supplied over 3,000 fuel cell systems to over 40 partners and customers. More than 2,700 operating vehicles are powered by Refire and are on the road today in 17 cities globally. The total combined vehicle mileage has surpassed 60 million kilometres. The vehicles in service are in a wide variety of applications, from a 4.5 ton truck doing short-haul deliveries, to 40 ton trucks doing heavy-duty applications, to 10.5 metre buses and 12 metre buses. Currently, Refire has 915 buses in operation today.

Unilia would love to deploy our fuel cells and technology in Canada and across North America. The ideal hydrogen strategy would be one where we could build a production facility in Canada to serve the North American market.

There are many government policies in Canada that support decarbonization and hydrogen as an energy storage system. These include Canada's net-zero commitment, putting a price on carbon, the clean fuel standard and light-duty, zero-emission vehicle standards in British Columbia and Quebec, which have driven up the retail hydrogen refuelling stations in those two provinces.

Government funding that supports decarbonization and hydrogen as an energy storage includes the $2.75 billion that Infrastructure Canada has put towards the zero-emission bus fund, the $1.5 billion that Canada Infrastructure Bank is putting towards infrastructure rollout, the $0.2 billion in the fuelling infrastructure fund and the $3 billion that the strategic innovation fund has put towards a net-zero accelerator.

I still think there are some gaps that are hindering deployment and adoption of hydrogen and fuel cell applications in Canada. These are the supply of clean, low-cost hydrogen in main hub areas. This exists in Edmonton, but it's needed in other locations, like Toronto, Montreal and Vancouver. Another is project funding approvals. We're seeing lots and lots of projects being proposed, but we need projects granted.

Today my recommendations to the standing committee include a guaranteed demand for fuel providers by issuing credits based on installed capacity. This strategy was previously included in the B.C. low-carbon fuel standard and has been adopted in California to entice greater private sector investment for larger-capacity refuelling stations. Other recommendations are for net-zero emission requirements for vehicles in Canada, net-zero emission requirements for heating fuels in Canada, and guaranteed project funding approvals, using a target system by funding dollars per megatonne of carbon. This can be adjusted on an annual basis as the usage of this funding system goes up or down.

I thank you for the opportunity to speak with you today. I'm happy to answer questions and discuss any comments you might have.

Thank you.

[The Chair, Liberal, James Maloney]

Great. Thank you very much.

We're right on time.

We'll move into our first round of questions, for six minutes each, starting with Mr. Zimmer.

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

Thank you to all our witnesses. I appreciate all of your testimony already.

I'm going to pick on Mr. Egan and Mr. Smillie with my questions today.

I will recognize Ms. Green. I appreciate your comments about our leader's environmental plan and support for renewables. Indeed, I have it in front of me. It talks about including 15% renewable natural gas in the supply chain in a way that we can make already clean natural gas even cleaner.

I'll go to my first question.

We talk about the marriage between renewable resources and our natural gas. How do we do that with our existing infrastructure without unduly affecting Canadians who need our natural gas?

The story is—you've heard it many times, Mr. Egan—that in places like my neck of the woods up here in northern B.C., gas isn't really an option we can do without. To increase costs to Canadians up here because of making it renewable is simply very difficult.

How do we do that and make it affordable for Canadians?

[Timothy Egan]

I think the focus on affordability is an appropriate one. It's a concern for constituents in your riding, Mr. Zimmer, and in constituencies right across the country. It's something that we focus on all the time.

As I noted, we offer the most affordable energy option to Canadians. Right now, we're meeting about 35% of energy needs, and that percentage is growing. We expect it to grow to 40% in the next 20 years. The reason it's growing is that customers, residential or commercial, are looking for an affordable energy option, and we offer that.

That said, Canadians and Canadian governments are committed to emission reduction targets. The question then is what the most cost-effective emission reduction option is that you can pursue. RNG, we think, is one of the most cost-effective emission reduction options. There's a lot of it across the country because of a very robust agricultural industry and a robust forestry sector. We're working on a variety of projects to try to bring that supply to market in the most cost-effective way possible.

In our view, it's probably the single most affordable renewable fuel option, significantly more affordable in many applications than conventional electricity, much less renewable electricity. However, it is still more expensive than natural gas.

The way to support it and the way to drive those costs down is to partner with industry where possible on new technology developments. I mentioned our natural gas innovation fund. We're investing in roughly a half-dozen RNG companies across Canada that are working on new technologies to make RNG in markets across the country, and looking to build on those kinds of investments and to expand them across the country.

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

Thank you, Mr. Egan, for that.

What's key to it all, and you brought it up earlier in your testimony, is that instead of adding a whole bunch of new infrastructure.... We talked about electrification and how good that can be in certain sectors, but, as you said, it's very costly, and we're not there yet.

I think what you brought up that was so critical to this conversation—and customers might disagree—is that natural gas is already a delivery mechanism that's affordable—we had this discussion with Fortis last week—but amongst all the energy forms, it's fairly low in terms of delivery.

You brought up existing infrastructure. I think that's the key to making this affordable. We already have pipes in the ground that go to people's homes to feed their furnaces and whatever else is used by natural gas, and I think that's the key to it all. This doesn't need to be remade overnight. We can use our existing infrastructure for many years. Our goal is to add 50% renewables by 2030. Certainly this enables us to metre up and dial it up as we go, rather than just bringing on a whole entire new system.

I don't know who to ask, Mr. Egan, whether it's you or Mr. Smillie, but with regard to the time to spool up for renewable natural gas for, let's say, the natural gas sector as opposed to spooling up the renewables in other sectors, timeline-wise what are we looking at, if you want to do a comparison?

[Timothy Egan]

There are a whole bunch of renewable fuels out there. I don't pretend to have a comprehensive comparison of the timelines for each, but one of the things about renewable natural gas is that, in many applications, it's available now. We've actually been using it for a number of years in different provinces, including yours, Mr. Zimmer. As you may know.... Well, you had Fortis two weeks ago, and they talked to you about this. There is a renewable natural gas option available.

The question, therefore, is not whether there is a technological hurdle per se. The question is this: Is there market demand, and will that trigger more supply and more technological innovation that will deliver more supply?

How does that compare to other renewables? I think a key point is to look at the full value cost when you're doing that. For any other renewable option, ask yourself this: Is there an existing delivery system in place? Is that delivery system already capable of taking on the fuels? Are significant expansions required? Are backup fuels required, etc.? You need to look at that kind of comprehensive analysis in order to make the assessment you're talking about.

We haven't done that comprehensive comparison, but I will tell you that we did make an aspirational commitment as an industry to 5% RNG in our systems by 2025 and 10% by 2030. We did that a number of years ago, and that's triggered all sorts of activity by our industry across the country. Our utilities are working—as the ones who spoke to you two weeks ago indicated—within their own regulatory frameworks to make sure that as much of that product can come to market as quickly as possible.

[The Chair, Liberal, James Maloney]

Thanks, Mr. Egan.

Thank you, Mr. Zimmer.

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

Thanks.

[The Chair, Liberal, James Maloney]

We will move to Mr. Weiler for six minutes.

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

Thank you, Mr. Chair.

I'd also like to thank all the witnesses for joining our committee today and for the fascinating discussion and introductions already.

The first question I have is for Mr. Kirby.

You mentioned that your members are supportive of looking into pathways of both green and blue hydrogen, but there is some confusion, I think, within our committee about what the hydrogen strategy actually focuses on.

In your opinion, does the hydrogen strategy focus on grey hydrogen, the higher-emitting hydrogen sources?

[Mark Kirby]

Grey hydrogen, just so everybody is aware of it, is hydrogen typically made from natural gas where there is nothing done to manage the CO2 that is emitted in that process. That's the way most hydrogen is produced today.

That is not what we are about in the CHFCA. We recognize that's a key tool, but what we are promoting and what we are focused on is CO2 produced without GHG emissions.

There are many ways to do that. One way is to simply capture those CO2 emissions, as is being done in Alberta, and then safely and permanently sequester them. There also is technology to avoid the production of CO2 and produce things, such as elemental carbon, that don't lead to GHG emissions. There are also, of course, ways to produce hydrogen, as was mentioned earlier, from waste materials, from waste wood products. There are also technologies to produce it from any type of clean power, and as long as the power is clean, the resulting hydrogen is produced without GHG emissions.

All of those are necessary. They all need to be scaled up significantly. In different parts of the country, it's going to make sense to use one or the other. In Quebec, with its surplus and low-cost clean power, it makes sense to use that to make hydrogen. In Alberta and in B.C., with a large amount natural gas and an ability to sequester, perhaps it makes more sense to use fossil fuels with carbon management. However, all of them achieve the same end result. They make hydrogen available and without producing GHG emissions as a result.

We feel that they all need to be encouraged. We need a lot more hydrogen to enable Canadians to decarbonize transportation, heating and industrial processing. The focus should be on how we spur investment in all these areas.

I point to the recent announcement by ATCO and Suncor that was mentioned earlier. That's a hugely significant project: 300,000 tonnes a year of hydrogen. I had some quick discussions with Fortis, and I understand that's about a third of the total natural gas demand in B.C. today. I could be corrected if I'm wrong on that, but that's the scale of that project. That amount of hydrogen being produced with private sector investment is able to deliver that range of emissions reduction, potentially being used to reduce one-third of the total GHG in B.C.

There are technical challenges, but there are no fundamental technical barriers to doing that.

Similarly, we can be looking to scale up other forms of hydrogen production in other parts of the country.

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

Great. Thank you for that.

As a fellow resident of the north shore, I know we're lucky to have a hydrogen fuelling station, the one recently built in North Vancouver, of course.

You're interested in discussing further how we can encourage the private sector to build out some of the hydrogen infrastructure we need. I was hoping you could expand a bit more on that and what we can do at the federal government level to encourage that.