Natural Resources Committee on May 14th, 2021

[Robert Artibise]

Thank you so much for this opportunity.

Yes, our first two manufacturing plants we built up in China, and that's because that's where the demand pull was for our product. Our research and development and our product technology centre is in Burnaby, British Columbia, and that's because that's where the talent is. We were able to start a company and then grow from one employee to 40 in six or seven months, all with years and years of experience because, as Grace said, this is where the talent and education is.

You talked about Canada being a large country, but Canada, in my mind, is three or four cities when it comes to the urban population. You can really make a difference by not looking at Canada as this large country. You can look at it as three or four major cities and really make a difference in that local area. I'd really target 30% of the population in those four cities.

With our products that are running in Shanghai today.... Shanghai has a demand where there are no internal combustion engines in downtown Shanghai, yet it's a 24-hour city. How are those stores going to get Starbucks cups? How are they going to get coffee beans and these kinds of things? They could run this on battery vehicles, and that definitely fills a gap, but for us, our trucks are running 24-7 on the road, making deliveries to all sorts of businesses.

I hope that answers your question.

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

Yes, thank you very much.

[The Chair, Liberal, James Maloney]

Thank you, Mr. Cannings.

We're moving into the five-minute round now, starting with Mr. Lloyd.

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

Thank you, Mr. Chair.

My first question is for Mr. Egan.

This might seem like an obvious question, but when I listened to a lot of witnesses over the past few weeks, it didn't seem so obvious. Do you believe that the strategy of the Canadian government should be to pursue the means of reducing the most emissions at the lowest economic cost?

[Timothy Egan]

The fact is that there are countless technologies. There are a variety of energy delivery pathways, and there's a risk, as I said in my remarks, of picking favourites. I think that there has to be a screen, if you will, on any government's approach to make sure that the effect is not to pick favourites because we don't know what technology is going to come to the fore.

I think that, in an effort to reduce emissions, you should put signals in place that ensure some fundamentals: one, that there's good market competition between technology options; two, that you're making sure that you're keeping things as affordable as possible for the customer; and three, that you're not doing anything that threatens the integrity and reliability of the energy system.

In that context, Mr. Lloyd, that's the screen that I would use in assessing that.

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

I would take that as mostly a yes.

Do you believe that in some quarters there is an aversion to working with the fossil fuel industry to reduce emissions?

[Timothy Egan]

Look, it's a difficult time for the fossil fuel industry; there's no doubt about it. There's a lot of public criticism of it. I joke about the fact that I'm an oil and gas lobbyist. How do my children react to that?

The reality is, though, that we're part of an industry that is investing more in innovation than I think just about any other sector in the country is. I mentioned our own natural gas innovation fund where we're investing in a whole host of new technologies, including those where many of my fellow witnesses are active. We're working, in fact, quite closely with people like Ms. Green and Mr. Kirby on a host of these technologies.

One of the key things to remember about the oil and gas industry is that it is managing resources and infrastructure that are meeting an enormous percentage of our energy needs across the country. The best way to make that service lower emission is to work with the players who are active in it right now.

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

My riding and the riding next to mine have the Alberta industrial heartland. We have companies like Suncor and ATCO. We have the Redwater Sturgeon refinery, which is in my riding. They're utilizing technology like carbon capture and they're developing hydrogen.

Would you agree that it's probably the oil and gas industry that is providing the bulk of investment in these new technologies for lowering emissions?

[Timothy Egan]

Well, I don't have an assessment of that. I'd certainly say we're trying to.

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

Is there any other sector, other than government, that is investing as much in that?

[Timothy Egan]

No, not to my knowledge.

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

I appreciate what you said about being technology neutral. Previously, we had some folks from the ministry here. I took them to task because in the latest federal Liberal government climate plan that was put out in the budget, there was a tax credit for carbon capture, utilization and storage. I was really disappointed. One of the largest carbon capture projects in Canada that's currently operational just achieved one megatonne of carbon dioxide sequestered. It's the Redwater Sturgeon refinery. However, because that carbon dioxide, which is collected from a fertilizer plant and a diesel refinery, is used for enhanced oil recovery, it's been excluded.

Would you say this is an example of a government that's not taking a technology-neutral approach?

[Timothy Egan]

Refiners aren't part of my membership and I'm not familiar with the particulars of that project. As I said, our goal is to work with a host of technologies and drive forward on efforts to reduce emissions by using those technologies.

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

Do you believe that enhanced oil recovery that uses carbon and sequesters carbon currently, thus lowering emissions, should be included under this tax credit?

[Timothy Egan]

Again, we're not involved in the oil industry, Mr. Lloyd, so I shouldn't comment on that.

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

Okay. What about the natural gas industry, for example? We know that when natural gas is coming out of the ground, it's being burned for hydrogen, for example. The carbon dioxide that's being sequestered can be used for enhanced oil recovery. It makes it much more profitable because you're getting oil out of it.

Do you see your members as being supportive of a tax credit for enhanced oil recovery?

[Timothy Egan]

Well, I see our members as being supportive of tax credits that drive efforts to reduce emissions from the use of natural gas. If the two were connected, I suspect we would support such a tax credit, but I'd need to see it.

[The Chair, Liberal, James Maloney]

Thanks, Mr. Lloyd.

We're moving to Mr. May for five minutes.

[Bryan May, Liberal, Cambridge, ON]

Thank you very much, Mr. Chair.

As the member of Parliament for Cambridge, it seems to me that the concept of hydrogen is on everybody's mind in my region. As I have said before, I attended a virtual town hall with Sustainable Waterloo Region not that long ago, and the hydrogen hub concept was ranked as one of the highest priorities for that organization. I have Toyota in my backyard, which is clearly taking a hydrogen approach moving forward.

I want to thank Mr. Cannings for the question he asked Ms. Quan about the idea of a hub. I want to give Mr. Kirby an opportunity to expand a bit on the idea of a hydrogen hub.

Specifically in terms of the Government of Canada's national jobs strategy, I'd love to hear your thoughts on this, Mr. Kirby. My thought is that this could create jobs not just in the Waterloo region but literally all across Canada.

[Mark Kirby]

We've been out talking, and we would agree that hubs will attract economic investment. That's based on what we're seeing internationally.

Hydrogen valleys are called clusters, but generally what we're talking about is two or more companies getting together and sharing a common production facility. It could be as simple as that, or right up to very large clusters, where you have multiple applications connected by a pipeline and so on.

The key thing about them is that they are going to enable low-cost hydrogen, which will attract investment for people deploying trucks, buses and so on. It will provide locations where you can do demonstrations and research, which will allow you to generate the highly skilled individuals Rob referred to. We're going to need a lot more of them. It will also allow technology companies, such as Grace's, to have locations where they can show their technology, to have customers they can rely on and to perhaps not be in mission critical mode so they can work the bugs out of these things and allow themselves to move forward.

It has been shown that starting a cluster will tend to stimulate this type of activity, and all of that leads to jobs and investments coming to the country.

[Bryan May, Liberal, Cambridge, ON]

I would ask you to elaborate a little bit more, and then I'll give Grace an opportunity to answer as well. How will the hub reduce the cost or could reduce the cost of hydrogen, as will, potentially, scaling up, which is something we think is going to have to happen for this to work across the country?

[Mark Kirby]

You're going to see hydrogen projects moving forward, for example, the NRCan project in Bécancour. That includes an 88 megawatt hydrogen generation system. That's great, and it's going to be that scale that is going to produce cost-effective hydrogen, but in and of itself, it's not supporting other applications and other types of growth of the hydrogen.

If you turn that into a hub, you can find ways to enable and stimulate others, such as heavy-duty filling stations, to locate in proximity to that to take advantage of that low-cost hydrogen. We have a hubs working group being kicked off, through which we're looking to get input from industry with regard to what can be done to enable companies to come together and share so they can get that scale and they can get the costs down on that hydrogen. It's going to take some additional work and discussion. We're going to have to think about what is needed, how we can encourage two companies to work together, and how we can enable that.

[Bryan May, Liberal, Cambridge, ON]

Thank you.

Ms. Quan, do you want to expand on that or give your thoughts on how the hub system could bring the cost down and increase scale?

[Grace Quan]

Bryan, you've brought up a very good point in that cost is the number one driver. We all vote with what's in our pocketbook, right? We really have to reduce the cost of hydrogen, and generation is one part. The difference between steam methane reforming and green hydrogen is probably $2. It's $12 at the pump. What is invisible and what we're not talking about is the cost of transportation, distribution and refuelling, which is between $6 and $8. We have low-pressure solid state storage technology that can cut that price in half. That's where we're going to make that difference in the price. These train companies, the large carriers, are going to be driven only by regulation or price, because if they have to pay double their fuel cost, it's going to be difficult.

[The Chair, Liberal, James Maloney]

Thank you very much, Ms. Quan.