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.