Evidence of meeting #31 for Natural Resources in the 43rd Parliament, 2nd session. (The original version is on Parliament’s site, as are the minutes.) The winning word was biofuels.
A recording is available from Parliament.
Conservative
Dane Lloyd Conservative Sturgeon River—Parkland, AB
This leads me into my next question.
Canada has a lot of existing legacy oil and gas infrastructure. What do you think the role of this infrastructure and the workers who build and maintain this infrastructure will be in a hydrogen future? Is that something that can be melded together?
Energy Systems Architect, The Transition Accelerator
I think what we're looking at here is an opportunity to piggyback on some of our existing infrastructure. Today across Canada we already make, mostly from natural gas, about 8,000 tonnes of hydrogen every day. We can actually piggyback off of that to, first of all, get the companies to start making that as blue hydrogen instead of grey hydrogen. The carbon pricing that Mark talked about actually really is helping to do that.
Also, we can take a pipeline off and distribute a portion of that hydrogen. Instead of being used as an industrial feedstock the way it is now, that same hydrogen could be used as a fuel.
Conservative
Dane Lloyd Conservative Sturgeon River—Parkland, AB
Can that hydrogen be blended with the crude or the bitumen in, and then separated at a later stage so that you could run bitumen and hydrogen in the same pipelines at the same time?
Energy Systems Architect, The Transition Accelerator
No, not really blended in terms of with oil, but blended with gas is a possibility with natural gas. You can put the hydrogen into distribution networks to decarbonize natural gas. The economics of that aren't as good—
Conservative
Liberal
Liberal
Patrick Weiler Liberal West Vancouver—Sunshine Coast—Sea to Sky Country, BC
Thank you, Mr. Chair, and thank you to all the witnesses today for the really interesting testimony already.
I want to pick up on something that my colleague was just mentioning. There's a wide understanding out there that we're going to need biofuels and hydrogen to decarbonize some of the hardest to evade areas, such as freight shipping and others. One area that it's a little less clear on is buildings, where in much of our country we have existing infrastructure to deliver natural gas. Actually, this is one of our largest sources of emissions.
My question is maybe first for Dr. Jaccard and then Dr. Layzell.
In your opinion, are we better placed to introduce low-carbon fuels into this existing infrastructure, or are we better placed to electrify if we're focused on measures that are both most economically palatable to the consumer and that will create jobs along the way?
Distinguished Professor and Director, School of Resource and Environmental Management, Simon Fraser University, As an Individual
Again, you would either continue to have a rising carbon price and then you'd find out if biomethane slowly blending out of natural gas or some combination of that and blue or green hydrogen coming into those pipes was the solution, or if it was more people using electric heat pumps and even waste heat, but electric heat pumps, probably ground-sourced, in much of the country. The policy is that you either have a rising carbon price or you can do what I just described for liquid fuels.
In fact, I'm involved in the Climate Solutions Council in British Columbia, where—I'm pretty sure I'm safe to say, as this has been public now—we're working on a regulation for gas in pipes that is similar to the type of regulation that I've just been talking about with clean fuel. It says we know that you can't be using fossil fuel-derived natural gas in our buildings, so we're going to phase out the content of that in any kind of gas that's delivered by pipe to buildings over a 20- to 30-year time period.
When we do that, as I say, the market will decide if actually biomethane or some mixture with clean hydrogen is what we start using in buildings increasingly or if we move more to electricity. I think we shouldn't care which one we do, but just get the right policy in place.
Liberal
Patrick Weiler Liberal West Vancouver—Sunshine Coast—Sea to Sky Country, BC
Thank you, Dr. Jaccard.
The same question goes to Dr. Layzell.
Energy Systems Architect, The Transition Accelerator
I would tend to agree largely with what Mark said, although I think we also have to look at the capability, actually what's capable that we can achieve.
For example, if we're going to move to electricity, especially in colder regions of Canada, once it gets below about -15°C, heat pumps, electricity-driven heat pumps that move heat from outside to inside in the winter, basically don't work very well. Then you have this huge electricity demand in one season of the year, and how do you actually create the electricity in the winter? We have short days; we don't have solar, and we often have a lack of wind resource in the middle of winter. You have a mismatch and you have a real problem with energy storage and distribution if you're using electricity. We've done a fair number of analyses of this, and in our analyses for many parts of Canada, it's pretty clear that we're going to have a real problem in our new energy system, a net-zero energy system, if we try to move it to electricity for space heating.
We have an infrastructure already, a natural gas infrastructure. Our recommendation is to start to look at slowly converting that infrastructure to more hydrogen. In terms of the economics, when you get to about $170 a tonne of CO2, which we're talking about, all of a sudden the price of natural gas and the price of hydrogen more or less meet. We could start to see that shift to hydrogen-based fuels for space heating, and you can store hydrogen and move it around more easily than you can electricity in large quantities.
Liberal
Patrick Weiler Liberal West Vancouver—Sunshine Coast—Sea to Sky Country, BC
Thank you for that. It's much appreciated.
Dr. Jaccard, you mentioned that a carbon tax and flexible regulations can get us most of the way there, or rather, all the way there, to our 2050 target of net zero and we shouldn't be picking winners.
Of course, in Canada, we're living in a globally competitive environment where different counterparts are making significant investments in different low-carbon technologies. Hydrogen is certainly one of them.
Part of this study is on how we advance the development of low-carbon and renewable fuels domestically as industries. How do we ensure that we can develop those industries in Canada and not buy them from other countries if we're not going to be picking winners?
Distinguished Professor and Director, School of Resource and Environmental Management, Simon Fraser University, As an Individual
Okay.
I think I partly answered this. I agreed earlier with some of David's comments, because when you are going down a path like hydrogen, and even clean zero-emission biofuels, government does have a role to play. I'm not denying that. The economist in me, though, says to find that sweet spot. That's what I say when I'm making recommendations to government.
The energy system has a great history of governments putting all sorts of money into failures. What I try to point out is that there are ways to do it where you're letting the market still decide while you're helping out these opportunities. That's my approach.
Liberal
The Chair Liberal James Maloney
Thank you.
Mr. Simard, I see you're back. We'll go to you for two and a half minutes.
Bloc
Mario Simard Bloc Jonquière, QC
Thank you, Mr. Chair.
Mr. Layzell, from what I heard, you said earlier that we should focus not on whether hydrogen is green, blue or grey, but on the emissions generated by the hydrogen production. I read somewhere that producing a single tonne of hydrogen using oil or gas resulted in 10 or 11 tonnes of greenhouse gas emissions, so I assumed oil- or gas-based hydrogen production was not the best way to go.
In your view, does oil- or gas-based hydrogen production have a significant environmental benefit?
Energy Systems Architect, The Transition Accelerator
We've done a lot of analysis of this. I'm happy to send reports to the committee, if you'd like.
The life-cycle emissions are about 10 kilograms to 12 kilograms of CO2 for every kilogram of hydrogen. That is grey hydrogen. That is produced from natural gas and just releasing the CO2 into the atmosphere. When that hydrogen is used in a hydrogen fuel-cell vehicle to replace diesel, you still get about a 25% to 30%, even 40%, reduction, depending on the vehicle you're replacing, in greenhouse gas emissions life cycle compared with diesel.
We're saying that's not enough. If we're going to really address climate change, we have to set our target higher. We have to be looking at lower-carbon hydrogen production. When you're making hydrogen from renewables, for example, from hydro, from solar, or from blue hydrogen from fossil fuels, but you're capturing the CO2 from the fossil fuels and you're sequestering it, the carbon intensity life cycle goes down to between around 1.5 kilograms to 3 kilograms of CO2 per kilogram of hydrogen.
That's kind of the range that I think we need to be setting and basically challenge, or have a standard protocol, for how you calculate the carbon intensity life cycle. We're talking about, of course, making the solar panels, putting them on the land, having the land impacts all be considered, and making the cement to make a big hydro dam. That has to be considered in the life-cycle emissions. Overall, we can get about a 90%, even 95%, reduction in emissions relative to the diesel we're replacing when we follow that whole pathway through.
Liberal
The Chair Liberal James Maloney
Thank you very much.
Thanks, Mr. Simard.
It's over to you, Mr. Cannings.
NDP
Richard Cannings NDP South Okanagan—West Kootenay, BC
I'd like to continue with you, Dr. Layzell, and talk about those hubs. I want to get a little more information.
You talked about capital investment being important. When I talk to people in the hydrogen world here in British Columbia, they talk about the capital investment that's needed to create these hubs as being the critical thing they need. These fairly small companies just don't have the capital themselves. It's difficult for them to get it from within Canada. This is the ideal place for the government to really step up and produce the infrastructure to help build the hydrogen sector in Canada.
Could you maybe expand on exactly what type of infrastructure is needed here?
Energy Systems Architect, The Transition Accelerator
Initially, probably most of the focus...You have to look at the entire value chain. You have to put public money and attract private money to support different links in this value chain. Like any chain, it's only as strong as the weakest link. One of the weakest links in the problem is that vehicles that use hydrogen are made in ones or twos right now. They're not made in tens of thousands like diesel vehicles are, so they're very expensive.
We're going to need to create opportunities to support the deployment of these vehicles, initially in demonstrations and small pilots, but eventually in hundreds of buses that will be supporting municipal bus fleets, and the deployment of large-scale hydrogen trucks on major corridors. I'm talking about very big transport trucks that use a lot of fuel.
The economics of buying these vehicles is very challenging. The government will need to support those vehicles until the production levels of those vehicles start to go up and the price comes down. Most of the estimates are that within the next eight to 10 years we'll be pretty close to cost parity if we start to really build lots these vehicles and have them deployed.
That has to be coordinated by making sure we have supporting fuelling stations. Ideally, we have to have the infrastructure for pipeline distribution of hydrogen along major corridors.
We have to be focused on where we are trying to be by 2030, 2035 or 2040, and start putting that infrastructure in today. It's not lost money. The money from the federal government could be put in low-cost or zero interest loans. The money will come back to the government as this pipeline starts to get used, and we start to develop this new hydrogen economy.
Those are the kinds of infrastructures that we need to invest in.
Liberal
The Chair Liberal James Maloney
Thank you, Mr. Cannings.
Mr. Zimmer, we'll go to you for five minutes.
Conservative
Bob Zimmer Conservative Prince George—Peace River—Northern Rockies, BC
Thank you, Chair.
I have a question for Dr. Jaccard, a fellow British Columbian. I'm up in northern B.C. right now.
We certainly like renewables and biofuels, but are concerned about some of the implications of that. I was on the agriculture committee for four years prior to this committee, and some of the effects of some of those food crops being turned into fuel crops....
What do you say to the potential upward pressure of growing renewable fuels as opposed to [Inaudible—Editor] and its effects on food prices?
Distinguished Professor and Director, School of Resource and Environmental Management, Simon Fraser University, As an Individual
My point, similar to what I mentioned before, is that when we look at studies that suggest a significant upward movement on food prices, these studies are more of what I call all or nothing, a dramatic movement into biofuels to replace all liquid uses of fossil fuel derived hydrocarbons.
Those are not the studies I'm looking at. Those are not the kinds of outcomes I was talking about in my remarks. I was talking more about something like 20%—
Conservative
Bob Zimmer Conservative Prince George—Peace River—Northern Rockies, BC
Doctor, I'm sorry, but time is tight.
A Bloomberg article from May 20, 2021, entitled “Green-Fuel Push Stirs Food Inflation Fears in Rebound From Virus”, states:
Soaring demand for crops has once again raised the question of whether nations should really depend on ethanol and renewable diesel to save the planet from global warming. Corn, soybeans, palm oil and sugar, which are increasingly processed into biofuels worldwide, are part of a staggering commodities rally that’s making everything from animal feed and noodles to taco shells and chocolate more expensive, putting central bankers worldwide in a tough spot between fighting inflation and seeking to stimulate battered economies.
How do you speak to that?
Distinguished Professor and Director, School of Resource and Environmental Management, Simon Fraser University, As an Individual
It is the same answer.
As I said in my opening comments, I've seen studies like that for 25 years. If you look at the Intergovernmental Panel on Climate Change, we run scenarios, and look at food pricing when we don't take an extreme case like the quote you were just using from Bloomberg.
What food costs is a serious question. I don't believe, therefore, that biofuels will solve climate, as I think your quote kind of said it would rely on them. It'll be more like in significant niches. We've been talking about the trucking industry, and that's where we're seeing it happen without those kinds of effects.
Conservative
Bob Zimmer Conservative Prince George—Peace River—Northern Rockies, BC
Maybe I'll open it up to any other witness here.
The previous Ontario Liberal government was the largest subnational debtor in the world mainly to do with their energy policy and throwing all the money at it. Doctor, you talked about putting money into failures. It's this endless...taxpayers' back pocket. Taxpayers only have so much money.
I think this gets to what Mr. McLean was referring to as well. We talk about the affordability of renewables. This is a big factor to Canadians. It needs to be affordable.
How do you delay those concerns about this push to biofuels and renewables? I just wrote down this quote, which is that we can get to the moon, but at what cost? At what cost are we going to get there? Maybe as a “glass is half full” kind of guy, how do we get to the moon, but with a low cost?