Natural Resources Committee on June 14th, 2021

[Yvonne Jones, Liberal, Labrador, NL]

Okay. That's great. Thanks.

We talked a lot about the infrastructure and the availability of infrastructure to support hydrogen. Is this something that private companies would be taking on and doing more of themselves, or is it profitable for them to be investing right now into the hydrogen industry?

I know it's a direction we have to go. I'm just concerned about the ability for some of these companies to do this and to meet the potential that is out there for this development and the investment that's required. What would be your thoughts on it?

[Don Romano]

I can take a shot at that, if you don't mind.

[Yvonne Jones, Liberal, Labrador, NL]

Yes.

[Don Romano]

In terms of one of the issues, right now we're giving the heavy-duty trucks away in Europe just to get them on the road to get people familiar with them.

I think the question you're asking is, if you build it, will they come? There's going to be a loss for everybody at a certain point; then there's going to be a break-even point, and then there is going to be an opportunity for everybody to make a reasonable profit on the systems.

I think everybody should expect that short-term losses are going to be a requirement for long-term gains. That's just our perspective at Hyundai.

[Yvonne Jones, Liberal, Labrador, NL]

One of the things we've been hearing is the economic profitability of doing this for some Canadian energy companies, and that's where my question is going, maybe in terms of Hydrogène Québec.

Dr. Roy, in your case, when you were presenting, you alluded to this. With the hydrogen that you guys are producing right now, how much energy is used to produce, for example, a tonne of hydrogen?

With regard to transportation of the product, how have you developed that network and been able to make it work from an economic perspective for your company?

[Simon Moore]

I apologize. Was that question directed to me?

[Yvonne Jones, Liberal, Labrador, NL]

It was to Dr. Roy.

[Dr. Jacques Roy]

Thanks.

I don't run gas stations, but there is one in Quebec. It's operated by a distributor called Harnois Énergies. In terms of cost efficiency, it's a very expensive investment. The only reason they did it was that there were partners who actually invested and helped reduce not only the cost of the infrastructure but also the cost of the hydrogen sold at the pump. Also, to be clear, this station actually produces its own hydrogen, so the electrolysis is done on site, which is one way to do it if you have enough volume, enough scale, but it's not the only way, actually, to operate. Eventually you could have gas distributors who would deliver hydrogen through stations, but at this time it was felt that producing on site was the better solution.

In terms of profitability, we are very far from that. It's like an act of faith right now. You have to actually demonstrate the use of hydrogen, and for that you need those refuelling stations, like a chicken and egg situation. If you don't have the stations, then people will simply not buy the products.

At this time in Quebec, the provincial government has acquired 50 fuel-cell cars produced by Toyota, and the demonstration is being carried out, trying to understand how the cars are operating and doing a cost-benefit analysis of using those cars at this time.

[The Chair, Liberal, James Maloney]

Thank you very much.

Thanks, Ms. Jones.

Next up is Mr. McLean, for five minutes.

[Greg McLean, Conservative, Calgary Centre, AB]

Thank you, Mr. Chair, and thanks to all our witnesses.

The main thing I'm hearing, which I really enjoy today, is that we are talking about decarbonizing and not just shifting one polluting mechanism to another.

I'm going to drill into some of the data that Mr. Romano provided here.

First of all, Mr. Romano, how much net profit has Hyundai made in Canada these past two years?

[Don Romano]

We're not public. We don't disclose our profitability numbers.

[Greg McLean, Conservative, Calgary Centre, AB]

Okay. Can you share them with the committee?

[Don Romano]

No. I'm not at liberty to share.

[Greg McLean, Conservative, Calgary Centre, AB]

Okay, thank you. Would it be more or less than $25 million per year, Canada and international?

[Don Romano]

I'm not at liberty to discuss our—

[Greg McLean, Conservative, Calgary Centre, AB]

The reason I ask, of course, is that you've taken $50 million in subsidies from the Canadian government in getting your vehicles on the road. I'm just trying to put this in a relevance perspective in terms of what you're contributing to your bottom line and what you're actually receiving in contribution from the Canadian government.

[Don Romano]

I understand. We've had years of losses and years of profit.

[Greg McLean, Conservative, Calgary Centre, AB]

Okay. Thank you very much. It's much appreciated.

There's an issue around CAFE standards, which of course were stalled by many administrations in the United States, and Canada follows the U.S. on these CAFE standards. Twenty years ago, if we'd stuck to our CAFE standards, would the industry have moved towards more of a hybrid model, as Toyota has in Canada, as opposed to this rapid shift, such as GM is making right now, and this virtue signalling to go to zero-emission vehicles directly, as opposed to steadily reducing the amount of fuel required in the automobile fleet in North America?

[Don Romano]

I would say that right now the focus.... We need to do both. We need to make hybrids. We need to make plug-in hybrids, but that's from a consumer perspective, because some people don't have charging infrastructure. They don't have the ability, if they live in an apartment or a condo, to get the charge.

If we did—

[Greg McLean, Conservative, Calgary Centre, AB]

Yes, I hear you.

[Don Romano]

Go ahead, please.

[Greg McLean, Conservative, Calgary Centre, AB]

The issue, I'm saying, is if your own industry had actually abided by CAFE standards, we would not be in the position we're in right now. Effectively, your industry is becoming much more of a rent seeker from government than a profitable industry in Canada. You can challenge that if you want, but I do see a lot of money flowing from the government for your agenda.

Let's go into what you talked about. You just mentioned the whole issue of getting these chargers in all these equations, everywhere they need to be delivered. Who's going to pay for those chargers?

[Don Romano]

I would hope that the people paying for them would be the people who would benefit from them. Those would be the places that currently provide the charging infrastructure for the population today. I would hope that we would be able to evolve as a community, as a society, to the point where the charging infrastructure would be profitable for the people who provide the infrastructure, the charging today, and that the vehicles would also be as profitable.

[Greg McLean, Conservative, Calgary Centre, AB]

I've talked to gas stations. Usually they talk about the issue around getting these chargers put into their stations in, let's say, Red Deer, which is halfway between Edmonton and Calgary, and it makes zero economic sense. I know the “if you build it, they will come” scenario. However, everybody who is looking at it is saying that the only reason this makes sense is that somebody else is going to pay for it.

That being the case, or that being the situation that's been presented, at what point in time do we start recognizing that the cost of these chargers is actually being borne by the taxpayer? Also, if I can drill down a little further, every bit of this infrastructure has a CO2 footprint that we're duplicating, and it is additional to the CO2 that the variable part of the equation is actually producing as well.

Can you comment on that at all?

[Don Romano]

No, I'm not sure I understand the point about the CO2.