Natural Resources Committee on June 14th, 2021

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

Thank you, Mr. Chair.

I'd also like to thank the witnesses for joining us for a very interesting meeting today.

My first question is for Air Products.

Mr. Moore, you mentioned a few things that I thought were quite interesting. You mentioned not only the important announcement last week in Canada but also that you're pursuing a hydrogen production facility focused on green hydrogen.

I know there's—not to get too much into the debate over colours—sometimes a disagreement on whether it makes sense to produce blue hydrogen when there are estimates that over time, green hydrogen is going to be cheaper to produce.

I'm curious to hear what made you decide to pursue blue hydrogen in Alberta but then focus on producing green hydrogen in Saudi Arabia, just in terms of the cost profile of producing it.

[Simon Moore]

Thank you very much.

I think in general we see this energy transition driven very much by hydrogen. It's going to have to be an “and” solution, not an “or” solution. There are going to be sets of circumstances in different places in the world that create the right incentive to do a renewable energy-driven electrolysis project, and then there are going to be other parts of the world where it makes sense to do a hydrocarbon-based project. The technology magic is to have a hydrocarbon-based hydrogen solution that has the lowest CO2 footprint. I think there is a different set of circumstances in different cases. We want to be a provider of all of these types of solutions to our customers and/or countries around the world that are looking for it.

As I mentioned earlier, there are some very strong and strategic reasons that we think this project makes sense, which we announced last week. I would also add that we hope this is not our last investment in this space in Canada. We are open to additional hydrocarbon-based investments as well as renewable energy-based hydrogen investments.

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

Thank you.

To follow up on that, I'm just curious if you could explain a little bit about how you see the announcement from last week fitting into the federal government's wider hydrogen strategy. What do you see as potential next steps in terms of your own company's projects, and also what you're hearing from some of your competitors in this market on what that might mean in terms of creating a hub?

[Simon Moore]

Great. Again, our project not only provides pipeline hydrogen at net zero but also creates 30 tonnes a day of net-zero liquid hydrogen that can be used for the transportation market.

One of the reasons we have the witnesses we have here today is that they all represent one of the key pieces of making this happen. We can't do it alone. The auto companies can't do it alone and the fuel cell companies can't do it alone.

One of the things we're proud of now is that we can say, without a doubt, that in 2024 there will be 30 tonnes a day of net-zero liquid hydrogen available from this project. Again, we hope this is just a start.

That's one of the key elements. From that, then, as was mentioned a few times, the actual fuelling infrastructure needs to be created. I very much agree with the earlier witness who talked about heavy trucks and buses being the right market for hydrogen in the short term.

One thing is that each of us, in our own way, has to take bold steps. We have to move this forward, and we have to move it forward in a way that ends up with the right vehicles, the right incentives, and quite frankly, the right hydrogen when it's needed.

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

Thank you.

That's actually a great segue to my next questions for Ballard Power.

I also hail from British Columbia, and we do have some hydrogen fuelling stations here. One is not far away from where I live. I am always quite impressed with the breadth of markets that Ballard is selling into and the range of products that your fuel cells are being used for, whether that's buses, trains, trucks, ships, cars, forklifts and more.

I was hoping you could discuss where you see the greatest opportunity for your products globally. What are the factors leading to that interest that we may be able to emulate in Canada to create that market here?

[Nicolas Pocard]

Thank you for your question.

I believe, as I mentioned earlier, that heavy-duty mobility is really where hydrogen provides one of the most attractive value propositions. I think the high energy density of hydrogen enables a lot of energy to be packed on those vehicles.

If a vehicle operates for long hours, such as a transit bus that is on the road from 5 a.m. to sometimes 11 p.m. or a truck that covers a very long distance, or a train, those vehicles need a lot of energy. Hydrogen provides the energy storage that is required and delivers the range that vehicle operators need.

As well, as was highlighted earlier, the quick refuelling enables those vehicles to be.... Those vehicles are more expensive than a regular vehicle, so you want to utilize those vehicles as much as possible. You want to operate them in multiple shifts. Hydrogen allows you to do that. This is really where we are focusing today. It's in that heavy-duty mobility segment. Those vehicles produce more emissions proportionately than a car that might be used only one hour per day. I think if you want to have the biggest impact on vehicle operation to enable the transition to zero emissions, as well as address GHG emissions, this is where the sweet spot is. It's what is recognized. If you look at every hydrogen strategy published by more than 30 countries in the past 18 months, you see that they all highlight that for transportation—and there are other sectors—heavy-duty mobility is one of the sweet spots.

[The Chair, Liberal, James Maloney]

Thanks, Mr. Weiler.

We'll move on to Mr. Simard.

[Mario Simard, Bloc, Jonquière, QC]

Thank you very much, Mr. Chair.

My question is for Mr. Moore.

I am a little confused. To get my head around the hydrogen issue, I got in touch with Karim Zaghib, who holds a Ph.D. in electrochemistry and now works for Investissement Québec. He was telling me that producing 1 tonne of blue or gray hydrogen could generate between 10 tonnes and 11 tonnes of CO₂.

You are saying that colours need not be taken into account, but I am rather under the impression that they are quite important.

I would like to know whether you have any numbers concerning the amount of carbon 1 tonne of blue hydrogen produces. If so, could you provide them to the committee?

[Simon Moore]

Thank you very much.

If I did not understand the question, please ask again.

When we speak of hydrogen produced from natural gas, the typical process today around the world is a steam methane reformer. If there is no carbon capture on that system, I might have said it's going to produce nine tonnes of CO2 per tonne of hydrogen, but it's essentially the same number. It's eight or nine tonnes, so it's a significant amount of CO2.

Now, when we turn to blue hydrogen, blue hydrogen still has to be produced. The CO2 is still produced by chemistry. The question is, how much of it can you capture? If you take a conventional hydrogen plant and retrofit a carbon capture system, at best you can get approximately 50% of the CO2, so perhaps then you would have 5 tonnes of CO2 per tonne of hydrogen.

We have chosen a new technology for this project, called an autothermal reformer, which allows us to capture more than 95% of the CO2 produced in this process. In addition, we create no-carbon electricity, which offsets the rest, so in this project that is producing hydrogen from natural gas, we view this as net zero. In other words, on a net basis there are no CO2 emissions for the production of the hydrogen.

I hope that answers the question.

[Mario Simard, Bloc, Jonquière, QC]

Yes, thank you.

Since I am a neophyte, I am wondering about certain things. Finally, given the entire process of capturing carbon, isn't the cost of producing that type of hydrogen nearly equal to the cost of producing green hydrogen, which is said to be a bit higher?

[Simon Moore]

You are exactly correct, but our view is that these are different products. They have a different place in the marketplace.

Comparing hydrogen produced from natural gas, where there is no penalty for the CO2 emissions and there's no CO2 capture, to the cost of producing net-zero hydrogen from this facility, we view that comparison, quite frankly, as apples and oranges. The reason we're here today and the reason that the world is so focused on this is that we want to reduce the CO2 footprint.

Yes, we believe that the products from this facility will be more expensive than if they were made from a facility that had no carbon capture, emitted all the CO2, and received no penalty for doing so, but that's not, as you very well know and as the committee knows, where the world is going. The world wants and needs its energy produced with a lower carbon intensity, and that's what's exciting about this project: being able to prove that we can do this and produce that net-zero hydrogen.

[Mario Simard, Bloc, Jonquière, QC]

However, I do have a concern, Mr. Moore, but don't take it personally. I am under the impression that, in its hydrogen strategy, the federal government is trying to decarbonize the fossil-based industry by finding an alternative to it, which is hydrogen. However, so far, we have not had much information on those carbon capturing strategies. I don't see why a business would get involved in this sector where costs are higher. Fundamentally, pretty big government support is expected to develop this sector.

Are you reading the situation the same way I am?

[Simon Moore]

I want to make sure my comments did not come across incorrectly.

When we compare to so-called grey hydrogen, any of the solutions—blue hydrogen or green hydrogen—are likely to be more expensive. Effectively, that's the reason nobody was producing blue or green hydrogen over the last 10 years. I do think, as I mentioned earlier, that in different parts of the world there will be places for hydrocarbon-based net-zero hydrogen or renewable energy-based net-zero hydrogen to fit.

Let me say it this way. From our view, I would suggest that the world is very focused on reducing the carbon intensity of its energy. One of the great ways to do that, as we've heard today, is hydrogen—as long as you can reduce the CO2 footprint. There are really a couple of different options here, and as I mentioned, we're doing projects in both areas. We view this project opportunity as creating the framework whereby the world can have these carbon-free hydrogen molecules it wants for its energy transition.

[The Chair, Liberal, James Maloney]

Thank you, Mr. Simard.

Next we have Mr. Cannings.

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

Thank you, and thank you to the witnesses for being here today.

I'm going to pick up on something. I'll start with Mr. Romano from Hyundai.

You mentioned that the challenge for hydrogen and fuel cells is the charging infrastructure. It's like the pain point you mentioned for electric vehicles: having a charging station. The challenge for hydrogen is having that recharging.

If we're going to look to a future, and hopefully it's sometime in the near future, when we can have semi-trailers travelling across Canada and trains and cars using hydrogen fuel cells, as we've heard from witnesses, we need that infrastructure in hubs across the country. We've heard from other witnesses that this is where the government could really play a role, just as it has started to play a role in expanding the EV charging infrastructure, in building those hubs and building that infrastructure to move hydrogen to those hubs where they can be used by the trucks, trains, or whoever is using them.

I wonder if you would like to comment on that. What role could the government play in building that infrastructure as part of this team that we need?

[Don Romano]

First of all, when it came down to electrification, the government was instrumental in working with the auto manufacturers to build the infrastructure and to bring EVs forward. I can tell you right now we have more EVs than we have demand. Supply is outstripping demand right now. That's a problem. That's a big problem. We're equally concerned with fuel cells. We're on our second version of fuel cells, the Nexo, which is available to you right now, but unfortunately, if you look at the infrastructure for charging, you'll see that outside of Vancouver, there are one or two stations. There are 12,000 gas stations out there. We have a lot of work to do.

However, the first place I would focus is on heavy-duty trucks. I think all my colleagues have said the exact same thing. It just makes sense. We produce heavy-duty trucks, in addition to cars. We sell them into Europe right now. We're actually selling them in California today. Amazon is our first client.

I have been personally in contact with Canadian Tire. We can envision a time when from Quebec City all the way down to Windsor and into Detroit, we could set up a hydrogen highway at the ONroutes all the way through. Simply putting our fuel stations in those locations will create demand for hydrogen trucks, because they just make sense.

They make sense from a brand perspective. You can imagine a Canadian Tire able to explain that they are delivering all their goods and services through hydrogen trucks. We, as well as my competitors, can produce the hydrogen heavy-duty trucks. We simply need that infrastructure, and I think it's just a matter of producing the same requirements for those people who currently provide the gas stations and the retail outlets.

The government came to us and said they had a mandate for us that meant we needed to produce so many electric vehicles, that we needed to reduce GHG by a certain level. If we do the same thing for those that currently provide the fossil fuels and ask them to come together as a village and begin to provide that infrastructure, it's just a matter of time. We'll build it and the customers will come, and we'll see a much better future.

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

Thank you.

I'd like to put that same question to Monsieur Pocard from Ballard. What role can the federal government play to help in building that hydrogen infrastructure? As Mr. Romano said, we have to do this at the same time or we'll get problems with supply and demand.

Monsieur Pocard, could you comment on the role the federal government can play in helping to build that infrastructure?

[Nicolas Pocard]

I think I would echo the comments made by Mr. Romano. I think we need to start looking at those freight corridors and at investing in heavy-duty hydrogen refuelling stations in those freight corridors that are the most important and contribute the most to emissions. I think that's really where the federal government can help.

Also, the building of those hubs is important. If you do a hub for the production of low-carbon hydrogen, it enables you to then generate demand for the application. It's not only for trucks. It can be for buses in the cities. It can also be for rail, at a yard for locomotives.

From that perspective, I think the government could invest in developing those hubs for the production of low-carbon hydrogen, as well as the infrastructure around selected freight corridors, which would really help decarbonization. Ports are another area where you can put together applications using hydrogen and have hydrogen refuelling, like some of the projects we've been developing now at the port of Vancouver.

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

Thank you, Mr. Chair.

How much time do I have?

[The Chair, Liberal, James Maloney]

You have about 25 seconds.

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

Okay.

Mr. Pocard, we've heard about competition with China around critical minerals. Maybe you could spend a few seconds talking about competition with China around hydrogen infrastructure and vehicles and that sort of thing.

[Nicolas Pocard]

Yes. China is rising as one of the big competitors that is interested in Canada. It has been leading the fuel cell industry for a long time. We've seen massive investments in technology in China to bring up their knowledge and their know-how, with investments in IP development and investments in R and D.

We're now starting to see Chinese competitors. They are in China mainly, but some of them are starting to come out of China. A lot of investment is being made in China to complement what they have done in batteries, but it's now in hydrogen and fuel cell technology.

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

Thank you.

[The Chair, Liberal, James Maloney]

Thank you, Mr. Cannings.

Mr. Patzer, we'll go over to you to start the five-minute round.

[Jeremy Patzer, Conservative, Cypress Hills—Grasslands, SK]

Thank you, Mr. Chair.

I'm going to go to you, Mr. Romano. You mentioned in your opening remarks that your EV vehicles are zero emission. When we look at the life-cycle footprint of your vehicles, where are you sourcing your batteries? Where's the mining of these minerals? How is that being done in a zero-emission way?