Natural Resources Committee on June 14th, 2021

[Greg McLean, Conservative, Calgary Centre, AB]

Thank you.

I wanted to talk about the transportation of hydrogen. You're proposing to build a plant in Edmonton that is going to supply a vast area. Can you tell us about the economics of distribution of produced hydrogen?

[Simon Moore]

Can I just make sure I understand the question? When you say “distributed produced hydrogen”...? I apologize.

[Greg McLean, Conservative, Calgary Centre, AB]

You're going to be producing hydrogen in Edmonton and distributing it to obviously a vast area. When is it better to establish a plant in, say, Saskatoon? What are the economics of a local build versus a big build?

[Simon Moore]

Thank you. I apologize.

I don't think we would ever suggest that this exciting project we announced last week would support all of western Canada's transportation needs. I think just some rough numbers for an order of magnitude are that the liquid hydrogen from this facility could supply about a thousand city buses or large truck vehicles. It depends on their routes and those sorts of things. Clearly there will need to be additional investments, perhaps in our case very close to this one, or also on a more distributed basis. There will be, in our view, much more to come.

[Greg McLean, Conservative, Calgary Centre, AB]

Then it's $1.3 billion to support one thousand buses?

[Simon Moore]

I apologize. That's one part of the hydrogen coming out of this facility. A significant part of the hydrogen coming out of this facility is going into the pipeline network to support the refining, chemical and petrochemical market as well. I'm sorry about that.

[Greg McLean, Conservative, Calgary Centre, AB]

No worries. Thank you very much.

I'm going to move back to Mr. Romano.

Mr. Romano, one of the things about hydrocarbon consumption in vehicles is there is a big excise tax collection from government. It's billions of dollars per year, distributed between the federal government and municipal governments. When you're comparing apples to apples, how do you think this infrastructure money's going to be replaced when you go down the road and we replace these vehicles with zero-emission vehicles?

[Don Romano]

I don't have the answer to that.

I know that the whole transformation to a zero-emissions format is going to cause pain in some areas and gain in others, but I don't think there's a free ride to get there.

[Greg McLean, Conservative, Calgary Centre, AB]

It's safe to say that there's a social cost here that the hydrocarbon consumption industry is bearing right now that isn't built into the equation of what we're replacing it with. We're going to have to figure that out.

[Don Romano]

We have to, absolutely.

[Greg McLean, Conservative, Calgary Centre, AB]

Thank you. I appreciate that very much.

I have a question for Mr. Pocard.

I really appreciate that you understood that the battery buses reduce GHGs at different places, depending on the local source of power. You save 50% in Alberta. Is that life cycle, or is that just in the power that's produced in the bus alone?

[Nicolas Pocard]

No, it's just at the tailpipe during the operation of the bus. It doesn't consider the whole life cycle.

Maybe to that comment I'd highlight that producing a fuel cell from cradle to gate—from the components to the assembly and the shipping to the bus OEM—is much less carbon intense. It's probably 70% less than a battery, because it's a manufactured product and you use just material that is assembled and that doesn't have the same carbon intensity. Some studies have shown that in the overall life cycle of the product, manufacturing fuel cell engines probably has a carbon footprint similar to manufacturing another internal combustion engine.

[Greg McLean, Conservative, Calgary Centre, AB]

Thank you.

I hope I have enough time to squeeze one more question in for Mr. Moore.

Mr. Moore, you talked about the $7-billion export facility you're building in Saudi Arabia. The benefits there, of course, are the wind and the sun, which we have in abundance in western Canada as well, but for some reason....

Can you tell us what it would take to have an export facility of that magnitude built in Canada?

[Simon Moore]

Again, what these renewable energy-driven facilities come down to, of course, is the cost of renewable energy. Whether that be wind, solar, hydro, or perhaps in some parts of the world even nuclear, if there's low-cost electricity on a renewable basis available there, that would be a potential candidate for one of these projects. Again, that project can supply carbon-free hydrogen into that local market, but it can also be used to export as well.

[Greg McLean, Conservative, Calgary Centre, AB]

Mr. Chair, thank you very much. I've finished.

[The Chair, Liberal, James Maloney]

Thanks, Mr. McLean.

We will wrap up with Mr. Weiler.

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

Thank you, Mr. Chair. I'm happy to bring it home here.

I'd like to pick up on a line of questioning that my colleague brought up earlier.

Mr. Moore, you mentioned that you were transporting hydrogen a total of 1,000 kilometres by pipeline in the gulf coast. I'm curious. Is this transport being done by purpose-built pipeline infrastructure for hydrogen, or is it going by natural gas pipeline?

[Simon Moore]

This is a pipeline network that Air Products built, owns and operates, and it's only for moving hydrogen.

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

Have you modelled the capacity of transporting hydrogen with natural gas as some type of blend or mix? Do you have plans to do that with your new facility that's being built, hopefully in a few years, in Alberta?

[Simon Moore]

That's a great question. That feels as though it could open up a long conversation.

In terms of the opportunity to perhaps blend hydrogen into a natural gas pipeline, I've seen various studies in which up to 10% hydrogen, or perhaps 20%, could be blended into the natural gas line and still be used as part of an energy source. Clearly that's a partial decarbonization, not a full decarbonization.

We've certainly had some conversations with various entities around the world about that concept. That's a possibility going forward, another opportunity for hydrogen, but to answer your specific question, at this time we don't have plans to do that with the project that we announced last week.

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

Thank you.

The project announced last week was put together with support from several orders of government. At the federal level, we have brought in in a price on pollution so that the cost of polluting isn't externalized and we have reduced the carbon intensity of fuels through the clean fuel standard.

With these two measures steadily increasing in stringency over time, at what point do you see some of the projects, such as the one that was announced last week, being viable without having the additional government support?

[Simon Moore]

That's a great question, but to be honest with you about our ability predict exactly how this market is going to shake out over the next five to 10 to 20 years, I don't think we're capable of doing that. I would just say that obviously, as everybody has said today, these markets are becoming more competitive every day and coming down the cost curve, but as was also acknowledged, this is fundamentally recognizing the desire of the world to decarbonize its energy source.

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

Thank you.

I'd like to ask the same question to Mr. Roy as well.

[Dr. Jacques Roy]

Could you repeat the question, please?

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

When you see the increasing price on pollution and the clean fuel standard, when are projects like that going to be cost-competitive?