Natural Resources Committee on June 18th, 2021

[Don O'Connor]

I think there are two. The first is ethanol, where you can capture the CO2 that comes off the fermentation and inject it underground, so it's carbon capture and storage. That's worth 30 g/MJ. We have ethanol plants today in the low 40 g/MJ on a full life-cycle basis. The other major factor is the fuel that's used—natural gas. Renewable natural gas or biomass combustion can get those plants down to zero.

The other fuel that has a lot of interest in Canada and in the United States is something called “renewable diesel”. It's made from vegetable oils or animal fats. It has low GHG emissions, probably in the order of 20 to 25 g/MJ. Again, more than half of that is due to the hydrogen that's used in the process.

I know that the companies that are looking at doing this are looking at two things. The first is carbon capture and storage, again, for the hydrogen. Second, those plants also produce some co-products that are biogenic in nature and can be used to produce the hydrogen. Using the biogenic components can get the hydrogen part of it down to zero, and again, you can still do the carbon capture on that biogenics to get the full life cycle down to zero without looking at some of the other things that are going to happen in the future with the use of renewable fuels, better farming practices and all of that.

[The Chair, Liberal, James Maloney]

Thank you.

Thanks, Mr. Weiler.

We will move on to Mr. Simard.

[Mario Simard, Bloc, Jonquière, QC]

Thank you, Mr. Chair.

I would have a question for Dr. Zacharias from Clean Energy Canada.

Dr. Zacharias, before I ask you this question, I just want to tell you where I stand. It seems to me that the government's proposed strategy on hydrogen is more about trying to find opportunities for the oil and gas industry. I won't hide the fact that this bothers me a little.

I'll ask you my first question, which I'd like you to answer briefly.

Do you think hydrogen made from gas or oil can be called clean?

[Dr. Mark Zacharias]

I think the answer to that question is, currently, yes. If you look at last week's announcement from Air Products Canada, they are planning to use carbon capture and storage and offsetting to get to 95% carbon removal from the project, so that is sufficient. Even two years ago when we were looking at blue hydrogen, if we saw 80% to 90% carbon removal, we thought that was good. Therefore, the technology has improved.

[Mario Simard, Bloc, Jonquière, QC]

Thank you.

I asked you this question, Dr. Zacharias, because I read an article earlier this week by Bruno Detuncq, who is a professor emeritus of the École Polytechnique de Montréal. He indicated that strategies to bury carbon are currently at the experimental stage and that these are very dangerous processes.

What stage is this at, to your knowledge? I saw a fairly alarming statistic that said that, to produce 10 million tonnes of hydrogen, it would basically mean burying 100 million tonnes of CO₂. So I'm guessing that's not hidden under a rug.

To your knowledge, are these hydrogen storage strategies sufficiently developed to be both safe and profitable?

[Dr. Mark Zacharias]

Sure. I'll speak to both of those questions.

On the first one, yes, Canada has been sequestering carbon dioxide underground for many years. Shell's Quest project in Alberta has been up and running since 2018, and I believe it has already sequestered several megatonnes of CO2 underground. Canada has favourable geology in terms of offshore basalt formations on both coasts, as well as depleted oil and gas reservoirs in Alberta, Saskatchewan and B.C.—and possibly off Newfoundland and Labrador as well—to store carbon dioxide. Canada does have the potential to store a lot of CO2 underground.

Second, on the economics, currently blue hydrogen is expensive. It's several times more expensive right now than grey hydrogen, which is hydrogen without carbon capture and storage. However, as technologies improve and costs scale down, I think it will be cost competitive, but again, green hydrogen might be more cost competitive in the next decade.

[Mario Simard, Bloc, Jonquière, QC]

Thank you.

Quickly, you mentioned earlier that the government should have a hydrogen strategy, and you brought up a rather interesting statistic. You say that by 2030, green hydrogen would be cheaper than natural gas. I heard an answer you gave earlier when you said that the United States wanted to move towards green hydrogen within 10 years. You also mentioned Australia and France.

In its strategy, shouldn't the federal government focus on supporting green hydrogen before supporting blue or grey hydrogen in order to have access, perhaps, to markets that will develop internationally?

[Dr. Mark Zacharias]

It's a good question. My answer is that Canada's competitive advantage right now is in both green and blue hydrogen. By using blue hydrogen right now, it does two things: One, it gets Canada ready for a green hydrogen revolution and to scale up its production; and two, it's a way to transition a workforce from natural gas and the oil and gas industry through into blue hydrogen, and possibly into green or clean hydrogen at some future date.

[Mario Simard, Bloc, Jonquière, QC]

In this hydrogen strategy, what do you think the government should put in place in the short term?

[Dr. Mark Zacharias]

Over the short-term right now, the government is doing a good job on the hydrogen hubs and getting those established. More funding would be required for Canada to really understand the export opportunities to scale up production.

We actually need a jurisdictional review that looks at all of our potential competitors and what our competitive advantages are. Canada produces a lot of electricity, some of which at times we don't need, and that electricity could be used to produce green hydrogen.

More work is required. The federal hydrogen strategy is a very good first step, but the recommendations in that strategy need to be turned into actions that can be moved forward quickly.

[The Chair, Liberal, James Maloney]

Thanks, Mr. Simard. We'll have to stop there.

We'll go on to Mr. Cannings.

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

Thank you.

I'd like to thank all of the witnesses, but I will continue with Mr. Zacharias, along those same lines.

My first question is about blue hydrogen. It seems that most of the carbon capture and storage in North America basically involves enhanced oil recovery, that is, pumping carbon dioxide underground into those depleted oil and gas formations, specifically to produce more oil.

I just wonder if you would comment on that. I've heard some negative comments about using that strategy to produce blue hydrogen.

[Dr. Mark Zacharias]

Yes, enhanced oil recovery is when carbon that's pulled out of blue hydrogen production is then in turn transported to an oil reservoir and used to increase and recover oil out of the reservoir. That is happening right now, and much of the carbon coming down the Alberta Carbon Trunk Line is used for that purpose. That's the short term.

I think there are a number of studies that have been published—I don't have them offhand right now—that show the overall carbon balance of that activity. I can't remember what it was. I would like to say, though, that it's only one small portion of carbon capture and storage.

If you look at B.C.'s offshore, you'll see that we have very favourable salt formations, and Ocean Networks Canada, based out of the University of Victoria, is looking at going out, potentially next summer, and doing some pilot carbon capture and storage, where basically the carbon is mineralized into the salt formations.

The east coast of Canada has very similar geology as well, so there are some opportunities for carbon capture and storage that haven't yet been built out to scale and don't involve EOR or enhanced oil recovery.

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

That's what I've been hearing as well.

Maybe you can also comment on the project off Norway that seems to be one of the big carbon capture projects gearing up to take a lot of carbon produced in the European industries and storing it underground off the shores of Norway in these geological formations, without enhanced oil recovery. They feel that enhanced oil recovery is just sort of oil business 101. We need to do it without that to really get the impact on the climate action.

[Dr. Mark Zacharias]

Yes, so Norway is doing some pilot projects right now. What they're planning to do is to take carbon dioxide produced from concrete plants, move that by pipeline off to disused oil platforms, and then use the oil platforms to inject the carbon dioxide into the depleted oil formations. It's not at scale right now. They're still looking for capital, but it may be an opportunity to store carbon offshore.

I'd also note that Norway isn't the only European country looking at this. A number of the countries in and around Denmark, down to northern France, are looking at the same opportunity.

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

Thank you.

I want you to go on to expand your comments on using hydrogen in various industries. We've heard about it being used in heavy transportation, but I think you mentioned fertilizer, cement and chemical industries. Perhaps expand on how hydrogen could be used in that manner.

[Dr. Mark Zacharias]

Sure. Canada has a number of potential uses for hydrogen. In the industrial sector, it can be used either as a feedstock in terms of chemical production, ethanol and so on. It can be used in fertilizers. It can also be used as a heat source for steel, cement and other reactions that currently use coal or natural gas. That's the industrial space.

We've talked briefly at the committee about it's use as a fuel for transportation, either through the use of a fuel cell, by blending it with diesel, or by direct injection into a diesel engine. There's a company in B.C. now that has just been set up, called Hydra Energy, and that does exactly that. It can be injected into the natural gas grid that currently exists, currently at percentages of up around 20%, to help decarbonize the existing natural gas grid.

It can be used for pretty much anything you can think of that requires energy. It can also be used as a grid-scale storage solution for renewable energy when the wind blows and the sun shines. California is doing this with the Los Angeles Department of Water and Power. They're taking over production from renewable power during the day, storing it as hydrogen and then running it through a fuel cell at night to produce electricity. So there are many uses.

[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 50 seconds.

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

I think I'll just move to Mr. O'Connor for an explanation. I think Mr. Weiler kind of touched on the life-cycle analysis of the net-zero impacts of different fuels, and you made a comment about the crude oil analysis at 10% or something. I just missed the details of that. I'm wondering if you could repeat that with some more details.

[Don O'Connor]

Certainly.

When you look at the life cycle of gasoline or diesel fuel, you go back right to the beginning of the extraction and production of crude oil, through the refining and then through the use. The use contributes about 75% of the total life-cycle emissions, and the other 25% is split between the crude oil and the refining. It depends on the kind of crude oil, but 10 to 15% of the emissions result from crude oil production—again, 10 to 15% from refining and then 75% from the use.

Making net-zero crude oil doesn't get you very far in terms of net-zero gasoline or diesel fuel.

[The Chair, Liberal, James Maloney]

Thank you, Mr. Cannings.

We're on to round two of five minutes for each, starting with Mr. Lloyd.

[Dane Lloyd, Conservative, Sturgeon River—Parkland, AB]

Thank you, Mr. Chair, and thank you to our witnesses.

Mr. Simard's line of questioning greatly interested me, Mr. Zacharias. When we're talking about the production of green hydrogen, it's being sourced, I believe, primarily from hydroelectricity and renewable sources like solar and wind power.

If we don't bring on new sources of hydroelectricity, wind power and solar power, as we see hydrogen begin to grow, what do you think the impact would be on electricity rates for Canadians?

[Dr. Mark Zacharias]

That's a good question.

Canada's healthy economy, healthy environment climate plan released on December 10 talked about a two to three fold increase in clean electricity requirement and generation for Canada. In speaking with NRCan officials, they tend to agree that it's at least double the amount of power Canada's going to need by 2050 to power a net-zero revolution.

As you scale up green hydrogen or clean hydrogen, yes, you're going to scale up. The amount of power's going to be increased across Canada.

Having said that, though, globally, looking at renewable power costs, they are plummeting. Alberta has 4 cents/kWh kinds of bids for wind power. If you look at Saudi Arabia right now, they've just recently had a bid at 1.04 cents/kWh. That is unbelievably low, and those costs and those renewable power at scale prices will probably not be the same price for Canada, but we can scale up considerably at a very low cost.

Again, it could be scaled up within the next 10 years if we need to.

[Dane Lloyd, Conservative, Sturgeon River—Parkland, AB]

We've seen how difficult it is to get the Site C dam. We've seen the project in Newfoundland, at Muskrat Falls. Hydroelectricity is one of the backbones of Canada's electrical grid. Do you think that the growth in wind power and solar power, given how much government subsidies are also going into it, will be able to replace our inability to build new hydroelectric capacity?