Public Accounts Committee on Dec. 2nd, 2022

[Greg McLean, Conservative, Calgary Centre, AB]

Thank you, Mr. Chair.

That's a good follow-on there. Thank you, Mr. Hannaford, for talking about Germany and their role in the world right now.

Germany came here asking for LNG, and our Prime Minister said that there is no business case for LNG, which was loudly contradicted by every business interest in Canada. As much as they would have come here and said, “Can you get us some LNG?”, we said no, apparently.

However, there is an MOU here for hydrogen for their chemical processes. This is not for their power processes. This is what it's going to be meant for going forward. This isn't the production of hydrogen for energy purposes. It's the production of hydrogen for chemical processes. I'll reiterate that, as it's my understanding from meeting one of the proponents.

If we're going to meet the world's needs, we're talking about $50 per MCF equivalent that was paid for natural gas in Europe this summer. Your modelling shows a natural gas price of $379 here. That's a 2020 number, I appreciate, in Canada. If we multiply that by the amount they're paying for gas over in Europe right now, it's an astronomical number, but on an inflationary number, think about what we're talking about, because your numbers show that if we use green hydrogen in Canada, the amount is 20 times higher for energy production than it is with natural gas. That's $379 versus $62.60 per equivalent unit of energy.

Can you tell us what effect you think this is going to have on inflation for Canadians who need to power their homes?

[John Hannaford]

Mr. Chair, there are several elements to that question.

First of all, the ongoing modelling is something that continues to evolve. We mentioned earlier that we continue to have conversations with colleagues at ECCC, with the CER and with outside sources to make sure that we have refined models of what the future of hydrogen is.

With respect to LNG, there are a couple of points. One of them, as we look at the next steps with respect to—

[Greg McLean, Conservative, Calgary Centre, AB]

I'm sorry, Mr. Hannaford. I'm not asking for input and an analogy. I was stating what happened in the news with our elected officials.

What I'm asking you is about the cost to Canadian consumers in switching to a green hydrogen industry development that replaces a natural gas energy source. If your numbers are right, it's 20 times more expensive. Is that correct?

[John Hannaford]

As I said, Mr. Chair, the ongoing review of our modelling is to be as accurate as possible. We'll see the outcomes of that with our next—

[Greg McLean, Conservative, Calgary Centre, AB]

Your model here shows that it's 20 times more expensive.

Is that correct? If it's incorrect, let me know.

[John Hannaford]

The numbers that are reflected in the report are from 2020.

[Greg McLean, Conservative, Calgary Centre, AB]

Yes. Do you think the number of $60.60 per MCF equivalent for the production of green hydrogen has changed now? Do you think that number will go up?

[John Hannaford]

I think one of the reasons we're continuing to have the conversations with experts is to make sure that we have the most accurate number possible.

[Greg McLean, Conservative, Calgary Centre, AB]

I deal with the experts here. A group called The Transition Accelerator is moving incrementally toward getting hydrogen into our economy as a solution, but your transformative approach was a Hail Mary, just to throw something at the wall, which should never have been considered by a serious government department.

I am challenging you on that. Why did you ever go with that scenario?

[John Hannaford]

Mr. Chair, the intention of the report was to show the full potential. We have taken a series of tangible steps over the course of the last several years, including significant investments in the production of hydrogen through natural gas sources. That's concurrent with steps that have been taken by provincial governments and will be reflected in further work that we do with the provincial and territorial governments through the regional table approach.

This is all with the view to being as tangible as possible in how we take steps with respect to the evolution of our energy markets.

[The Chair, Conservative, John Williamson]

You have 30 seconds, Mr. McLean.

[Greg McLean, Conservative, Calgary Centre, AB]

We've talked about costs. We've talked about infrastructure. We've talked about the actual delivery and the net-negative energy proposed in green hydrogen.

Do I have another round, Mr. Chair?

[The Chair, Conservative, John Williamson]

No, you don't.

[Greg McLean, Conservative, Calgary Centre, AB]

Okay.

The effect on Canadians is going to be severe. Would you acknowledge, Mr. Hannaford, that there's a lot we don't see here as far the results are concerned, and that the cost effect on Canadians is going to be huge if we move in this direction?

Is inflation at all a part of your concern?

[John Hannaford]

We're absolutely mindful of cost as a general matter with respect to energy policy. The recent announcements with respect to things like heat pumps were with a view to the energy cost for individuals.

We view hydrogen as a matter of potential, not only for the application domestically but also because there is a global market that is forming here. That has the potential of having significant economic benefits for Canada.

[The Chair, Conservative, John Williamson]

Thank you.

Just as a clarification, Mr. McLean, there will be another round for the Conservatives. I'm told you might be taking that, so we might see you again.

Mr. Dong, you have the floor for five minutes.

[Han Dong, Liberal, Don Valley North, ON]

Thank you very much, Chair.

I want to follow my Conservative colleague's question, looking at this technology from the consumer's side. We know the government has set very aggressive goals for all new cars on the market not to have combustion engines using fossil fuels.

How soon will we see vehicles on the road using hydrogen technology? It's a bit unfair to ask this, but do you have any estimate at all?

[John Hannaford]

We're seeing them now. There are hydrogen vehicles driving on Canadian roads.

[Han Dong, Liberal, Don Valley North, ON]

Say, 10 years from now, will we see a good portion of them being used by Canadians and Canadian families?

[John Hannaford]

There are going to be a variety of different ways of dealing with transportation. It's possible that light vehicles may steer more towards battery technologies rather than hydrogen technologies. It may be that the way the market will work is to steer more towards medium and heavy vehicles applying hydrogen technologies.

The use of a fuel cell is possible in a consumer car. There are examples right now. We are also making investments with respect to the infrastructure, because that's obviously a critical enabler here. We are looking at stations that will allow for refuelling.

[Han Dong, Liberal, Don Valley North, ON]

Yes, that's very important, and to make it convenient so people can use it.

I've had conversations with the auto-manufacturing industry. It seems to me there's a bottleneck for what type of energy can replace fossil fuels. As you said, light vehicles are powered by electricity. It's doable. We see many of them. When it comes to larger vehicles, transports, even trains, electrical power doesn't seem to.... It seems to me there's a bottleneck.

Maybe hydrogen is a solution to replace clean diesel or whatnot. Would you agree with that?

[John Hannaford]

It certainly has potential, yes.

[Han Dong, Liberal, Don Valley North, ON]

Just quickly, do you have any idea how much that will cost consumers? Would it be cheaper for consumers than what they're currently seeing at the gas pump? Do you have any idea on that?

[John Hannaford]

Over time, the price point will drop. This is one of the reasons why we're looking at the sorts of incentives and frameworks we are discussing right now. Right now, the relative price is higher with respect to hydrogen. That's partially a question of scale. It's partially a question, then, of investments in technology.

[Han Dong, Liberal, Don Valley North, ON]

I want to come back to the energy cost to produce hydrogen. I didn't quite understand. I understand the line of questioning. It sounds like you need more electricity to produce hydrogen, which could then be used as a form of energy to produce electricity. Does that, in your analysis, make sense? Does that make sense in terms of energy production? Why would you use more electricity to produce less electricity using hydrogen technology?