Public Accounts Committee on Dec. 2nd, 2022

[John Hannaford]

I will defer to my colleague on certain details, but the blending levels.... I think this is one area where we continue to study what the effect of higher concentrations of hydrogen would be on existing infrastructure. That's where you get into questions around retrofits, as well.

I'll turn to my colleague.

[Greg McLean, Conservative, Calgary Centre, AB]

No, I think you answered the question fairly well. I appreciate it. I'll get to your colleague later in the day.

We're talking about a test, right now, to get to approximately 5% hydrogen in a 95% remainder gas stream, but turning that 5% of hydrogen from natural gas into hydrogen to get there, so really testing the infrastructure we have over.... What would you say? Is it a three-year process?

[John Hannaford]

That's my [Technical difficulty—Editor].

[Greg McLean, Conservative, Calgary Centre, AB]

Will we then get to 10% in the next three to five years?

[Sébastien Labelle, Director General, Clean Fuels Branch, Department of Natural Resources]

Natural Resources Canada is currently looking at the natural gas system to assess the impacts of blending hydrogen into the system. As you can imagine, it's a big network. It will take about three years to understand exactly how much blending can happen, what kinds of retrofits might be required to do that blending, and at what kinds of percentages.

We know that, for example, some pipelines out east accept a higher blend without much retrofit, while some are older pipelines that require a full overhaul to accept hydrogen. It will depend.

[Greg McLean, Conservative, Calgary Centre, AB]

Will those pipelines and retrofits you're talking about have a higher carbon content?

[Sébastien Labelle]

I'm sorry, a higher...?

[Greg McLean, Conservative, Calgary Centre, AB]

Will they have a higher carbon content in the pipe?

[Sébastien Labelle]

I could get back to you on the specifics of the requirements.

Typically, we know that, out east, they use some plastic-based materials. Those tend to be more resilient to hydrogen, but I would like to get back to you on that one, in particular.

[The Chair, Conservative, John Williamson]

Thank you very much.

Just for clarification from the chair, when you say “out east”, is that Atlantic Canada?

[Sébastien Labelle]

It's Atlantic Canada, yes.

[The Chair, Conservative, John Williamson]

Sometimes western Canadians confuse central and eastern Canada. Being from New Brunswick, I just want to be clear for the record.

We're turning now to Mr. Fragiskatos.

You have the floor for five minutes.

[Peter Fragiskatos, Liberal, London North Centre, ON]

Thank you very much for the time today.

Mr. Hannaford, you were talking about where things are evolving, as far as green hydrogen is concerned. Mr. McCauley, as he's prone to do—I say this almost as a compliment, because he's turned it into an art—completed your sentence for you in talking about a Hail Mary pass, which you did not say.

I wonder whether you remember that moment in the interaction. Do you want to complete what you were trying to say?

[John Hannaford]

The focus is on achieving the lowest carbon concentration possible with respect to the generation of hydrogen. We've framed our approach not so much on colours as on basically carbon intensity. That is a technological question, as to how you reduce the carbon intensity of the fuel. The technology is already advanced pretty materially. Over the course of the last period of time, we've gone to a higher heat application of separation of the molecules to create the hydrogen. If you combine that with capturing the methane at source, it gets you a very low-carbon-intensity product.

The investments that are being made by some of our partners, particularly the investments through the recent United States legislation, create a real dynamic here that we are mindful of. We have been making substantial investments ourselves, both in terms of our own tax measures and in terms of direct investments through the clean fuels fund and other mechanisms. It is with a view to that kind of technological evolution. We're seeing the results of that to a degree.

[Peter Fragiskatos, Liberal, London North Centre, ON]

Thank you very much.

This goes both to you and to Deputy Minister Hogan.

One of the key findings from the report, as you know, is the following: “We found the 2 departments used unrealistic assumptions for modelling the potential of hydrogen to reduce greenhouse gas emissions.” I think you've addressed it, but I would like it on the record as clear as possible. Where does each department stand in response to that particular finding?

[John Hannaford]

We have taken the recommendations of the commissioner, but, as I said at the outset, the exercises that we were engaged in were different exercises. Natural Resources Canada had been engaged in what we have termed a “call to action”, because it was really intended to show the potential of hydrogen as a fuel. The results you see are reflective of that approach.

[Christine Hogan]

In my opening comments and subsequent questions, I hope I did underscore again that the Environment and Climate Change Canada modelling that is referenced in the commissioner's report is, of course, a set of policies and measures that are contained in the strengthened climate plan. The reference that has been made to the hydrogen numbers.... We were simply able to use a proxy for hydrogen, because the strategy was still under development at that time. Further refinements continue to be made to our model, as we've seen.

If I have the opportunity, I would like to highlight that in the emissions reduction plan, which came out in March, there is an extremely comprehensive annex in that document to the approach to modelling. It can be a very complex and complicated space. We are doing our best to unpack how the modelling works against our climate plans.

Similarly, to Mr. Hannaford's comments, we acknowledge the recommendations of the commissioner. In fact, one of the other initiatives that are highlighted in the emissions reduction plan is a commitment—and it's referenced in our management action plan as well—to an expert-led process that will allow us to take stock and continue to enhance our modelling efforts going forward.

[Peter Fragiskatos, Liberal, London North Centre, ON]

I'll end it there, and thank all of the public servants for their work.

Thank you to the Office of the Auditor General.

[The Chair, Conservative, John Williamson]

Thank you very much.

For our next round, we're going back to Mr. McLean.

You have the floor for five minutes.

[Greg McLean, Conservative, Calgary Centre, AB]

Thank you, Mr. Chair.

Let me go on a different tack here. Thanks for the input earlier on infrastructure that has not been addressed in terms of what Canada will have to undergo in order to switch to a hydrogen economy, even as little as we can by 2030.

The production of hydrogen is among the most inefficient power production in the world. Would you agree, Mr. Hannaford?

[John Hannaford]

I would agree that it is expensive in the current circumstances, but that's one of the reasons we are making the investments we are making, in order to advance the technology and to create the scale that will see some economic returns.

[Greg McLean, Conservative, Calgary Centre, AB]

Advance the technologies and make the investments. Does this mean bet on technologies that don't exist?

[John Hannaford]

It means building on technologies that are evolving now, and there may well be new applications. We were talking earlier about carbon capture and storage. You're seeing technologies where one of the ways in which natural gas is reformed is to use microwave to essentially create solid carbon and hydrogen. It's a very different kind of storage situation with that kind of application.

The point is that this is an evolving space.

[Greg McLean, Conservative, Calgary Centre, AB]

Thank you.

You're correct. Let's look at the impetus for green hydrogen in this country, because we've had some announcements on it. Is green hydrogen the most expensive, least efficient power produced on the planet?

[John Hannaford]

When it comes from electrolysis, it is expensive, and it is relatively expensive to the feedstock of natural gas. Again, this is subject to evolution, and that's partially a question of investment.