I call this meeting to order.
Good morning, everybody. Welcome to meeting number 33 of the Standing Committee on Natural Resources.
I'd like to welcome our members and our guests, particularly those who are on the west coast and who are up bright and early to attend the meeting. We are very grateful. We have another great panel this morning to continue our study.
I believe all our panel members are familiar with the process, but I'll go through it quickly.
We're doing this by Zoom, so we have to be a little patient and not talk over each other. Speaking slowly is not a bad thing; it helps our translators.
You have translation services available to you on your screen. You are welcome and encouraged to speak in either of our official languages. You will be asked questions in both, I'm sure, and thank you for coming.
Each presenter will be given up to five minutes to make their opening remarks, and once all of them are completed, they will be followed by questions from the members.
We have four witnesses today. We have Air Products Inc., Dr. Jacques Roy, Ballard Power Systems Inc. and Hyundai Auto Canada Corp.
Thank you for joining us.
I will go through the opening remarks in that order, so why don't we start with Mr. Simon Moore, who is the vice president, investor relations, government relations and sustainability from Air Products Inc.?
The floor is yours, sir.
Good morning, Mr. Chair and honourable members of the committee. On behalf of the employees of Air Products globally and in Canada, thank you for the invitation to appear before your committee today.
Air Products is a global corporation with a market cap of over $65 billion and operates in over 50 countries. Our 19,000 employees work hard every day supplying critical products to customers in a variety of industries. Our products enable our customers to be more productive and more efficient. For example, last year our products allowed our customers to avoid the equivalent of 72 million metric tonnes of equivalent carbon dioxide emissions.
At Air Products, our higher purpose is to bring people together to collaborate and innovate solutions to the world's most significant energy and environmental sustainability challenges. Obviously we consider the energy transition one of the greatest challenges of our time.
We are the leading global supplier of hydrogen. Every day we produce and safely transport over 9,000 tonnes of hydrogen via pipeline and trucks. We were a pioneer in the hydrogen for mobility market—we've been involved in over 250 projects over the last 15 years—and we participate in over one and a half million hydrogen fills every year.
We have a strong presence in Canada as the leading supplier of hydrogen. Our Alberta Heartland Hydrogen system began operations in 2006. Today we have three world-scale plants connected by an over 50-kilometre pipeline network supplying the refining and petrochemical sectors. We also have a hydrogen system, including liquefaction, in Sarnia.
Our sustainability-driven offerings for gasification, carbon capture and hydrogen are essential and necessary components of any realistic energy transition plan to reduce carbon intensity while also meeting the world's growing energy demand.
A prime example of translating our vision into reality is our announcement just last week of a world-scale energy complex in Edmonton, which will begin with a transformative $1.3-billion net-zero hydrogen production and liquefaction facility to be on stream in 2024. This project is an example of what we can achieve when all three levels of government work to create a common solution, bring investment, and in this case provide over 2,500 good-paying construction jobs when they are desperately needed.
This first-of-its-kind investment enabling the production of net-zero hydrogen from natural gas was made possible by Canada's clean energy diversification strategy and regulatory framework that made it clear that clean hydrogen will be a key enabler to Canada's being carbon-neutral by 2050.
During the announcement ceremony last week, which included Minister and Minister , our chairman, Seifi Ghasemi, stated, “I can't think of a better place to invest our money for the long term than Canada. You are leading the world in the vision for energy transition.”
While we are clearly supportive of the federal government's leadership, I'd like to suggest a few overarching considerations.
First, with regard to hydrogen, consider focusing on carbon intensity, not colour. Much of the world still assumes that green hydrogen made from renewables is better than blue hydrogen derived from fossil fuels, mainly natural gas. We believe the net-zero complex we announced last week proves that blue hydrogen can be produced with a carbon intensity equal to green. Where that's the case, the policy should be agnostic to how the hydrogen is derived and focus on its carbon intensity. This will allow the market to determine the best option.
Second, in tax policy, focus on CO2 reduction efficiency, not capital investment. Finance Canada is currently conducting a consultation on tax policy to incent carbon capture and storage. We had hoped Canada would follow the U.S. lead with a tax incentive similar to the U.S. 45Q tax reduction tied to the volume of CO2 sequestered. Finance Canada's proposed capital investment tax credit approach runs the risk of prioritizing capital investment inefficiency over CO2 reduction efficiency. We hope this approach gets reconsidered.
Finally, address the historical bias against multi-facility solutions. For over 70 years, Air Products has been a pioneer in the outsource model of industrial gases and energy supply. For the refining sector, our outsource model is recognized as a global best practice for the safe, reliable and capital-efficient supply of critical gases like hydrogen. Unfortunately, federal tax and environmental policies have in the past created an unintentional bias against our multi-facility offerings. This bias has even made its way into the proposed clean fuel standard, which we're working hard to address with officials at Environment and Climate Change Canada. Given that every tonne of CO2 reduction matters, we urge you to avoid the flaw everywhere you can.
Thank you again for the opportunity to come before the committee today. I look forward to answering any questions you may have.
Respected committee members, thank you for the invitation. I am happy to be joining you today to share the results of my research on hydrogen's potential.
I am a professor of operations and transportation management. I am not a chemist or an expert on hydrogen. What I am particularly interested in are its applications to various modes of transportation.
My interest in hydrogen is actually pretty recent. It goes back to 2019, when I carried out a study on the use of hydrogen around the world. That was a study I carried out for the Hydrogène Québec coalition, which is made up of automobile manufacturers, including Hyundai and Toyota, gas producers, such as Air Liquide and Messer, and energy distributors. The study was essentially based on a fairly comprehensive literature review and on a few interviews with experts in the field. In less than five minutes, I would like to provide you with a few highlights of the study, which will soon be available to you.
As we all know, the use of electric zero-emission vehicles is a growing global trend. There are actually two types of electric vehicles. The best known are of course battery-powered vehicles, which are becoming increasingly available on the market. There are also vehicles that use hydrogen fuel cells. Batteries are more appropriate for small vehicles travelling short distances, while hydrogen fuel cells are better suited for use in heavy vehicles travelling long distances. We could be talking about class 8 trucks, for example, or even about less heavy vehicles that need to operate for many hours in a day. Under those circumstances, hydrogen becomes a more worthwhile option. Between the two types, there is a whole slew of hybrid vehicles, either plug‑in or not.
Hydrogen vehicles are becoming increasingly popular around the world. We estimated in our study that there were about 13,000 of them at the end of 2018. One year later, the number reached 25,000, so it nearly doubled.
Hydrogen vehicles are everywhere—for example in the United States, especially in California; in Asia, especially in Japan, China and South Korea; and in Europe, such as in Germany, France, Norway, the United Kingdom, and so on. Of course, there must be enough charging stations for that many vehicles. So the number of charging stations has also increased. It went from 376 stations at the end of 2018 to more than 470 stations one year later. That growth has mostly been happening in Asia and in Germany.
Concerning vehicles, an increasing number of buses are also being converted to hydrogen or are using hydrogen as their source of energy. Hydrogen buses are commercialized around the world, but very little in Canada. Sales are skyrocketing. In the past year, over 4,000 orders have been placed in China and another 4,000 orders in South Korea. I am sure the Ballard Power Systems representatives will be able to talk to you about this. In fact, we have in Canada vehicle and equipment manufacturers such as Ballard or Hydrogenics, which is now owned by Cummins. We have very active manufacturing businesses in that sector.
I will say a word about the transportation of goods. I think that hydrogen is especially appropriate for heavy trucks, which are, as you know, the main source of pollution in transportation. I am talking about heavy-duty trucks, which travel long distances. Canadian winters are harsh, and battery-powered trucks are less efficient in those conditions.
There are a number of hydrogen truck manufacturers in the world. I will not name them all, but some are Hyundai, Cummings and Toyota.
Someone talked earlier about Alberta and the production of hydrogen from natural gas. It is interesting to note that testing is currently being done in Alberta as part of the AZETEC project, which brings together transport companies such as Trimac and Bison. Researchers will essentially test hydrogen trucks travelling between Calgary and Edmonton. I think that experiment should be followed very closely. The same experiment should even be replicated in Quebec and in Ontario. The same kind of a test could be carried out in the Montreal-Toronto corridor.
Those trucks have been commercialized around the world, including in the United States, by Anheuser-Busch, in France, by Carrefour, and in China and Japan.
The advantage of hydrogen trucks over battery-powered trucks is clearly the recharge time. It takes about the same time to recharge with hydrogen as to fill a diesel fuel tank. The weight of batteries is also an important downside for trucks with electric batteries. Transporters want to transport goods, not batteries. What is more, the range is significant. When hydrogen is used, there is no loss due to the cold. There is enough power to transport goods between Abitibi and Montreal, for example.
However, there is currently a considerable downside, over the short term, and that is the high cost. I am here talking about the cost of equipment, of hydrogen and of transportation.
That said, every study I have looked at—
Governments should develop a roadmap and encourage initiatives involving hydrogen. It must be said that, in countries that are successfully using hydrogen, governments are involved. We also recommend stimulating research and development. Incentives for purchasing hydrogen vehicles should also be implemented, especially for vehicle fleets. In addition, the use of hydrogen must be encouraged in new projects. I am here thinking of the Quebec City tramway and the VIA Rail high-frequency train.
As my time is up, I will stop here. I could answer any questions you may have about other hydrogen applications.
I apologize. We, professors, usually have three hours.
Good morning, everyone.
Mr. Chairman and members of the committee, thank you very much for allowing me to be a witness on your panel today.
I am very happy to be representing Ballard Power Systems. Ballard is a Canadian company, based in British Columbia. Today, globally, we employ over 950 people, with more than 760 in Canada. We have been developing fuel cell technology for the past 40 years, and we put on the road the first-ever fuel cell buses in Vancouver in the late 1990s. Today we export almost 100% of our production, and last year we produced over 100 megawatts of fuel cell products.
The hydrogen strategy, which was published in 2020 by NRCan, highlighted the critical role of hydrogen in the decarbonization of the Canadian economy in order to reach carbon neutrality by 2050, especially for the hard-to-abate sectors like heavy-duty transportation. This has been highlighted by previous speakers.
Fuel cell electric buses, trucks, trains and ships benefit from the high energy density of hydrogen as a fuel to match the performance of diesel vehicles, but with zero emission and without any compromise in operation, enabling long-range operation in harsh climates like we have in Canada.
The use of green hydrogen produced from renewable energy, as recently announced by some projects in Quebec, will reduce GHG emissions by 89% for heavy-duty trucks, compared to the diesel equivalent. Such a reduction can also be achieved by using blue hydrogen produced from natural gas with carbon capture and sequestration.
As an example, a transit bus using such low-carbon blue hydrogen in Alberta will reduce its GHG emissions by 83%, compared to a diesel bus. To compare, a battery electric bus will only reduce emissions by 50% in Alberta due to the higher carbon intensity of the electric grid.
The use of hydrogen as a low-carbon fuel is also an economic opportunity for Canada. With a unique, strong and world-leading hydrogen and fuel cell industry, Canada is very well positioned to benefit from this transition.
At Ballard alone, we have created over 200 high-paying jobs in the past two years. According to the NRCan hydrogen strategy document, up to 350,000 jobs can be created in Canada with the growth of the hydrogen economy in the next three decades.
We believe now is the time to act and the time to start. Supporting the production of hydrogen as a low-carbon fuel in Canada with regulations such as clean fuel standards and providing financial incentives for vehicle operators will accelerate the adoption of zero-emission fuel cell vehicles such as transit buses and trucks. We are demonstrating these vehicles now in Alberta with the 60-tonne fuel cell truck, as part of the AZETEC project, or in trains, as was recently announced by CP Rail, which has its first freight locomotive using hydrogen as a fuel. All those vehicles disproportionally contribute the most to GHG emissions, compared to other modes of transportation.
Thank you very much.
Good morning, everyone. Thank you for having me.
I'll start by saying the auto industry is past the inflection point of change when it comes to electrification, having invested to date over $300 billion in zero-emission vehicle development and production, which is already resulting in a substantial supply, with much more to come. You could confidently say that our industry is at the point of no return when it comes down to zero-emission vehicles in the future.
I'm proud that Hyundai is an industry leader. We presently are the second-largest retailer of zero-emission vehicles, next to Tesla, and one of the only brands to offer hydrogen fuel cell cars in Canada.
While we offer hybrids and plug-in hybrids, our primary focus is a zero-emissions future with pure EV and fuel cell vehicles. We believe in fuel cell vehicles for a number of reasons, which have already been discussed. In addition to being zero emission, they're more consumer-friendly. As I think Mr. Roy had mentioned, the vehicles charge rapidly, in five minutes, and they have a substantially longer range than traditional all-electric vehicles. This addresses the two biggest consumer issues that we face, the two biggest pain points: the charge time and the range.
In addition, fuel cell vehicles require substantially fewer batteries. Really, regardless of whether a consumer chooses an electric vehicle or a fuel cell vehicle, as long as it's zero emissions, the real challenge we face is the infrastructure for charging. Both electric charging stations and hydrogen fuel cell pumps in our country are too few in number to accommodate the current and forthcoming supply of zero-emission vehicles. To change the situation, we need commitments—commitments from gas stations, retail outlets, home builders and parking operators to install the charging systems that will give all Canadians the peace of mind that zero-emission vehicles will accommodate all their transportation needs. In other words, it's going to take a village for our country to make zero emissions part of our future and turn that into a reality.
If we all pull together, I believe a zero-emission future is not just possible but inevitable, and when I say “all”, I mean everybody. It cannot be just the people who are speaking today and it cannot just be auto manufacturers. Everybody is going to have to carry their weight and get involved in this movement.
Thank you very much for your time.
Thank you very much. I appreciate the recognition of the very exciting announcement.
There were a number of factors. To be frank, we've had a very successful hydrogen production and pipeline network operation in the area for more than 15 years, so we have experience in executing projects there. We've had the support of various government authorities, as well as a very qualified workforce in the area, so quite frankly, we know it's a good place to do business. That's one thing.
The second thing is the ability to effectively capture and sequester the CO2, taking advantage of the Alberta carbon trunk line, the CO2 pipeline. Obviously it is very beneficial to carry out this project where you can take natural gas and capture over 95% of the CO2 to be sequestered, and then generate hydrogen-based electric power to offset the rest. Of course, this project, in addition to making zero-carbon hydrogen for our pipeline network, is also going to feed hydrogen into a liquid hydrogen plant that will make liquid hydrogen for the mobility market.
Finally, I must say that we were very excited to see the significant support coming from various levels of the Canadian government, including a number of officials who joined us on our announcement call last week.
That's a combination of factors that helped us make this the right decision for us.
Yes, and as I said in my remarks, I think we are all familiar with the colours, but I think, honestly, that occasionally assigning these products colours can confuse things. I'll just expand on that for a second.
Obviously, everybody is aware that blue hydrogen is produced from hydrocarbons, but what matters is its carbon intensity. In a different type of process, you might only be able to capture half of the CO2 from a hydrogen plant. We chose a different process that helps us capture more than 95% of the CO2. Quite frankly, the carbon footprint of the hydrogen from this project is very similar to that of so-called green hydrogen produced from a project using renewable energy, so again I think it's important to keep focused on the actual carbon intensity, as opposed to what colour it is assigned.
We've certainly looked at different opportunities. Not to get off track, but we're building a $7-billion renewable, carbon-free, green hydrogen facility in Saudi Arabia for exporting hydrogen around the world. I share that with you to provide some credence behind the idea that we have the capability to do both hydrocarbon-based zero-carbon hydrogen and renewable energy-driven carbon-free hydrogen, and we saw again, with the opportunity to deploy this technology and leverage the CO2 pipeline, that this looked like the right solution here to create net-zero hydrogen.
It's a really good question. I wish I had an answer for you.
I think it's going to depend on the ability of the industry, like Ballard on the fuel cell side or the engine side, to drive the cost, and I think for that we are on the right track. We have been reducing a lot of costs for the technology in the past five years. Accelerating now, we are in really aggressive cost reduction, so we should be able, by the end of the decade globally, to be at parity with diesel trucks. On the fuel cell side, I think we're making really good progress.
I think, though, the challenge would be the deployment of the hydrogen infrastructure. If we want to be able to have a significant market share of trucks operating with hydrogen, we need to bring that heavy-duty station infrastructure across Canada.
Initially we can start with trucks operating as a fleet base—home and return, or operating between two points—to minimize the requirement in terms of hydrogen infrastructure by focusing on those fleets of vehicles. We fully believe that by the second part of this decade, we can start to see a significant part of those vehicles being fuelled by hydrogen.
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.
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.
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?
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.
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?
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.
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.
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.
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?
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.
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.
It isn't, and that's a challenge, which is why hydrogen fuel cells make so much more sense. Unfortunately, there are very few battery manufacturers right now, but that footprint will grow over time. We will see more and more batteries being developed here in North America.
Until then, you're going to find that the lithium, the cobalt and the zinc—all of the materials that go into those batteries—are coming from all over the world, and I would not say that they are coming to us in an ecologically friendly manner. That is an area that has incredible opportunity for improvement, but at the same time, there are limited resources in anything that we produce, other than hydrogen.
The battery size in hydrogen vehicles isn't a whole lot larger than what you're going to find in your car. Because hydrogen is flowing over a membrane and creating electricity while you're on the move, it's constantly charging the battery that's being used to run the engine. It makes a lot of sense from a number of aspects. One, obviously, is that less battery means less mining of minerals across different areas where we have less control over the way those products are being mined—
No, I'm sorry, it has not, and I couldn't answer the question on that.
That is something I'd be glad to get back to you on. On the difference in weight between an electric vehicle and a non-electric combustion engine ICE vehicle, there are many different variations, but most of our electric vehicles are relatively small and most of our combustion engine vehicles are relatively large.
Canadians are buying, for the most part, big trucks as well as big SUVs when it comes to combustion engines. When they buy electric vehicles, they buy smaller cars, smaller SUVs. I think if you were to look at it from that perspective.... I'd have to do the analysis and get back to you.
My first question is for Mr. Roy.
At the end of your presentation, you started listing your recommendations, and then you were asked to wrap up quickly. Could you tell us about them briefly, in a few minutes?
You have examined the situation. In addition, you have heard the excellent testimony we have had today. We are doing some very worthwhile work.
Could you quickly talk to us about solutions you are foreseeing for this transition?
No, I think your question is exactly right. Five to 10 years versus today has to do with economies of scale.
Right now the cost of a fuel cell vehicle is far greater than the cost of an EV. The cost of an EV is greater than the cost of a combustion engine vehicle, but when you look at the components required to build an EV, long term it is going to be more cost-effective. It's going to be priced lower than a combustion engine vehicle if it's the same content, item for item,.
When you take a look at electric vehicles, you see that they have a lot of other features that are being put into them, especially the safety features right now that are coming in, or the ability to create a sound so people know the car is coming up on them. We continue to make advancements in that area.
For hydrogen vehicles, it's the same. Right now hydrogen vehicles are extremely expensive to manufacture because right now we sell 10 hydrogen vehicles a year. We sell 4,000 to 5,000 EVs and we sell 120,000 gas vehicles. When you put that together, there's quite a difference.
If we put the infrastructure in place to overcome the concerns that consumers have over range and over charging, whether it's fuel cell or electric vehicle, we're going to find that the cost is going to go right back to the same level that we see for cars today. There will be no difference over a long period of time, but we have had a lot of support from the government to provide incentives to get people into zero-emission vehicles, and that's what's bridging the gap right now.
I'm sorry, Mr. Moore, you will find me annoying, but I have another simple short question for you.
I recently read in an article that the strategy used for decarbonizing the production of blue and green hydrogen consisted in burying the carbon, but that there was no guarantee, technically speaking, that carbon leakage would not occur sooner or later.
To your knowledge, is the technology used to sequester carbon now efficient?
That's a good question. I believe that is going to happen if we commit ourselves to requiring the fast-charging DC infrastructure that's necessary. For instance, today in Ontario we have only 94 fast chargers versus thousands of gas stations. If you consider everybody is moving in that direction, if every gas station had a fast charger, then yes, 15 minutes is not a ridiculous time to wait to get an 80% charge.
I would also say that I don't think there is going to be one solution to our zero-emissions problems. We are going to find that there will be multiple solutions, especially, as my colleagues have talked about, with the heavy-duty truck industry, the bus industry and even the train industry being able to run more efficiently on hydrogen. With a hydrogen vehicle, with our Nexo, which you can buy today here in Canada, if you have a place to refuel, you can charge that in five minutes. It's no different from filling up a vehicle with gas. It provides you the ultimate fast charging, plus you get over 600 kilometres on that charge.
Even though we're getting closer to 500 kilometres and although I do believe battery technology will improve, my main point is that whether it's a battery or a fuel cell, without the infrastructure moving faster and even with our industry already investing $300 billion in zero-emission vehicles, we have a problem coming up, which is that we have too much supply compared to the demand.
Thank you. I'm going to turn to Mr. Moore.
You talked about a project in Saudi Arabia where you're producing hydrogen, I believe you said, for export. This is something I've heard from other sources. I was at a G20 meeting where the German minister talked about investing in green hydrogen projects in Chile with massive solar panels—I assume this is what's going on in Saudi Arabia—and then capturing that energy as hydrogen and exporting it around the world. The Japanese minister indicated the same sort of thing.
I've asked this of other witnesses in this study. I'm wondering if you could comment on the future of that global market in hydrogen, how it could play a role over the next 30 years as we go to net zero globally, and what opportunities there are for Canada, especially in green hydrogen and perhaps also in blue hydrogen. I might get to more on that later, but what are the opportunities for Canada to play a role in that global hydrogen export-import market?
That's exactly right. Just to very briefly describe this project, it's solar power and a wind farm creating renewable electricity using an electrolyzer to create carbon-free hydrogen. We then turn that into ammonia to simplify the transportation around the world, and then dissociate that ammonia back to hydrogen at or near the point of use to provide carbon-free hydrogen fuel mobility.
The reason the project is in Saudi, and I know this sounds incredibly simple, is that the sun shines a lot and the wind blows a lot in the northeast part of Saudi Arabia.
As you mentioned, for places like Chile, obviously what it comes down to is that the cost of renewable energy is a huge part of a carbon-free project that is driven by an electrolyzer. You obviously have capital downstream, but the cost of the renewable energy is very important. Places in the world where renewable energy is available at a very competitive price have the potential to be locations for exporting hydrogen to places around the world where it's not economical to produce that renewable energy.
You mentioned Germany. Some of you may be familiar with this. Throughout Europe and particularly in Germany, they are embracing the idea that they're going to need to import hydrogen, because it's not practical to produce hydrogen economically within Germany. Obviously, as everybody knows very well, Canada is blessed with some very attractive costs of renewable electricity, and that absolutely is a potential to be leveraged to produce electrolyzer-driven carbon-free hydrogen, either for use in Canada and/or to be exported.
Maybe I'll be more specific.
You talked about the necessary infrastructure. I'm in British Columbia and I often go to Vancouver, where I see a lot of charging stations. However, I live in Fort St. John, where the charging stations are few and far between. Even thinking about an electric vehicle, for me.... My destination is usually Prince George or somewhere in between in my riding. It's around five hours. In the winter, it would be impossible to use an EV in my job.
This is spitballing it, and I don't know if your industry has looked at this aspect. You talked about $300 billion in the industry around EVs. How much does the industry see is necessary in terms of dollars to set up the necessary infrastructure? You were talking about the shortfall.
I want to thank our panellists this morning for some wonderful presentations.
I have a couple of things.
As you know, with respect to the hydrogen strategy for Canada, we've already put it out there. The objective is both to ensure there is more development and also to have the right regulatory measures and so on.
Mr. Moore, I appreciate the suggestions you made in your presentation. I would ask that you follow those up in more detail so that our committee can look at them as we move into preparing our final report and putting forward our recommendations.
I don't run gas stations, but there is one in Quebec. It's operated by a distributor called Harnois Énergies. In terms of cost efficiency, it's a very expensive investment. The only reason they did it was that there were partners who actually invested and helped reduce not only the cost of the infrastructure but also the cost of the hydrogen sold at the pump. Also, to be clear, this station actually produces its own hydrogen, so the electrolysis is done on site, which is one way to do it if you have enough volume, enough scale, but it's not the only way, actually, to operate. Eventually you could have gas distributors who would deliver hydrogen through stations, but at this time it was felt that producing on site was the better solution.
In terms of profitability, we are very far from that. It's like an act of faith right now. You have to actually demonstrate the use of hydrogen, and for that you need those refuelling stations, like a chicken and egg situation. If you don't have the stations, then people will simply not buy the products.
At this time in Quebec, the provincial government has acquired 50 fuel-cell cars produced by Toyota, and the demonstration is being carried out, trying to understand how the cars are operating and doing a cost-benefit analysis of using those cars at this time.
I'm going to go back to Mr. Romano for part of my question time.
First of all, it's good to see you. As many on this call know, I co-chair the Liberal auto caucus, and it's great to see a manufacturer on this study, because I think it's an important perspective that we need to address.
I think you're right: I think we have seen a massive evolution in automaking in just the past five years. I remember in my early days as an elected member of Parliament listening to manufacturers explain to us in the auto caucus why this isn't going to work and why electric vehicles are not the future. How quickly that has changed. A lot of that is market driven, but a lot of it is also the reality that we have to do our part to manage climate change.
One of the big issues that we had early on with electric vehicles—and it comes back to infrastructure—was the proprietary nature of charging stations. I know there's been some work to help alleviate that situation, but I'll pose this question as a hypothetical. Imagine having a gas engine vehicle and pulling up to a gas station and realizing that you can't pump gas at that gas station because it has a triangular nozzle versus a hexagonal nozzle. To me, that's how silly this problem is.
Can you speak to that a bit? Has the industry solved that problem? When it comes to hydrogen, is that also going to be a problem, or have we learned from that issue?
We have a standard for hydrogen. We do not have a standard for electric vehicles that has been adopted by all manufacturers, but there are adapters that are bridging that problem.
I think the bigger issue right now is that we don't.... The people providing the charging infrastructure all require sign-ups. People have to enrol, which means that if you're driving down the highway and you want to use a ChargePoint, you have to be a ChargePoint customer. You can't take a Visa card and swipe it and get your charge. That becomes just one more obstacle limiting the adoption of EVs. Eventually, we need to have all chargers operate in a fashion similar to a gas station pump, where any credit card we use, any bank card we use, can be utilized to charge those cars.
That just isn't the case today. Right now, there are no standards out there for that type of service. I think part of the building of the infrastructure will require those standards to be put in place.
I would like to make a quick comment to my friend Mr. McLean. The activity sector that wastes taxpayer's money may not be transportation electrification, but rather oil. The oil industry has been given $24 billion over the past four years. Just in the budget we studied, $560 million is earmarked for the oil sector. I don't think the transportation electrification industry is receiving that kind of money.
I have a question for Mr. Roy.
I took note of a statistic Mr. Pocard brought up. He was telling us that a bus using blue hydrogen as fuel had an 83% reduction in emissions, compared with diesel, and that, if that same bus was electric, the emissions reduction would be only 50%. That may apply in Alberta, but it certainly does not apply in Quebec. Given the transportation electrification in Quebec and Lion Electric's bus project, let's say that our emissions are well below those that may have been calculated for Alberta.
Would you agree in saying that calculating emissions certainly depends on the available and usable sources of energy? In that sense, Quebec is at a different level than the other Canadian provinces.
A distinction must be made.
In terms of emissions from vehicle operations, all vehicles with an electric engine are zero emission.
In terms of the source of energy, in Quebec, hydrogen is produced using electricity—the green hydrogen we are familiar with. When the hydrogen is blue, Mr. Moore says that it is possible to produce hydrogen where 95% of the CO2 would be captured. So that is within 5% of the zero-emission goal.
Those are the two aspects we can comment on. As for the rest, such as the manufacturing of vehicles, battery recycling and that entire cycle, extensive studies are clearly required.
I'd like to go back to Mr. Moore.
Earlier Monsieur Simard was talking about the differences between green and blue hydrogen and whether we want to use those colours or not. I know your project in Alberta involves carbon capture and storage, but I'm not sure if I heard you mention whether that project involves storage that uses enhanced oil recovery, as most carbon capture and storage projects do in North America.
The fact is that projects using enhanced oil recovery start out as carbon negative because they're storing carbon, but over a period of years, six to 10—I forget the exact number of studies in the United States—they turn carbon positive. I'm wondering if your industry has factored that in or whether you're not using enhanced oil recovery.
Mr. Romano, I'm going to go back to you, but before I begin I want to read something here from a study by UC Davis down in California. They did a study regarding the impact of the additional weights on roads. It said:
The damage analysis for an example waste facility access road modeled for only 500- to 2,000-lb. increases in the weights of waste-hauling trucks from conversion to natural gas indicated (a) that for fully loaded inbound trucks, the 500-lb. vehicle weight increase reduced the life of pavement overlays by approximately 5 percent and (b) that there was an approximately 13 percent reduction in life with the 2,000-lb. vehicle weight increase.
The reason I'm asking is that in Saskatchewan there is a tax now on EVs that people are all up in arms about. The reason they are doing that is to make up for the loss of fuel tax. We know the fuel tax is used for road maintenance and upkeep as well.
As we are shifting to EVs—industry is saying we're going this way—we know that there's going to be a disproportionate impact on the infrastructure, yet we're losing all this tax revenue. Who's going to pay for the road maintenance and infrastructure upkeep if we lose that tax base?
Perhaps I could comment. Thank you very much.
Again, we think there is a tremendous framework in place. Quite frankly, that's one of the reasons we were excited to announce our project last week.
I did make a couple of suggestions in my remarks about some things to keep focused on as you move forward and create additional opportunities. Blue is not better or worse than green; it's about the carbon intensity. Less carbon intensity is better, and I think the program should reflect and focus on that.
I think we definitely want to recognize and reward putting CO2 in the ground, not capital spent to recover CO2. Programs that support CO2 recovery are not necessarily spending capital, but then again, we have a nuance around the outsource model whereby we provide a lot of value to our customers in making sure that this is not negatively impacted by the regulations going forward.
Those would be a couple of suggestions that we would make for things to keep in mind.
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.
I would like to add to that. Ports represent a really great opportunity to deploy hydrogen, because you have the drayage trucks. We are pushing our products in the port of Vancouver so we should see, hopefully, some drayage trucking operation shortly.
You have the yard trucks in the port. A lot of vehicles operate in the ports, and those vehicles are similarly operating on hydrogen in California ports and also in Europe.
The last are the vessels. The marine vessels are a bit more challenging because of their size and their certification.
What we have at Ballard today are six projects for ships that are being built using hydrogen, and solar ships. We are looking at ferries for passengers or barges for inland navigation. It's a beginning where we can see the growing role of hydrogen. Actually, we see more and more shipyard operators coming to us and saying, “We need to reduce our emissions. How can hydrogen play a role in that? What is the role of fuel cells?”
There is a really big change that we have noticed in that sector, I would say, in the past 18 months.