DALL·E generated cartoon of a hydrogen powered train and corporate welfare recipient

Why Is Quebec Energy Minister Rejecting & Embracing Green Hydrogen In The Same Week?

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So, Quebec confused a lot of people paying attention to green hydrogen this week, as Hydrogen Insight noted. They said they don’t have enough electricity for it on the one hand, and on the other said they were going to run a hydrogen train experiment and that hydrogen was necessary for some transportation and heavy industry. (Pro tip: Hydrogen Insight is the only hydrogen-specific news site worth following. The rest are beloved of fossil fuel and hydrogen-for-energy lobbyists, and have the rigor of overcooked spaghetti.)

Pierre Fitzgibbon, Quebec’s energy and economy minister, told one group on Tuesday that the province didn’t have enough electricity to do the 9 GW of proposed green hydrogen projects and rejected them, and that while they had 23 GW of proposed electricity purchase agreements, they could only supply 10 GW of capacity.

But then, on Thursday, he announced that the province was going to fund a hydrogen train test for $3 million of the $6 million of the trial by Alstom, and that green hydrogen had a big role to play in future energy demands in addition to industrial demands.

That certainly appears contradictory on the surface, even paradoxical. But a bit of history is required to parse why this silliness is playing out the way that it is.

First off, Quebec has a massive hydro facility in the far north, the James Bay site with 16.5 GW of capacity. It runs at about a 59% average capacity factor, delivering 83 TWh of electricity annually. Quebec also has 4 GW of wind energy in the biggest wind farm in Canada that no one in the rest of the country knows about, and is building GWs more. Lower capacity factors, but St. Lawrence headland winds, so pretty good. And then there’s the newly commissioned Muskrat Falls dam bringing another 3 GW of capacity into the mix, although a bunch of that is sold in the Maritimes. There are another 16 GW of smaller hydro projects around the place as well.

But that’s only about 40 GW of nameplate capacity between the power generation facilities in the province. A great deal of that is already being used, of course. 23 GW is well over half of the total generation capacity for the project, including Muskrat Falls. Not having surplus electricity equaling almost 60% of capacity is unsurprising.

Having 10 GW of capacity is still amazing, and indicative of some of the weird energy history in the region. Quebec is already delivering 1.2 GW of capacity to NY, 2.7 MW to Ontario and about 2 GW New England. It’s been trying to sell more of its excess, very cheap, very low carbon electricity to the large population centers to the west and south for decades, with only limited success.

In Ontario’s case, energy policy is stuck in a distant past when jurisdictional electricity autonomy still made sense. They built a massive set of nuclear reactors in the 1970s and 1980s based in part on that even then archaic notion, as well as the existence of the Chalk River nuclear research facility, Atomic Energy Canada’s lobbying for CANDU reactors, and of course the massive US, nuclear-oriented military presence looking northward over the pole for Soviet bombers. Now they have 55% to 60% nuclear supply annually, which means massive surplus baseload conditions requiring paying neighboring jurisdictions to take electricity and expanding a pumped hydro facility at Niagra Falls. (The usual reminder: virtually all grid storage built to date was constructed to give mostly nuclear plants something to do at night and back them up during the day.)

The $20 billion in nuclear debt still on Ontario’s books in the mid-2010s (and still about the same today) represented 50% of the special line items on its residents’ electricity bills that drove rates up to about average for North America, and which became an exploitable political wedge for the populist Doug Ford and provincial Conservatives, along with inanities like promises of a buck a beer which turned out about as well.

One of the administration’s first acts was cutting up the contracts for 758 renewables facilities and projects in the province and legislating lack of legal recourse, something which pleased the Conservatives’ base but was an absurd choice in the 21st Century, not to mention a deeply hypocritical choice for a purportedly business-friendly government. Naturally, the result is that Ontario is going to be burning vastly more natural gas and its emissions per MWh are going to increase substantially. Not a good choice.

And Ontario also rejected buying any more electricity from Quebec because reasons. Yes, refusing inexpensive, reliable, low-carbon electricity from Quebec is par for the course for the provinces’ Conservative ideologues. Instead, they are absurdly choosing to try to build a small modular nuclear reactor on one of their existing nuclear generation facilities. Yes, nothing like a first of a kind, small solution that won’t be available for at least a decade and likely will cost three times projections to solve this decade’s problems caused by last decade’s stupidity. In meantime, they’ll burn more natural gas.

The 2000s, when energy policy in Ontario was rational and non-ideological, when they chose to actively shut down coal generation and lean into renewables while maintaining their low-carbon nuclear advantage, are a fading memory. I try not to be nostalgic for those days, or let the current administration’s policies raise my blood pressure too much.

To be perfectly fair, the Ford administration is finally starting to open up the potential for more renewables and grid storage. They still have the opportunity to do the wrong thing, and unlike Churchill’s observation about America, they rarely get around to doing the right thing after they have tried everything else. Oh, and every renewable developer in the world is leery of the province because of those 758 ripped up contracts. I do wish the Greens, NDP, and Liberals in Ontario would actually get a strategic, cold-blooded, warm-appearing strategist who could force them into a unified party, or at least unite the NDP and Liberals.

Meanwhile the US is suffering from the recurrent problem of NIMBYism. At present, the US has devolved the ability to say no to fundamentally required transformational infrastructure down to the county and often to the individual. As a result, the new 1.25-1.4 GW HVDC connector down from Quebec has been blocked. My contacts tell me it isn’t fully dead, but it is on life support and the defibrillation unit is on its way.

So Quebec’s surplus 10 GW of capacity isn’t being eaten up by neighboring jurisdictions that should be hammering on the border, demanding some of those clean, cheap electrons.

Of course, Quebec is electrifying more rapidly than the rest of Canada (outside of the city of Vancouver at least). Local demand is high and increasing. With the lowest electricity rates in the country, it’s unsurprising that a much greater percentage of Quebec households heated with electrons rather than gas or oil than in other provinces, 79% compared to neighboring Ontario’s 9% or Alberta’s sub-6% in 2016. Or that they are the largest purchaser of heat pumps outside of much more populous Ontario, and the leader by ratio to population.

The province is funding the purchase of 1,200 electric transit buses and 120 electric school buses, very credible numbers when the biggest countries that aren’t China are still under 1,000 electric buses in total. Quebec is also subsidizing electric car purchases, and almost half of 2021 Canadian EV purchases were in the province.

Quebec gets electrification, so what’s up with the hydrogen train?

The green hydrogen thing is a current Canadian oddity. Don’t forget that 5% of Canada’s GDP is oil and gas, and Ballard is a BC company, so hydrogen for energy hype is strong in the country. (Yeah, I have some stilted conversations locally here in Vancouver).

Quebec is a mostly politically savvy entity, but tends to be a bit more rational about energy policy in the long run. For example, they are now moving to eliminate the 270 MW allocation for crypto mining. Quebec is also the home of both CN Rail and Via Rail (both former clients of mine). Big rail companies are frequently stuck in a energy = fuel paradigm, and have problems climbing out of it. CN Rail especially is politically powerful.

And then there’s Bombardier, which made rail locomotives and cars until the corporate welfare recipient divested its Germany-based division to Alstom. Yup, that Alstom. The one providing the H2 train for a few weeks or months. This remains a situation where well connected ex-Bombardier types are pushing the government and Corporation Quebec to do irrational things as a result.

After all, the federal and provincial governmental bail outs of Bombardier, over $4 billion since 1966, ended so well, with the Bombardier C Series narrow-bodied passenger jet being handed over to Airbus for cents on the dollar, and Bombardier’s rail division being sold to Alstom under equally bad terms for the Canadian citizens who kept the terribly managed firm afloat for decades. (I was also engaged on a major proposal for Bombardier a few years ago, and it was clear from the inside that they were headed for collapse.)

So the $3 million is legacy Bombardier types managing to scrape a few more provincial dollars into their pockets. The reality is that Quebec’s clean electricity is fully subscribed, finally, and will almost entirely be used for useful, productive, climate change reducing things. And that doesn’t include wasting any on green hydrogen for energy. When they build electrolyzers, one assumes the EU’s dear departed additionality requirements will be firmly in place in Quebec.

In other words, the refusal of 9 GW of green hydrogen electrolyzer proposals makes complete sense, with hydrogen manufacturers having to pony up for new renewable generation, and the hydrogen train is just the usual nonsense, but with only millions instead of billions wasted on corporate welfare.

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Michael Barnard

is a climate futurist, strategist and author. He spends his time projecting scenarios for decarbonization 40-80 years into the future. He assists multi-billion dollar investment funds and firms, executives, Boards and startups to pick wisely today. He is founder and Chief Strategist of TFIE Strategy Inc and a member of the Advisory Board of electric aviation startup FLIMAX. He hosts the Redefining Energy - Tech podcast (https://shorturl.at/tuEF5) , a part of the award-winning Redefining Energy team.

Michael Barnard has 707 posts and counting. See all posts by Michael Barnard