Canada’s Hydrogen Funk (Part I)

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Innovation lost

A hydrogen solution to the world’s energy problems is a done deal. The path from concept to reality, however, is proving a little tougher to negotiate. “We were way ahead, could’ve been a world beater,” says David Scott somewhat wistfully from his Victoria home about Canada’s role in the solution to an over-dependence on fossil fuels. His reflection comes at a time when most agree that green-house gases from burning oil are poaching the earth into something resembling petroleum jelly.

Scott is Canada’s hydrogen visionary. He missed the industry’s birth — that was in 1905 when Ontario native Alexander Stuart stared at Niagara Falls and wondered how to use all the energy he saw going to waste — but was front and centre in the early 1980s when as a mechanical engineering professor at the University of Toronto he helped set up the Institute for Hydrogen Systems, the world’s first.

Back then hydrogen wasn’t the Wonder Drug for oil consumption; it was simply a better fuel. Canada had all the tools to make it viable — natural gas, hydroelectricity, hydrogen-poor Oil Sands, electrolysis technology (which produces hydrogen from water), and a head start — and Scott had $10 million of public/private investment through Ontario’s government to help revolutionize an energy-addicted world.

He started the institute in 1982 and within two years had refined a 500-watt fuel cell, the building block of a hydrogen economy that produces electricity with little or no carbon byproducts. The project drew scientists from around the world, including Americans whose government was still trying to figure out which Middle Eastern country to destabilize next to make sure crude kept flowing.

Scott discovered that going to the office was the most fun he’d ever had, and this was a guy who did his doctoral thesis on plasma propulsion in deep-space rockets. But he also found out that Canadian government leaders often looked at energy as a bargaining chip in power politics.

The switch from Pierre Trudeau’s energy vision to Brian Mulroney’s in 1984 put an end to most things that didn’t produce a short-term profit. It also gutted the Institute of Hydrogen Systems the same year because, as Scott puts it, the new slate of bureaucrats couldn’t wait to get rid of old ideas.

The malaise continued as Canadian politics retreated further into micromanagement. A $16-million initiative in 1988 in Alberta fell apart under the weight of an Ottawa-Quebec power struggle, and a proposed $100-million Agency For Hydrogen Systems in British Columbia in 1989 was skewered by an incoming NDP “technophobic” government.

“That was it for me and government. Here we had the world locked on the teat of fossil fuels, and Canadian courage was slipping away,” recalls Scott who ended up at the University of Victoria when chancellor Bob Alexander asked him to set up the Institute of Integrated Energy Systems (IESVic).

The two men had met at a conference in Vancouver and after a few drinks discovered they had played in the same high school jazz band in Belleville, Scott on sax, Alexander on trumpet. The academic also introduced the scientist to Geoffrey Ballard, who was being forced out of Ballard Power Systems, a company he had founded and that was the world’s leading hydrogen fuel-cell producer.

And it was the example of Ballard Power Systems that allowed the government, quite unintentionally, to squeeze hydrogen-energy funding to a trickle.

“In Canada the fuel cell effort is driven by industry whereas it seems to be government driven in the rest of the world,” says Francois Girard, research officer at the National Research Council’s National Fuel Cell Program. Not far into the 1990s, Ballard had raised $57 million in the stock market and sold part of the company to car giant Daimler-Benz for another $35 million (and allowed fuel-cell patents funded by Canadian cash to be transferred to the German company). Why would a government offer public money to an industry that was being led so well by private enterprise?

Except Ballard was hemorrhaging cash, had a product that really wouldn’t compete in the market for another twenty to thirty years and was scaring the daylights out of every investor who thought hydrogen might be worth a flutter. It’s not much different today because private industry has never been inclined to wait for a return on investment.

Leaving alternative-energy research and development to market forces is like taking a hangnail to the emergency ward: it gets prioritized out the door. After midwifing the hydrogen and fuel-cell industries, Canadian leaders no longer wanted responsibility for helping it grow, even though it was destined to produce billions of dollars in commercial benefits. The whole scenario bore an eerie resemblance to the Avro Arrow project.

Not even the Americans were so short-sighted. While the U.S. government commits about US$200 million a year to hydrogen R&D and Japan is laying out US$3.1 billion over the next twenty-five years. Canada’s total investment since 1982 has been just $150 million, with only $20 million to $30 million available annually.

This might change once the federal-provincial turf war over the cost of adopting the Kyoto Protocol flares up again and everyone realizes that, yes, having a positive effect on climate change will actually cost more money. Then we can decide whether we are a nation that wants to precipitate positive effects or remain insulated in our own little oil slick. Using public cash to help Canadian hydrogen-energy companies innovate and compete seems like a no-brainer, especially because of the employment and production windfalls it can bring.

“I won’t hold my breath,” says Ned Djilali, IESVic’s current director. “Most governments in industrialized nations aren’t encumbered by the timidity of Canadians. While there has been substantial (public) funding here, there remains a serious lack of understanding [about] what a golden opportunity hydrogen offers for expansion of the Canadian economy.”

The University of Victoria institute is one of the few places in this country that looks at hydrogen in a realistic way. Men like Scott and Djilali understand intrinsically that access to energy is what defines and sustains societies.

Fuel-cell cars and batteries and portable power plants may fit nicely into corporate promotional material, but they “are just products for a rich society,” says Djilali. “I really can’t see them as a replacement for current uses because the technology is not nearly ready to compete here for existing demand. Real growth potential is going to come from creating hydrogen infrastructure that’s a hybrid of current technology, probably in developing countries. Maybe we can help them bypass the fossil-fuel stage altogether.”

If Djilali’s premise is correct, Canada still has a role to play. But it will take courage, cash and an ability to rise above the fundamentalism of both sides of the energy debate — the business boys and their market mechanisms or the environmentalists and their Damocles Sword of climate change. And it means listening to what David Scott has been saying for a very long time: “We will win if we use our energy as a platform, not if we buy other peoples’ technologies.”

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