Alternative Energy

[QuickTrade]

Hydrogen And Fuel Cell Sector Asks Feds For More Money
Canada has become recognized as a world leader in fuel cell and hydrogen technology, but with minimal help from the federal government, and the industry believes it has a strong case for securing more funding from Ottawa, according to the head of a Vancouver-based organization that represents the sector.

John Tak, president and CEO of Hydrogen & Fuel Cells Canada (H2FCC), says the fledgling industry and its private sector investors have provided about 85% of the research and development (R&D) and commercialization funding it has needed for the last decade or more and it is time for government to step up to the plate.

"For every dollar we've invested we've received 10% to 15% from government," he says. "Yet the first country that comes to mind when you mention hydrogen and fuel cells is Canada."

He and 18 executives of Canadian fuel cell companies, including industry leaders such as Vancouver-based Ballard Power Systems Inc. and Mississauga-based Hydrogenics Corporation, travelled to Ottawa in mid November to meet with Finance Minister Jim Flaherty, Natural Resources Minister Gary Lund and officials of several departments to lobby on behalf of the industry.

"We split into three groups and we were able to cover 26 meetings in two days," says Tak. "We were able to update the ministers and the officials on the sector and our commercial prospects."

They asked for more support for R&D and for pre-commercialization of hydrogen and fuel cell technology. And they asked for Ottawa to come up with another program to fund that work beyond next March.

"As of this March 2008, a program that provided $215 million over five years will expire," says Tak. "We asked for another program."

But they also asked for more money, requesting more than a doubling of the previous funding.

The industry itself has invested $1 billion in its technology in the last five years.

The $215 million has been parcelled out by various departments and agencies, including Natural Resources Canada (NRCan), Western Economic Diversification Canada, Industry Canada and federally-funded Sustainable Development Technology Canada (SDTC).

Tak says the industry has no problem with this multi-departmental approach, since it leads to better targeting of sectors within the industry. But, given what is happening in other developed nations, H2FCC believes Canada risks falling behind without much more government funding.

For instance, Japan is providing hundreds of millions of dollars a year, as is the United States.

"Japan has decided to go down the fuel cell and hydrogen road," he says.

In fact, a senior executive with Honda Motor Company recently said the future of the automobile industry hinges on the development of fuel cell technology.

The Japanese government has a program that offers users of stationery fuel cells and hydrogen power grants of up to 30% of the purchase price of a system and the U.S. is planning similar incentives, worth about $3,000 per system.

Tak says other green energy sectors in Canada, such as wind, solar and bioenergy, are receiving generous funding from both federal and provincial governments.

For instance, the federal government is providing $2 billion to the ethanol and biodiesel sectors, while Ontario, British Columbia, Quebec, Manitoba and other provinces have utilities that offer power purchase agreements, which feature secure prices for green energy for 20-year periods.

Nothing of the sort exists for the hydrogen and fuel cell sector, with all funding being project specific.

That means other green energy providers receive subsidies that are far in excess of the government assistance received by the fuel cell sector.

Even the biotech sector in Canada, which has a good worldwide reputation, much like the fuel cell and hydrogen sector, has obtained more generous funding over the years.

"For every dollar the biotech sector spends it receives $1 from government," says Tak.

He argues that the generous incentives going to wind, solar and ethanol producers are aiding technologies that are already commercial and that have largely been developed elsewhere.

Wind turbines, for example, are mostly a European technology.

"We need to pick things we're strong at," Tak notes.

"For example, Canada has a strong reputation in nuclear, hydrogen and fuel cell and cellulosic ethanol technology and that's where much of the R&D and commercialization funding should be going to."

Tak says Ottawa and the provinces must do much more.

B.C., where many of the industry players are headquartered, has provided some of the $12.2 million for a hydrogen-capture technology plant in North Vancouver and also is contributing to the "Hydrogen Highway" project, aimed at integrating the technology.

He says Canadian hydrogen and fuel cell leaders such as Hydrogenics and Ballard are already doing much of their commercialization work with U.S. or Japanese companies and that will continue unless they have a reason to stay in Canada.

While Tak acknowledges the industry may have got a black eye in Canada after many years of "over-promising and under-delivering" -- Ballard, for one, was once a stock market darling when many believed fuel cells would become commonplace in automobiles, something that will likely not happen for many years -- he says it is now producing "real products" and will continue to.

"The companies are now taking a more pragmatic approach," says Tak, a former senior executive with Mitsubishi Canada Limiteds multimillion dollar specialty chemicals business.

For example, Ballard has said it will concentrate on the use of its technology in the materials handling and back-up power markets, where it already has a significant presence.

He says the industry has started to adopt a diversified approach towards product development, as well as aiming at sectors where the centralized nature of fuel cell infrastructure gives it a leg up -- such as forklifts in warehouses and courier companies that use central fuel depots (Hydrogenics has had great success in those markets). Hydrogen fuel cell buses are also beginning to appear on some urban streets worldwide.

In addition, larger companies, such as BC Hydro and Enbridge Inc., are working on the development of large electrical power systems using fuel cells and hydrogen.

Vancouver-based Tekion Ltd. and Angstrom Power Inc. are both targeting the portable electronics sector, where small fuel cells are seen as a logical technology to power mobile phones and small electronics devices.

The Vancouver area has such a concentrated nucleus of fuel cell researchers and developers, Mountain View, California-based PolyFuel Inc., which develops hydrocarbon-based engineered membranes for fuel cells aimed at the portable and automotive markets, recently opened an office there.

Tak says the industry's history of "over-promising" has hurt itself among the public and the media.

For instance, when Ballard recently announced it was selling off its automotive fuel cell assets to German auto giant Daimler AG and Ford Motor Company, the media spin was negative, with the suggestion it was abandoning that business.

In fact, says Tak, it was a good news announcement, since the three firms announced they would be establishing an automotive fuel cell technology firm in the Burnaby area that will employ 113 people. Ballard will have a 19.9% interest in the new private company, while Daimler will hold the majority interest (50.1%).

"It was good news. Daimler wasn't saying it wasn't interested in the technology," he says.

However, Tak believes it could still be many years until fuel cells are commonplace in passenger automobiles.

The technology has more immediate promise in applications where centralized power sources are needed, such as in warehouses or in transit.

For instance, Ottawa and B.C. are jointly funding the purchase of hydrogen-fuelled buses for the province, as part of an overall $89-million commitment.

B.C. Premier Gordon Campbell announced this past summer Ottawa would provide $45 million for the purchase by BC Transit of 20 hydrogen buses and the development of hydrogen-fuelling stations in Whistler and Victoria.

He said the funding will ensure there will be a "hydrogen highway" from Whistler to Vancouver and Surrey to Victoria.

The province provided $10 million to ramp up the program, and another $34 million of provincial and federal funding will be used by BC Transit to operate the fleet for up to five years.

Winnipeg-based New Flyer Industries Inc. will build the buses, Ballard will provide the fuel cell modules and Calgary-based Dynetek Industries Ltd. will supply the hydrogen storage system.

Tak points out that using hydrogen-powered buses is a proven technology, with 30 Canadian-produced hydrogen buses having been tested in Europe for the past several years.

It is planned that the buses will initially be used in Whistler in time for the 2010 Winter Olympics, which will be held there and in Vancouver. Tak says the deployment will provide a "showcase" for Canada's fuel cell expertise.

"In my opinion, fuel cell technology will still be used in passenger cars, but that will be 10 or 15 years down the road," he says. "For the next five to 10 years, they will be used for shuttle buses, for stationery power applications and in materials handling."

Each of those is a very large market, which will potentially mean billions of dollars in revenue for the industry, says Tak.

http://www.ecolog.com/issues/ISArticle.asp?id=77838&PC=EE&issue=12172007