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

So, Quebec confused a lot of people aware of green hydrogen this week, which Hydrogen Insight noticed. They said that on the one hand they don’t have enough electricity for that and on the other hand they said that they should run a hydrogen train experiment and that hydrogen was needed for some transport and heavy industry. (Pro tip: Hydrogen Insight is the only hydrogen specific news site worth following. The rest are beloved by fossil fuel and hydrogen-for-energy lobbyists and have the stringiness of overcooked spaghetti.)

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

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

It certainly seems contradictory on the surface, even paradoxical. But a bit of history is required to analyze why this stupidity plays out the way it does.

First, Quebec has a massive hydroelectric facility in the far north, the James Bay site with a capacity of 16.5 GW. It operates at an average capacity factor of around 59% and delivers 83 TWh of electricity annually. Quebec also has 4 GW of wind energy in the largest wind farm in Canada, which no one in the rest of the country knows about, and is building more GW. Lower capacity factors, but St. Lawrence headwind, so pretty good. And then there’s the recently commissioned Muskrat Falls dam, bringing another 3GW of capacity into the mix, although a lot of that is sold in the Maritimes. There are also another 16 GW of smaller hydro projects around the site.

But that’s only about 40 GW of nameplate capacity between the power generation facilities in the province. Of course, much of it is already being used. 23 GW is well over half of the total generating capacity for the project, including Muskrat Falls. Not having surplus electricity equivalent to almost 60% of capacity is not surprising.

Having a capacity of 10 GW is still amazing and is indicative of some of the strange energy history of the region. Quebec already supplies 1.2 GW of capacity to NY, 2.7 MW to Ontario and about 2 GW to New England. It has tried for decades to sell more of its excess, very cheap, very low-carbon electricity to the large population centers to the west and south, 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 American, nuclear -oriented military presence looks north over the Pole for Soviet bombers. Now they have 55% to 60% nuclear supply annually, which means massive excess baseload conditions that require paying neighboring jurisdictions to take electricity and expanding a pumped hydro plant at Niagra Falls. (The usual reminder: virtually all grid storage built to date was designed 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 residents’ electricity bills that drove prices up to about average for North America, and which became an exploitable political wedge for the populist Doug Ford and the provincial conservatives, along with madness such as promises of a buck a beer, which also appeared.

One of the administration’s first acts was to cut the contracts for 758 renewable energy plants and projects in the province and legislate missing legal remedies, something that pleased the conservative base but was an absurd choice in the 21st century, not to mention a profoundly hypocritical one for an allegedly business-friendly government. Of course, the result is that Ontario is going to burn a lot more natural gas, and its emissions per MWh will increase significantly. Not a good choice.

And Ontario also declined to buy more electricity from Quebec for reasons. Yes, denying cheap, reliable, low-carbon electricity from Quebec is par for the course for the provinces’ conservative ideologues. Instead, they absurdly choose to try to build a small modular nuclear reactor at one of their existing nuclear power plants. Yeah, nothing like a first-of-its-kind, little fix that won’t be available for at least a decade and will probably cost three times projections to fix this decade’s problems caused by last decade’s stupidity. In the meantime, they will burn off more natural gas.

The 2000s, when energy policy in Ontario was rational and non-ideological, choosing to actively shut down coal generation and lean into renewables while maintaining their low-carbon nuclear advantage, is a fading memory. I’m trying 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 renewable energy and grid storage. They still have the opportunity to do the wrong thing, and contrary to Churchill’s observation about America, they rarely get around to doing the right thing after they’ve tried everything else. Oh, and every renewable developer in the world is scared of the province because of the 758 ripped contracts. I wish the Greens, NDP and Liberals in Ontario would actually get a strategic, cold-blooded, hot-headed strategist who could force them into a unified party, or at least unify the NDP and Liberals.

Meanwhile, the US suffers from the recurring problem of NIMBYism. Currently, the United States has delegated 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 plug down from Quebec has been blocked. My contacts tell me it’s not completely dead, but it’s on life support and the defibrillator is on its way.

So Quebec’s 10 GW of excess capacity won’t be eaten up by neighboring jurisdictions that should be hammering the border and demanding some of the clean, cheap electrons.

Of course, Quebec is electrifying faster than the rest of Canada (at least outside of the city of Vancouver). Local demand is high and increasing. With the lowest electricity prices in the country, it’s not surprising that a much larger percentage of Quebec households are 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 in terms of population.

The province is financing the purchase of 1,200 electric transit buses and 120 electric school buses, very credible numbers when the largest countries other than China are still under 1,000 electric buses in total. Quebec also subsidizes electric car purchases, and nearly half of 2021 Canadian electric car purchases were in the province.

Quebec is getting electrified, so what will happen to the hydrogen train?

The green hydrogen 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 the hydrogen to energy hype is strong in the country. (Yes, I have some stilted conversations locally here in Vancouver).

Quebec is mostly a 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 remove the 270 MW allocation for cryptomining. Quebec is also home to both CN Rail and Via Rail (both my former clients). Large rail companies are often stuck in an energy = fuel paradigm and have trouble climbing out of it. CN Rail is especially politically powerful.

And then there’s Bombardier, which made locomotives and wagons until the corporate welfare recipient sold its Germany-based division to Alstom. Yes, that Alstom. The one that delivers the H2 train for a few weeks or months. This continues to be 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 government bail-outs of Bombardier, over $4 billion since 1966, ended as well, with Bombardier C Series narrow-body airliners being handed over to Airbus for cents on the dollar and Bombardier’s rail division being sold to Alstom under equally bad conditions for the Canadian citizens who kept the terribly managed company afloat for decades. (I was also involved in 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 old Bombardier types who manage to scrape a few more provincial dollars into their pockets. The reality is that Quebec’s clean electricity is fully drawn, finally, and will be used almost exclusively for useful, productive, climate change-reducing things. And that doesn’t include the waste of green hydrogen for energy. When they build electrolysers, one assumes that the EU’s dearly departed additionality requirement will be firmly in place in Quebec.

In other words, the rejection of the proposal for 9 GW of green hydrogen electrolysers makes complete sense, where hydrogen producers have 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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