Fuel cell industry report highlights need for federal partnership and assistance

R&D and early production stressed

An authoritative new report on the Canadian fuel cell industry is calling on the federal government to move quickly and establish a national strategy for the sector or risk losing Canada’s early dominance to rapidly gaining competitors. The industry has become an early market leader even though Ottawa has invested just $150 million in fuels cells R&D in the past 20 years, an amount far lower than many other nations.

The report — prepared by PricewaterhouseCoopers LPP (PWC) and Fuel Cells Canada (FCC) — marks the most comprehensive survey and analysis to date of fuel cell activity in Canada. It was commissioned to provide baseline data for ongoing discussions with government officials and to mount a compelling argument for continued public investment in the sector. It is blunt in its contention that Canada must broaden its current focus on R&D to include early production, or watch the industry mature offshore.

“The key message is, there is going to be a large potential global market in the next ten or twenty years and we’ve got to capture as much as we can,” says John Webster a BC managing partner for PWC. “Industry, academe and governments must examine the challenges and how they can be overcome. Everything should be focused on how to maintain leadership and capture a large part of the marketplace.”

The benefits of developing a vibrant fuel cells industry are numerous and extend well beyond the jobs and prosperity equation. Governments are acutely aware of the environmental, energy security and health benefits to be gained from widespread adoption of fuel cell technology, whether they are in the transportation, stationary power or mobile power sectors. Industry observers are already witnessing aggressive attempts by other jurisdictions to lure Canadian firms to their locales with attractive incentive packages that include tax breaks and substantial public R&D investment. It underscores the importance of technology clustering, and Vancouver lays claim to the largest fuel cells cluster on the planet.

California, Texas, Michigan, Ohio and other US states are attempting to build fuel cell clusters. A trade delegation from Michigan visited the Vancouver area in May, which many viewed as a raiding party seeking to steal Canada’s emerging companies.

“Michigan wants the whole industry to transplant itself from Canada to Michigan,” says Webster.” They have very aggressive incentives. It’s a worrying trend.”

With the release of the report, FCC officials are stepping up their discussions with government officials at Industry Canada, Human Resources Development Canada, Natural Resources Canada, Health Canada, and the National Research Council. The holistic approach reflects the boundaries that fuel cells crosses and indicates that the FCC strategy is to encourage broad buy-in for a national strategy. Discussions are also underway at the provincial level, particularly in BC, Ontario and Alberta.

“Many within government are keen to look at the characteristics that will mark commercialization of fuel cell technology,” says FCC chairman Ron Britton, senior VP of emerging energy applications at Methanex Corp. “We have to examine the whole chain for an innovative technology to come to the market. Canada is more efficient in managing this type of process than other nations.”

Part of that process is the development of a fuel cells industry roadmap. Britton and Bruce Bowie, DG of Industry Canada’s energy and marine branch, are leading the effort which should be complete in several months.

The PWC report makes clear that R&D and early production are the main objectives of a national strategy, but many other components are considered critical as well. Codes and standards, an attractive regulatory regime, government procurement, skills training and greater public awareness are also key to building and sustaining an industry with world-class strength in specific niches.

“The future of the fuel cell industry is very broad. It’s anywhere you see electricity today. Anywhere I see a plug or a battery, I will use a fuel cell tomorrow. It cuts across so much invested capacity it will run into all sorts of blockages,” says Britton. “It represents a major change, like the changes we have seen in the computer and electricity industries. Government participation is key.”

Canada’s fuel cell industry is largely focused on proton exchange membrane fuel cells and solid oxide fuel cells. BC accounts for 75% of fuel cell activity in Canada, followed by Ontario (20%) and a combination of Alberta, Quebec, Manitoba and Nova Scotia (5%).

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Six more fuel cell demo projects announced

The British Columbia and federal governments have announced six more fuel cell demonstration projects as part of a $14-million commitment under the Western Economic Partnership Agreement (WEPA). The $5.2-million investment will be administered by Fuel Cells Canada and targets key gaps in the process of taking new technologies to market.

The largest investment ($2.135 million) was awarded to a $3.178-million non-commercial project to demonstrate the viability of a hydrogen fuelling station for vehicles. The project will be carried out by BC Hydro and several partners. BC Hydro also received $650,000 to develop and test a 1.2-kilowatt standby fuel cell system.

Cellex Power Products Inc received $1 million to support a $3-million product development and field trials program for fuel cell power units in industrial trucks. Another non-commercial project by Cellex received $875,000 to help build a multi-fuels warehouse for refuelling industrial trucks.

Membrane Reactor Technologies Ltd received $385,000 for a $875,000 project to build a small-scale hydrogen generator unit.

Goodings Environmental Inc received $150,000 for a $3090,000 project to develop an integrated system for generating electricity. Approvals for demonstration funding are made by a WEPA management committee.