Fuel cells sector heats up as government and industry prepare for new round of activity and collaboration

Canada’s fuel cells companies are in discussions with the federal government to secure support for a major commercialization program and push for the development of a national strategy as part of Ottawa’s roll out of its innovation strategy. Fuel Cells Canada (FCC) is preparing a submission for a “shared risk” program at a time of increasing interest, and investment, in Canada’s nascent fuel cell industry.

The renewed lobbying campaign for government support of demonstration projects at the pre-commercialization stage closely follows a decision by the National Research Council (NRC) to establish a national institute in Vancouver dedicated to fuel cell R&D (R$, March 18/02). The two initiatives are being coordinated in an attempt to provide a suite of assistance and services to the sector as it competes with much larger investments being made by nations such as the US and Japan.

FCC backers won’t divulge how much they are seeking from the government, although they say the amount is substantial. The negotiations refresh a campaign that stretches back several years but has been unable to convince Ottawa to support the industry. The last time the 45-member organization approached government, they were seeking at least $25 million delivered through a targeted program modelled along the lines of PRECARN Inc or CANARIE Inc (R$, November 28/00). The result was modest funding from Western Economic Diversification Canada (WED), which resulted in one $6-million demonstration project jointly funded by WED and the British Columbia government. FCC is hoping that this time, things will be different.

“We’re getting a huge positive reaction from the government,” says FCC president Brian Josling. “FCC is seeking a partnership with government to share investment risk and the innovation paper is a major fuel cells opportunity.”

It’s unclear whether FCC is advocating a separate program, or the channeling of money through an existing mechanism such as Technology Partnerships Canada (TPC). TPC has occasionally made fuel cell-related investments, most recently with a $19-million loan to DuPont Canada Inc to support a $40-million R&D program related to flow plates for proton exchange membrane fuel cells (R$, February 27/02).

VC FOR FUEL CELLS FLOWING INTO BC

While government decides how to provide support to the fuel cells sector, private venture capital from domestic and international sources is flowing into BC’s emerging industry cluster. Several funds are now active in the region, including Conduit Ventures Ltd, National Bank’s Merchant Bank division, TD Capital, Ventures West and Chrysalix, the latter chaired by BC fuel cells guru Michael Brown.

Josling notes that fuel cells-focused venture capital funds are seeking promising investments globally and interest in BC will only be sustained if there is coordinated support for the sector.

Like other industry sector groups, FCC is preparing a brief for submission to the innovation strategy process within 60 to 90 days, indicating that Ottawa is fast tracking the consultation process in order to meet its self-imposed deadline for a national innovation summit this fall.

FCC was one of the first industry groups to be briefed on the innovation strategy’s schedule and intent, having recently hosted a presentation by John Bannigan, assistant DM for Industry Canada’s industry sector branch. For its part, FCC has commissioned PricewaterhouseCoopers to conduct a major study of the global fuel cells industry to gauge future trends and competitive strengths. The study will be released in June.

On the government side, Industry Canada is developing a commercialization road map for the fuel cells industry and has established a steering committee to carry out the necessary work. The road map is being funded by the Climate Change Action Plan and should be completed within one year. Also gearing up is the Transportation Fuel Cell Alliance, a $23-million program being developed by Natural Resources Canada.

“The innovation agenda and road map should pull all these pieces together,” says Bruce Bowie, DG energy and marine branch at Industry Canada. “Consultation with the various sectors will provide feedback to the government on where to go next.”

When the study and road map are complete, they will illustrate that the sector is diversifying rapidly to include far more potential applications than cars and other modes of transportation. Researchers and industry analysts now conclude that the first major commercial breakthrough for fuel cells won’t be in transportation.

“There has been a shift in first market from transportation to residential and portable,” says Dr Ned Djilali, a professor and associate dean of engineering at the Univ of Victoria. “More money is needed but money is only part of a concerted approach. Government must support the building of infrastructure.”

Speaking before an Ottawa breakfast audience of MPs and senators on March 14, Djilali said it could be at least a century before the majority of cares are powered by fuel cells, while mobile appliances using fuel cells will be available next year.

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