Fuel cells R&D and demonstration get $215-million shot in the arm from federal investment in hydrogen economy

The fuel cells industry is applauding the federal government’s decision to dedicate $215 million to stimulate hydrogen R&D and demonstration projects while cautioning that much more is needed for Canada to become a major global player. The five-year commitment is being pitched as an investment in the emerging hydrogen economy and follows several months of negotiations between the representatives of the fuel cells sector, Industry Canada and Natural Resources Canada (NRCan). The majority of the funding is targeted to the private sector, mostly on a leveraged basis.

The announcement comes wrapped in the language of climate change and economic development, reflecting its strong positioning in both policy areas. But the latter is clearly being given precedence with a strong focus on “accelerating the development, commercialization and early adoption of hydrogen technologies and applications”.

New and reallocated money has been assembled from a number of sources to launch the various initiatives with the largest amount — $110 million — controlled by Technology Partnerships Canada (TPC). As Industry Canada’s flagship business assistance program, TPC is launching a new program for so-called early adoption (see page 3), as well as placing greater emphasis on hydrogen-related R&D and flowing through $10 million to NRCan and its Canadian Transportation Fuel Cell Alliance program. NRCan will also receive $7 million for its R&D initiative program ($7 million) and $3 million for its Technology Early Action Measures (TEAM) program, a component of the previously launched Climate Change Action Fund.

Of the total, $130 million is new money, announced in the federal Budget earlier this year, with the remainder ($85 million) reallocated from within the Industry Canada portfolio.

The National Research Council is reallocating $15 million towards fuel cell R&D while a further $20 million is being contributed by the regional agencies and granting councils. As previously announced in the last federal Budget, Sustainable Development Technology Canada (SDTC) is dedicating $50 million in new money specifically for hydrogen-related projects.

COMMERCIALIZATION ROAD MAP POINTED THE WAY

Negotiations leading up to the announcement ostensibly utilized a technology commercialization road map completed earlier this year (R$, April 16/03). The road map contained a number of recommended actions that were touted as “key components of a national fuel cell strategy”. But several of the road map’s recommendations are not addressed in the most recent funding announcement, leading many industry participants to argue that a national strategy remains an urgent priority.

“We indicated that Canada needed a strategy in the road map and we don’t have that yet,” says Fuel Cells Canada (FCC) president and CEO Ron Britton. “This announcement is a hell of a first step towards a national program (but) the lack of a strategy leads to fragmentation which is what we’re seeing.”

TOO MANY FUNDING SOURCES

Britton adds that there is concern that the new funding is fractured over far too many existing programs, some of which are not particularly suited to delivering the desired results.

“The money has been set up in a number of pies which can make it hard for a company to access. We’ll have to work through this,” says Britton, adding that this is particularly true when federal stacking provisions come into play, allowing recipients to combine public money from a variety of sources. “Industry is saying, ‘Let us work with one group. I don’t care how you manage it internally.’ But this is not happening. There’s a big hole in the middle that is not being addressed.”

Participation by two government departments reflects the dual focus of the initiative: stimulate an emerging industrial sector contributing to the objectives of the Kyoto accord that Canada signed on to last year.

While the industry is generally pleased with the level of support contained in the latest announcement, it still falls short of the resources competing nations are devoting to hydrogen and fuel cells technologies. According to the Commercialization Road Map, the US plans to spend $2.7 billion over five years on hydrogen and fuel cell R&D and automotive technologies. The European Community plans to spend even more — $3 billion between 2003 and 2006 on renewable energy, with the majority devoted to hydrogen and fuel cells. Japan has also announced ambitious levels of support, committing $380 million annually on fuel cell R&D and commercialization.

Britton says the industry is not overly concerned with the financial discrepancy since Canada plans to focus on niches where it feels it has the potential for global leadership. The approach for the new funding will be to spend it as quickly as possible and then lobby for more — using TPC to finance larger demonstration initiative and SDTC for smaller, one-off projects.

The funding will also give Canada credibility on the international front where the trend is towards multinational approaches to common challenges. “Six months ago we had nothing so $215 million is an important investment,” says Britton. “It’s a bargaining tool and now we have some chips.”

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