Canada will retaliate within days against American aluminum tariffs, with plans to announce a series of counter-tariffs early next week.
Officials in Ottawa and at the Canadian embassy in Washington confirmed previously threatened counter-tariffs will proceed by Wednesday.
The government had said during the summer that unless the U.S. dropped its latest round of aluminum tariffs, Canada would impose $3.6 billion in countermeasures by then.
The Canadian ambassador to the U.S., Kirsten Hillman, said in an interview Friday that the move is imminent.
“Absent any change in [the U.S.] policy, they will take effect next week,” the ambassador said.
“And they will remain in effect until the U.S. eliminates its tariffs against Canada.”
Canada is responding to a 10 per cent tariff announced by President Donald Trump in August, a move that struck just over half of Canada’s aluminum exports to the U.S.
The Trudeau government will reveal its choice of U.S. targets from a preliminary list published in August of more than five dozen potentials.
The government has said it will keep those targets limited to aluminum products, in order to respect a 2019 agreement with the U.S.
The preliminary list included a disproportionate number of products from U.S. swing states that will determine Trump’s fate in the Nov. 3 presidential election.
WATCH | Ambassador says Canada has bipartisan support in U.S. for removal of tariffs imposed by Trump
Kirsten Hillman, Canada’s ambassador to the United States, tells Power & Politics host Vassy Kapelos that Canada has bipartisan support in Washington for the removal of tariffs on Canadian aluminum, and that the Canadian government’s response will be “measured” if U.S. President Donald Trump doesn’t remove them. 1:26
A Canada-U.S. trade consultant who used to work for the Canadian government says political calculations clearly play a role in tariff strategy.
“There’s a number of considerations,” said Eric Miller of the Washington firm Rideau Potomac Strategy Group. “One is: How do we not hurt ourselves? Two: How do we persuade [Americans] to remove them?”
But, he said, counter-tariffs are not about trying to damage Trump in swing states, so much as an effort to get the attention of other candidates seeking office in those electorally fertile states.
“They want people running for office to get on the phone [and advocate for removing tariffs],” Miller said.
“That’s really the calculation … It’s not about [hurting] Trump per se.”
Other observers have expressed skepticism there’s any chance the Trump administration might be persuaded to back down on tariffs this close to an election.
Last time Canadian metals faced tariffs it took many months of pressure to get them removed, and it required timely help from powerful U.S. congressional allies, like the Republican chair of the Senate finance committee, Chuck Grassley.
Grassley had threatened to stall Trump’s signature trade agreement — the new NAFTA — unless the tariffs were removed.
“I’m calling on the Administration – specifically, President Trump – to promptly remove Section 232 tariffs on steel and aluminum imports from Canada and Mexico. This will help clear the path for the U.S.M.C.A. agreement…” –<a href=”https://twitter.com/ChuckGrassley?ref_src=twsrc%5Etfw”>@ChuckGrassley</a> <a href=”https://t.co/vdClgyl9yZ”>pic.twitter.com/vdClgyl9yZ</a>
A guaranteed basic income for all Canadians has emerged as the top policy choice of Liberal MPs, just as the Trudeau government is crafting its plan to help people weather the ongoing COVID-19 pandemic and rebuild the ravaged economy.
The Liberal caucus is calling on the government to adopt the idea in a priority policy resolution for consideration at the party’s upcoming national convention.
And MPs consider it so important that they’ve designated it their top resolution, guaranteeing that it will go directly to the Nov. 12-15 convention for debate and a vote.
It is among more than 50 priority resolutions from the governing party’s provincial and territorial organizations and its various commissions that will be the subject, starting Saturday, of a two-week online discussion among registered Liberals.
Liberal MPs are not alone in urging a guaranteed basic income. The 50 resolutions include numerous calls from all corners of the country pressing the government to adopt the idea in one form or another.
There are also multiple resolutions, including one from the caucus, calling on the government to develop enforceable national standards for long-term care homes — and to provide provinces with the funding needed to meet those standards. Long-term care facilities have borne the brunt of the more than 9,000 COVID-19-related deaths in Canada.
Pandemic identified gaps in social safety net
The pressure for an overhaul of Canada’s social safety net comes just as the Liberal government is preparing for a throne speech on Sept. 23 laying out its plan for protecting Canadians during the pandemic, which is heating up again after a bit of a summer lull, and for reviving the economy.
The pandemic has exposed holes in Canada’s social safety net, particularly the employment insurance program that proved incapable of helping the millions of Canadians left abruptly without incomes when businesses were shuttered in March to help curb the spread of the deadly coronavirus that causes COVID-19.
The government hastily introduced the $2,000-per-month Canada Emergency Response Benefit to fill the void, which the caucus resolution calls a “progressive and transformative program” that supported 8.5 million Canadians and proved to be “both effective and popular.”
Advocates had hoped that the CERB would eventually evolve into a permanent guaranteed basic income, but the program is now winding down, to be replaced by more generous and flexible employment insurance.
And while some ministers had initially suggested that the CERB could pave the way for a basic income, government insiders now suggest that kind of major reform is not in the cards while the pandemic continues to rage.
However, the caucus resolution argues the pandemic has created “a unique opportunity to rethink the Canada of tomorrow.” It further argues that a guaranteed basic income would simplify benefit applications for Canadians in need and reduce administrative costs for the government while providing Canadians with income stability that is “key to equality of opportunity, well-being and dignity.”
More than 500 resolutions proposed
The convention is slated to take place in Ottawa. The party has yet to decide whether it will be a virtual convention or a hybrid of small in-person sessions with other Liberals participating electronically.
The policy process has been entirely online.
Liberal riding associations and the party’s various commissions, representing seniors, women, youth and Indigenous people, came up with more than 500 proposed resolutions, according to party spokesperson Braeden Caley. Thousands of grassroots Liberals then voted on their top three priorities within each region and commission, he said.
After the two-week discussion period, those resolutions will be whittled down again through another online vote to just 30, which will be sent on for debate at the convention. Each region and commission, as well as the caucus, has also chosen one top resolution to go directly to the convention.
The resolutions demonstrate some of the conflicting internal pressures on the Liberal government, particularly with respect to its goal of reaching net-zero carbon emissions by 2050.
One from Newfoundland and Labrador calls for “world-leading incentives and benefits” for that province’s offshore oil and gas industry in order to attract “sustainable exploration and production” and fuel the economic recovery.
But a Quebec resolution calls on the government to end support for both the fossil fuel and nuclear components of the energy industry. And a youth commission resolution calls for an economic recovery plan that “promotes investment in the environmental infrastructure projects and divestment from the oil industry.”
The ratio of what Canadians owe versus their ability to pay it back went down in the first three months of COVID-19, but that unexpectedly brighter debt picture could be hiding a wave of bankruptcies waiting to emerge.
Statistics Canada reported Friday that the debt to disposable income ratio fell to 158.2 per cent in the three months between April and June, compared with a reading of 175.4 per cent in the first three months of the year.
That means that Canadian households owed $1.58 for every dollar they had to spend as of the end of June. That ratio peaked at 177 per cent in 2017 and has held steady in the 170 range up until the sudden drop this year.
While it’s encouraging to think that Canadians are managing to pay down their debt loads during the pandemic, insolvency trustee Scott Terrio with Hoyes & Michalos says that number can mislead about what’s happening beneath the surface.
Prior to the pandemic’s start in March, consumer insolvencies had been growing at a double-digit pace since the start of 2019 as the system worked through a decade of debt fuelled by a low rate that Terrio said people “binged” on “and kicked the can down the road.”
“The ones I’m worried about are the ones who had significant debt and then one of the spouses stopped working,” he said.
“They’ve taken advantage of deferrals and benefits [but] that ride is gonna end.”
Savings up sharply, too
All told, Canadians owed $2.3 trillion at the end of June, which consists of $1.5 trillion worth of mortgages, and $779.4 billion worth of consumer debt such as credit cards.
“The Statscan numbers show the debt picture is uneven across different income groups. The lowest 20 per cent had a debt to income ratio of 281.7 per cent at the end of 2019, meaning they owed almost $3 for every dollar they had on hand to spend. Those in the top 20 per cent, meanwhile, owed just $1.38 for every dollar of disposable income they had.
Those imbalances are part of why Terrio predicts that insolvencies are going to come back “with a vengeance ” in the coming months.
“Once the courts open you’ll find out how much your bank loves you,” he said.
TD Bank economist Ksenia Bushmeneva found reasons for optimism in the numbers.
“One of the major risks heading into this pandemic-induced recession was the high level of household indebtedness in Canada, which could greatly amplify the hit to the economy and slow the subsequent recovery,” she said.
“So far, it appears that the consumer side of the economy has held up better than might have been expected at the start of the crisis.”
Bushmeneva was especially heartened by the fact that the debt service ratio — the amount of money spent on servicing debt loads — fell by its highest amount on record, to 12.4 per cent from 14.54 per cent, largely because of lower rates.
In addition, she noticed that the household savings rate — the percentage of disposable income that households manage to save — soared from 3.9 per cent at the end of 2019 to 28.2 per cent in June, a level she described as “eye popping.”
But she is also worried about what could be coming down the pipeline.
“The unprecedented federal government income support programs and payment deferrals by financial institutions have been paramount for averting a delinquency tsunami and protecting household finances,” she said. “However, more challenging times are likely ahead.
“Delinquencies and consumer insolvencies will likely begin to rise at the end of this year and into 2021.”
The CRTC’s order was stayed last September by the appeal court, meaning the rates charged to independent internet service providers (ISPs) didn’t change and the big carriers weren’t required to pay the rebates.
TekSavvy is the largest of Canada’s independent ISPs, which collectively share about 10 per cent of the market.
The company is based in Chatham, Ont., and its largest base of customers in Ontario, where Bell and Rogers are the largest ISPs.
The carriers have mounted several challenges to the CRTC’s rate decision, including court appeals filed by Bell Canada and five of Canada’s largest cable operators: Rogers, Shaw, Quebecor’s Videotron, Cogeco and Eastlink.
More than three-quarters of a million Canadian homeowners have either deferred or skipped a mortgage payment during the COVID-19 pandemic began, to the tune of about $1 billion a month, Canada’s national housing agency says.
In a report on Thursday, the Canada Mortgage And Housing Corporation looked at the state of the mortgage market in Canada. The report is annual and typically looks at broad trends in the industry, but this year’s numbers, as is the case with just about everything else, are viewed through the prism of COVID-19.
The report underlines just how significant the pandemic’s impact on Canadian mortgages has been.
Early on, in March and April, Canada’s big banks announced sweeping mortgage deferral programs that would allow borrowers to skip some payments on their mortgages. While the move gave borrowers some breathing room at a time when incomes were falling, those payments must be made in full at some point down the line. And the CMHC report showed just how big the wave of deferred payments is.
Roughly 760,000 Canadians applied for some sort of mortgage deferral from a chartered bank since the pandemic began. Canada’s big banks control about two-thirds of the mortgage market, so that figure suggests that one out of every six people with a mortgage has opted to defer at least one mortgage payment since COVID-19 began.
The CMHC calculated that on average, that means Canadians deferred about $1 billion in mortgage debt every month since the pandemic began. But most of those deferral programs were for six months at most, which means those who applied early are due to start making up those payments now or soon.
“Given that many financial institutions have offered payment accommodations to their mortgage clients for up to six months, there continues to be a risk that a significant increase in mortgage delinquency will be observed in the third or fourth quarter of this year as these deferral agreements come to an end,” the CMHC said.
Defaults still low
Those arrangements with banks are a big reason why the default rate — the number of people who are at least three months behind on payments — has remained low so far at just 0.28 per cent of all loans on the books at the big banks. But as those deferral programs expire this fall, that number could rise.
All that deferred debt means that in the aggregate, fewer and fewer Canadians are likely to get ahead of their payments this year. In last year’s report, the CMHC said that two-thirds of Canadian homeowners planned to make an extra scheduled payment on their mortgages in 2020.
This year, only one in five borrowers expect to be able to do so.
Existing mortgages are getting more payments tacked on to them, and there’s even been a surge in new mortgage debt, too, the CMHC said. The number of new loans grew by 14 per cent in the first quarter of 2020 compared to 2019.
“We observed a surge in outstanding residential mortgage credit in the first five months of 2020,” said Tania Bourassa-Ochoa, the CMHC’s senior specialist in housing research. “This mortgage credit acceleration is a result of an increase in newly extended mortgages, given residential property sales were up late last year and early this year, and a record number of homeowners deferring their mortgage payments from impacts of pandemic-related economic shutdowns.”
An American consumer advocacy group is accusing Amazon of price gouging on items such as soap, face masks and toilet paper in the early days of the COVID-19 pandemic, even as the e-commerce giant claimed to be cracking down on third-party sellers on its platform who were doing the same thing.
A report by Washington-based Public Citizen claims that Amazon hiked prices on many essential items in March and April, adding mark-ups of up to 1,000 per cent on some basic items.
“Amazon has fundamentally misled the public, law enforcement and policymakers about price increases during the pandemic,” said Alex Harman, the consumer policy advocate for the group which says it lobbies lawmakers for legislative changes to protect consumers.
The group tracked a sample of items to monitor their price and availability. Among the price changes the group said it observed were:
A pack of 50 disposable face masks increased by 1,000 per cent.
Dial liquid antibacterial hand soap increased by 470 per cent.
A pack of 100 disposable hand gloves increased by 336 per cent.
A pack of eight 1,000-sheet toilet paper rolls increased by 528 per cent.
A pack of eight Brawny paper towels increased by 303 per cent.
A five-pound bag of unbleached flour increased by 425 per cent.
In a statement to CBC News, Amazon strongly refutes the claims and says it is in favour of legislation that would forbid price gouging in all forms.
“There is no place for price gouging on Amazon and that includes products offered directly by Amazon,” the company said Thursday. “Our systems are designed to offer customers the best available online price and if we see an error, we work quickly to fix it.”
Items such as hand sanitizer, toilet paper, flour and other sudden essentials were hard to come by in March and April across the U.S. and Canada, as reports of massive price hikes and supply shortages were rampant.
But the Public Citizen report says Amazon was also hiking prices on many items at the time. “Amazon has publicly blamed third-party sellers for price increases while continuing to raise prices on its own products and allowing those sellers to increase their prices,” Harman said. “Amazon is not a victim in the price gouging on its marketplace — it is a perpetrator.”
Basic supply and demand
Farla Efros, president of retail consultancy HRC Advisory, said in an interview with CBC News on Thursday that any price hikes for in-demand items just boil down to simple supply and demand issues.
“Given the fact they were able to service their customers, I think that [consumers] will be forgiving,” she said.
Efros added that prices went up elsewhere. “You saw the same thing in the grocery stores,” she said, noting high-profile examples of retailers who were shamed in the media, including high-end Toronto grocery store Pusateri’s, which at one point was selling sanitizing wipes for $30 a can.
Efros says consumers are mostly grateful to be able to get their hands on those items at all, which wasn’t the case at most in-person stores. “Consumers were so desperate to get their hands on anything and everything that they didn’t pay as much attention as they would normally.”
But another retail expert thinks Amazon may have taken a hit to its reputation with consumers. Doug Stephens, founder and CEO of The Retail Prophet, says the secret weapon in Amazon’s growth as a retailer is the trust that consumers have in its prices and reliability.
“You felt pretty confident that you weren’t going to be gouged, so something like this is really damaging,” Stephens said in an interview. Coming on the heels of other revelations about labour violations and health concerns in warehouses, and a Competition Bureau probe into whether Amazon gives preferential treatment to its own products, Stephens says the company may have hurt itself a little in this pandemic, despite their booming sales.
“It takes a long time to build trust but it takes a little time to lose it,” he said.
Citibank has named Jane Fraser to be its next CEO, the first woman to hold the top job at a major bank on Wall Street.
The U.S. bank said Thursday that current CEO Michael Corbat will retire in February. And Citi has named Jane Fraser, the current head of the bank’s consumer unit, to replace him.
Corbat, who has been with Citi for 37 years including the last eight as CEO, was one of seven bank CEOs who testified to the U.S. House of Representatives Financial Services Committee last year on proposed changes to bank regulations.
In one high profile exchange, Democratic lawmaker Al Green of Texas asked the all-white and all-male panel of CEOs if they thought a woman or a person of colour would succeed them. None of the bank CEOs said they thought that would happen.
Fraser has been with the bank for the last 16 years, and was named the bank’s president last year, fuelling speculation that she may be on deck for the CEO job, since the two titles are often held by the same person.
“I have worked with Jane for many years and am proud to have her succeed me,” Corbat said. “With her leadership, experience and values, I know she will make an outstanding CEO.”
John Dugan, the chair of the bank’s board of directors, was just as effusive. “We believe Jane is the right person to build on Mike’s record and take Citi to the next level. She has deep experience across our lines of business and regions and we are highly confident in her. Jane’s ability to think strategically and also operate a business are a unique combination that will serve our company well.”
The 53-year-old Fraser has degrees from Cambridge and Harvard, and prior to becoming president, she had senior roles with the bank’s Latin American unit, the mortgage division, and a stint in mergers and acquisitions.
JPMorgan Chase’s Jamie Dimon has had women as his second-in-command for years, but shows no signs of stepping down from the CEO role.
No woman has thus far ever held the top job at any of Canada’s five big banks.
Prime Minister Justin Trudeau today announced a new multi-million dollar program to help Black Canadians get business loans with national banks and said his government is looking at measures to tackle systemic racism in Canada.
The $221-million program will receive about $93 million from the federal government over the next four years and $128 million from eight financial institutions.
Ottawa is deploying close to $33 million — along with funds from RBC, BMO Financial Group, Scotiabank, CIBC, National Bank, TD, Vancity, and Alterna Savings — to create a new Black entrepreneurship loan program which will provide Black entrepreneurs with loans between $25,000 and $250,000.
Another $53 million from the federal government will go toward helping entrepreneurs access funding, capital, mentorship, financial planning services and business training, while $6.5 million will go support collecting data on the state of Black entrepreneurship in Canada.
“We’ve heard very clearly from the Black community that economic empowerment is an essential step toward breaking down those barriers and creating true success, not just for the Black community but for our country,” Trudeau said when questioned by reporters about his government’s anti-racism strategy.
“I recognize there’s much more to do on the justice system, much more to do on public safety and working with police and we will have more things to talk about.”
‘A good start,’ says business owner
Nadine Spencer, president of the Black Business and Professional Association, called Wednesday’s announcement a “game changer” for Black business owners who have struggled for access to capital and loans.
“I always say that the biggest challenge Black business owners face is that the owners are Black,” she told CBC News in an interview.
“Systemic racism, that is is the biggest factor when we walk into a bank. There is something different for Black businesses than for mainstream businesses.”
Meryl Afrika, president of the Canadian Association of Urban Financial Professionals, said it’s reassuring to see a promise come with a price tag.
“It’s better than what we’ve had in the past. So I think I think it’s a good start and it’s a good way to gauge whether or not it is going to be enough,” she said.
“I think it all comes down to data. At the end of the day, we want to be able to look at this, you know, three years from now, five years from now — even if the government changes — to know that there’s actual measures being tracked and that we can then hold our government accountable if they’re not being successful in deploying the funding to these businesses. That’s great.”
Support for Black-run businesses was one of the requests in a letter drafted by the Parliamentary Black Caucus back in June. The letter called on governments across Canada to immediately address systemic racism.
“We’re listening to that document. We’re also engaging directly with the Black community and hearing the challenges, the issues, the impediments, the barriers that we need to tackle,” said Trudeau while making the announcement at HXOUSE in Toronto, which describes itself as a “think centre.”
“But there are many other elements, whether it’s our justice system, whether it’s around public security, whether it’s around community supports, that we’re going to continue to work on.”
Trudeau criticized by Singh
In July, as “Black Lives Matter” protests swept North America, Trudeau announced his cabinet had created a summer work plan to draft policies to tackle systemic racism in Canada and to help eliminate barriers facing Indigenous and racialized people and those with disabilities.
At the time, NDP Leader Jagmeet Singh accused the prime minister of not acting to eliminate systemic racism and criticized him for kneeling at an Ottawa protest following the death of George Floyd in Minneapolis instead of making legislative changes.
Singh said today’s announcement is helpful but added marginalized communities are waiting for systemic changes to policing in Canada, including a ban on the police practice of “carding”.
“There’s a lack of priority to the real concrete changes that are needed to tackle the problems Indigenous, Black and racialized people are facing,” he said Wednesday in Brampton, Ont.
As part of the cabinet’s plan, Justice Minister David Lametti has been asked to examine possible reforms to the legal system, Employment Minister Carla Qualtrough and Immigration Minister Marco Mendicino are looking at improvements to the temporary foreign worker program and Public Safety Minister Bill Blair is looking into “modernizing policing structures and updating standards regarding the use of force.”
For more stories about the experiences of Black Canadians — from anti-Black racism to success stories within the Black community — check out Being Black in Canada, a CBC project Black Canadians can be proud of. You can read more stories here.
Builders broke ground on more new homes in August amid a surge in construction on apartments, condos and other types of multiple-unit housing projects in urban centres.
The annual pace of housing starts in August rose nearly seven per cent compared with July, Canada Mortgage and Housing Corp. reported Wednesday.
The housing agency said the seasonally adjusted annual rate of housing starts was 262,396 units in August, up from 245,425 units in July. That’s the highest level of housing starts since 2007.
The increase came as the annual pace of urban starts increased 7.1 per cent in August to 248,154. The pace of urban starts of apartments, condos and other types of multiple-unit housing projects climbed 9.1 per cent to 201,214 units, while single-detached urban starts fell 1.0 per cent to 46,940.
“Higher multi-family starts in Ontario, including Toronto, drove the national increase,” said Bob Dugan, CMHC’s chief economist, in a statement.
Quebec and Ontario led growth
Quebec and Ontario cities led the country in terms of the volume of new homes under construction, with levels jumping 18 per cent and 32 per cent, respectively, compared to August 2019.
Ottawa, Regina, and Sherbrooke, Que. saw sizable jumps in construction compared to August 2019. Cities in Prince Edward Island also saw construction on new homes jump more than 150 per cent in August compared to the same time last year.
Rural starts were estimated at a seasonally adjusted annual rate of 14,242 units.
The six-month moving average of the monthly seasonally adjusted annual rates of housing starts rose to 213,144 in August, up from 204,597 in July.
“To say `this is a solid level of building activity considering the pandemic,’ and all that, would be a massive understatement,” said Robert Kavcic, senior economist at BMO Capital Markets Economic Research, in a note to clients.
“Another very strong showing in August suggests that builders have fully made up any lost time during the spring. Where we go from here is another question.”
Despite August’s construction boom, Dugan said CMHC expects housing starts to trend lower by the end of the year, as the COVID-19 pandemic weighs on the economy and housing sector.
Royce Mendes of CIBC Economics said that housing demand from immigration and students has waned, causing rents to fall. In turn, Mendes wrote in a client note, investors may become less interested in funding new apartment and condo buildings.
“(The) fact that so much of the recent strength has been focused in the multi-unit sector presents a risk,” Mendes wrote.
“We continue to see the pace of building activity cooling as the year winds down, particularly as mortgage and other loan payments resume after a period in which many households took advantage of deferrals.”
For years, David Lloyd has been intrigued by hydrogen-powered cars. Living in Burnaby, B.C., he regularly passes by Ballard Power Systems — the hydrogen fuel cell company — and often wonders when the technology would go mainstream.
Then last month, while his RAV4 was getting serviced at a Toyota dealership, he spotted a hydrogen car in the showroom. He couldn’t believe it.
Lloyd wasn’t in the market for a new vehicle, but he bought it anyway.
He’s owned the Toyota Mirai for a few weeks and enjoys the smooth, quiet drive. Filling up at one of the three nearby hydrogen stations is pretty straightforward, he said, and costs about $50 if the tank is empty. The vehicle is emission free.
“I’m surprised that I could get in on this sort of next wave of technology,” said the 69-year-old former university instructor.
WATCH | Take a spin in the Toyota Mirai:
It’s a new experience driving a fuel cell vehicle, but David Lloyd is enjoying the ride. 1:27
Canada wants in on hydrogen, too, in a big way.
The fuel is having a moment globally, in large part because it’s viewed as a critical component in combating climate change, improving air quality and creating economic growth in a carbon-constrained world.
Amid this resurgence of interest in hydrogen, Ottawa has been crafting a long-term strategy aimed at securing a place for a Canadian sector in what’s expected to be a significant, global industry in the decades ahead.
The government anticipates it will release its plan this fall.
‘Things are happening quickly’
As momentum around hydrogen builds globally and other countries execute their own strategies, Ottawa is under pressure to act.
“Things are happening quickly,” said Natural Resources Minister Seamus O’Regan, who remembers riding on a Ballard hydrogen-powered bus during Expo 86 in Vancouver.
“It looks like trends we saw before the pandemic have accelerated. We want to be ahead of it.”
WATCH | O’Regan on what hydrogen could mean for Canada:
Natural Resources Minister Seamus O’Regan on hydrogen’s potential and what it could mean for Canada. 5:46
But hydrogen’s hurdles include technology, economics, infrastructure and transportation requirements. Producing large amounts of the fuel in a low-carbon and affordable way has also been challenging. The cleanest way of making hydrogen is to use renewable electricity to split water into oxygen and hydrogen through a process called electrolysis.
Governments around the world have begun investing money to kick-start the sector, a move the federal government and some provinces have signalled they will follow. Alberta and Quebec have already committed funding to hydrogen.
The federal natural resources department has been working with industry and different levels of government for the last three years on the project.
The strategy is expected to lean into the strengths Canada already possesses, including low-carbon intensive electricity, like hydro, and ample fossil fuel reserves, according to background documents provided by the federal government.
Alberta has been working with Ottawa on the national strategy and is developing its own blueprint.
Hydrogen in Alberta is traditionally made from natural gas, but the province believes it can become a leader in cleaner “blue” hydrogen by introducing carbon-capture-and-storage technology to the process.
“By 2050, [hydrogen] is going to be a $2.5-trillion industry,” said Dale Nally, Alberta’s associate minister of natural gas, citing global hydrogen industry figures. “We need to keep advancing this sector.”
The ‘fuel of the future’
For decades, hydrogen has been referred to as the fuel of the future. A history of complicated challenges has kept it from becoming the fuel of today.
Part of the appeal is hydrogen produces water — not carbon — when used in a fuel cell.
Enthusiasm has returned with hope that advances in low and zero-carbon production technology could have the potential to provide the hydrogen that governments and industries are looking for to help slash greenhouse gas emissions over coming decades.
Powering cars is one thing, but most experts say hydrogen’s true potential is in decarbonizing some industrial sectors like steel-making, providing heat for buildings and being a reliable fuel for trains and heavy-haul trucks.
Though not a panacea, some analysts expect hydrogen could meet 24 per cent of world energy demand by 2050.
Canada is one of the larger hydrogen producers in the world today, making about three million tonnes a year using steam methane reformation of natural gas — a process that’s drawn scrutiny for because it also produces carbon emissions.
But government officials and analysts believe Canada has the building blocks to develop low or zero-carbon hydrogen through a variety of tools, including renewable energy. In the case of natural gas, carbon-capture technology could be used to produce low-carbon hydrogen.
O’Regan points to Ballard’s stock price more than tripling in the last year as one sign of the renewed interest in hydrogen technology.
The federal strategy will include government incentives likely aimed at increasing production, building transportation and storage infrastructure, and a distribution network.
Decades from now, hydrogen could have the potential to replace oil as the dominant fuel source, he said.
“Possibly — that’s your best and honest answer from the natural resources minister in the middle of a pandemic, when things are changing so quickly,” said O’Regan, if costs decrease and technology accelerates.
“We do know though that oil is going to be with us for quite some time. Even the most ambitious Paris accord targets have it occupying a very large space in energy consumption.”
‘Tremendous’ progress made
Industry is already making “tremendous progress” in cutting costs and improving efficiency of hydrogen infrastructure, according to Wayne Leighty, hydrogen business development manager for Royal Dutch Shell in North America.
The newly developed refuelling stations are half the price and twice the performance as the stations which are just finished being built, he said.
“It’s a very fast pace of progress and as we achieve that progress, come down the cost curves, then the size of the opportunity grows,” said Leighty.
WATCH | Why some traditional oil and gas companies are investing in hydrogen:
The company is focused on building a refuelling network, says Wayne Leighty, Shell’s hydrogen business development manager 2:30
With much of hydrogen’s future as yet uncharted, there’s room for innovation, including on the wind-swept prairie of west-central Saskatchewan.
That’s where Proton Technologies is attempting to turn the remains of a bankrupt heavy oil play into a zero-carbon hydrogen development.
The pilot project aims to develop a commercial process where oxygen is injected into oil fields, raising their temperature and creating a reaction that frees the hydrogen.
As the hydrogen is drawn to the surface, the company said other gases, like carbon dioxide and hydrogen sulfide, are filtered out and stay below ground.
The goal of Proton’s patented process is a carbon-free hydrogen at a cost well below current green hydrogen technologies.
“I think hydrogen will be widely adopted if people can save money for heating their homes or industrial processes or transportation fuel,” said Proton’s chairman, Grant Strem.
If all goes as planned — and they can demonstrate the technology can be scaled-up — Proton aims to produce 500 tonnes a day of hydrogen from the site within about two years.
Beginning later this year, Strem said the company plans to sell smaller amounts of hydrogen from the site using above-surface separation and shipping it by truck.
Still the fuel of the future?
Despite current interest in hydrogen, it remains to be seen exactly how significant a role it will play in the future.
Challenges and unknowns remain, such as its ability to produce a profit, consumer attitudes or even unexpected leaps by rival technologies. The economics will also have to work — and the global capital cost of the equipment for low or zero-carbon hydrogen production has been estimated to be hundreds of billions of dollars over the next three decades.
An ongoing commitment to decarbonization by governments is also expected to be key.
“It’s so much harder to build something up than it is to tear something down,” said Alex Klaessig, director of gas, power, and energy futures at IHS Markit.
“A lot of things have to go right for it to work, whereas … just a couple of big things could go wrong for it not to.”
Still, he believes hydrogen will play a significant role moving forward as part of a mix of energy solutions, including renewable energy.
WATCH | What Proton wants to achieve with its technology:
Seta Afshordi with Proton Technologies explains the innovation underway and the potential of hydrogen. 1:05
Others are wary of government involvement in building out hydrogen infrastructure.
“I’m a free-market guy,” said economist Peter Tertzakian, deputy director of the ARC Energy Research Institute in Calgary. “I’m not convinced the government should be involved in picking technologies.”
As for Lloyd, who bought a hydrogen car last month, he’s perfectly happy to drive the car locally in the Vancouver area, and he’s excited new filling stations are planned for Victoria and Kelowna, B.C.
For now, regardless how the hydrogen industry evolves over the next few decades, he’s enjoying the ride.
“When you ask for a little bit of acceleration, it moves easily without hesitation,” he said. “Being clean and quiet is great.”