Canada: A New Canadian Zero-Emission Vehicle Strategy And The (Re)Emergence Of The Hydrogen Fuel Cell Electric Vehicle

Last Updated: November 29 2017
Article by Daniel Brock and Robin Edger

In May 2017, Federal Transport Minister Marc Garneau launched the development of a federal zero-emissions vehicle (ZEV) Strategy. The ZEV Strategy is part of Ottawa's Pan-Canadian Framework for reducing greenhouse gas emissions to 30 per cent of 2005 levels by 2030. Transportation accounts for one quarter of the country's total GHG emissions, mostly from cars and trucks. The ZEV Strategy would canvass options for addressing the key barriers to the greater deployment of ZEVs in Canada, including ZEV supply, cost and benefits of ZEV ownership, infrastructure readiness, public awareness, and clean growth and clean jobs.

The timelines to produce a ZEV Strategy were short. An Advisory Committee of two-dozen experts from the auto sector, academia, NGOs and federal, provincial and territorial government officials was quickly struck and tasked with developing a plan to significantly reduce GHG emissions by appreciably increasing the adoption of ZEVs. In Mid-September the Advisory Committee completed a first draft of the ZEV Strategy. The plan now heads for a round of consultation among senior federal and provincial officials with an announcement expected early in 2018.

At the time of its launch, the ZEV Strategy was to consider all avenues for reducing GHG emissions from transportation. Nothing was off the table, and the government hoped it would build on existing policy and programs. The 2017 federal budget had allocated $120 million for Natural Resources Canada to deploy infrastructure for alternative fuels and EV charging stations. Ontario, Québec and British Columbia offer consumers ZEV purchase incentives. Minister Garneau, however, did suggest that it was unlikely a national ZEV Strategy would follow the leads of governments in Québec and California and require automakers to sell ZEVs at certain established and increasing levels - the so-called mandatory ZEV mandate. Under a ZEV mandate automakers are assigned "ZEV credits," which represent the company's sales of electric cars and trucks. Automakers are then required to maintain ZEV credits equal to a set percentage of non-electric sales.

ZEV mandates are not a preferred approach among automakers which argue that broadening direct consumer-level incentives, both financial and non-monetary, to increasing ZEV adoption in the marketplace is the most effective pathway.  These incentives include robust vehicle purchase rebates, preferred parking, lower registration fees, access to high-occupancy vehicle lanes, supported by aggressive public awareness campaigns.

The Québec ZEV mandate requires automakers to generate credits equal to 3.5 per cent of sales for model year 2018, rising annually to 6.9% in 2020 and 15.5% in 2025. Currently under one per cent of Québec car sales are electric.  In California, automakers are required to maintain ZEV credits equal to 4.5 percent of sales in 2018, rising to 22 percent in 2025.  There are also restrictions on the amount of credits that can come from 'transitional' ZEVs that still have an internal combustion engine. In 2018, plug-in hybrid vehicles (PHEVs) can only account for 55 percent of credits, meaning at least 45 percent must originate from battery electric vehicles (BEVs) or hydrogen fuel cell vehicles (FCEVs). PHEVs are not eligible for ZEV credits in Québec. By contrast to Québec and California, Ontario has recently adopted a voluntary approach to help the province reach a ZEV goal of five per cent by 2020.

It remains unclear at the end of 2017 whether the federal government will hold fast to its pledge not to make mandatory for automakers the sale of ZEVs in Canada.  Nevertheless, there is a clear policy direction being adopted in Canada's largest vehicle markets to promote a wider adoption of cars with zero emissions.

ZEVs and the Hydrogen Powered Electric Vehicle

The centerpiece of a new ZEV Strategy for Canada will be the available ZEVs and related technologies. To be zero-emission, a vehicle must run on a battery. Of these there are two types available today: Battery Electric Vehicles (BEVs) or, the lesser known hydrogen-powered fuel cell electric vehicles (FCEVs). Though not currently available in Canada, FCEVs are poised to be an important ZEV option in the Canadian vehicle market.

Several automakers are leading the field in the development of FCEVs including Toyota, Hyundai, Honda, BMW, Kia, and Mercedes-Benz. Collectively, these companies have invested, billions of dollars in development of hydrogen fuel cell vehicles and the technology to mass-produce them cost-effectively. These clean, zero-emission vehicles are market-ready and being deployed in jurisdictions around the world where hydrogen fueling infrastructure is available. Hydrogen fuel cell-powered vehicles are electric vehicles - they have no internal combustion engine - that generate electricity onboard while in use. This is in contrast to the plug-in electric vehicles, which draw electric power from a battery previously charged.

Hydrogen gas carried onboard in pressure cylinders is supplied to the fuel cells, where the hydrogen bonds with oxygen to form pure water. This process produces electricity – silently and safely – which is the primary source of power for all of the vehicle's systems. A FCEV currently can drive much longer distances (400-600 km) than a plug-in electric vehicle because the amount of energy that can be stored in an EV battery is much less than the storage capacity of a FCEV's on-board hydrogen. And, when the hydrogen gas needs to be replenished, the FCEV can be refueled as quickly as filling up a conventional car with gasoline.

The experience of owning and operating an FCEV is quite similar to a gasoline-powered vehicle. They do not plug in to charge a battery, yet they are fully electric vehicles and zero-emission. Currently, FCEVs are more expensive to build than conventional gasoline - or diesel-powered cars, but less costly than plug-in electric vehicles. It is estimated that the 2015 incremental cost of FCEVs and plug-in electric vehicles compared to a typical car were approximately $6,000 and $12,000 respectively. But these costs are projected to drop as the technology evolves.  Between 2030 and 2040, the difference in costs between FCEVs, plug-in vehicles and highly efficient internal combustion engine-powered cars is estimated to be negligible. Despite the cost advantage of FCEVs compared to plug-in vehicles, they face a more formidable barrier: a lack of hydrogen fueling infrastructure.

Currently, there are over 5000 FCEVs in active use on the roads worldwide as private passenger cars, mostly in France, Germany, Japan, and California. In heavy-duty and industrial applications, such as buses and forklifts, there are more than 8,000 vehicles in the U.S. alone. The market is projected to expand swiftly as a hydrogen fueling network is built.  For example, in California alone, automakers have plans to deploy more than 40,000 FCEVs by 2022. In the absence of the necessary infrastructure, however, the potential of FCEVs cannot be realized.  In Canada, there is currently only one publically accessible hydrogen fueling station, and three additional stations will be built with the help of funds from the federal government. Hydrogenics Corporation, based in Ontario, will receive $1.6 million in federal government funding this year to build two hydrogen fueling stations in the Greater Toronto Area.  Hydrogen Technology and Energy Corporation, based in British Columbia, will receive federal funding this year to build one hydrogen fuelling station in Vancouver.  None of these stations are connected to the dedicated deployment of FCEVs in the Ontario or BC markets.

The hydrogen fueling networks that are currently operating elsewhere have received government support. In France, there are 26 publicly accessible stations either complete, in construction, or with funding for construction secured. In California, the State has allocated $100M to help fund the construction of up to 100 stations and to support operational and maintenance expenses.  In Germany, the government is supporting a plan to build a national network of 400 hydrogen refueling stations by 2025.

ZEV Strategy and FCEVs

Canada cannot be confident about meeting steep reductions in GHG emissions from transportation without a firm commitment to ZEVs generally, and FCEVs in particular. Authoritative, comprehensive analyses of decarbonization pathways within the transportation sector have found that the chances of achieving meaningful GHG emissions reduction are more successful if multiple pathways are supported. Assessing the scope of Canada's commitment may have to wait until the release of Canada's new ZEV Strategy, and the place within it of FCEVs and hydrogen refueling infrastructure.

As such, significant initial federal and provincial investment in hydrogen fueling infrastructure should be directed to the deployment of publically accessible fueling outlets in Québec, Ontario and British Columbia. It will take this sort of investment to make Canada a world-leading jurisdiction for the deployment of clean, zero-emission FCEVs. Given our understanding of the various ZEV technology options, once the barrier of the lack of hydrogen fueling infrastructure is removed, FCEVs will be poised to be an important part of Canada's ZEV marketplace.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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