A Cleaner Future

Canadians could be forgiven if they view Ottawa’s decision to hire comedian Rick Mercer to promote the One-Tonne Challenge as something of a bad joke. At one level, Mercer’s exhortations to homeowners – turn down the thermostat, replace drafty windows, cycle to work – sound like worthy ways to live light on the land.

But the unavoidable daily reality is that many Canadians live in sprawling suburbs with virtually no transit, meaning they rely on their vehicles to get to work, school and play. In Canada, new homes are built with the latest in energy-efficient furnaces, appliances, windows and insulation. Yet we do little to support the development of renewable energy sources. We choose to buy gas-guzzling SUVs and products encased in wasteful plastic, and we elect politicians who give Canadian packagers, oil companies, utilities and automakers an easy ride in the name of economic growth and low taxes.

Mercer’s One-Tonne Challenge may encourage us to conserve energy and alter some of our most wasteful habits, but a long-term solution to climate change – and the diminishing supply of oil – will require a radical shift in thinking about the kind of energy we use. Indeed, the development of alternative fuels and renewable energy sources represents one of humanity’s greatest challenges in the 21st century.

Though the proven oil reserves in the Middle East, Russia and Canada will probably last for several more decades, world oil production is expected to peak by 2010. The implications are profound, both economically and environmentally. David J. O’Reilly, chairman and CEO of ChevronTexaco, warned of an approaching energy crisis in a speech earlier this year in Houston. “The era of easy access to energy is over,” he declared. At the same time, the buildup of atmospheric greenhouse gases over the next decades (they will continue to build even as oil production declines) is expected to trigger more extreme weather and further melting of the polar ice caps and glaciers.

Most countries have responded to the environmental threat by signing the Kyoto Protocol, which came into effect in February after more than a dozen years of geopolitical wrangling. On paper, Canada has pledged to cut its greenhouse gas emissions to six per cent below 1990 levels by 2012. The reality is that Canada’s total emissions are now more than 20 per cent above the 1990 level – and still growing.

Many economists and climate change experts believe the most effective way to cut emissions is to impose an additional tax on fossil fuels. Price hikes, such as those felt during the 1970s oil crisis, encourage consumers to conserve and increase the appeal of energy-efficient vehicles. Everyone agrees that the best policy instrument, a tax that makes fossil fuels more expensive, isn’t being addressed, says Douglas Macdonald, director of environmental studies at Innis College.

The political reality is that a “carbon tax” would harm Alberta’s powerful export-oriented oil and gas industry, which is investing tens of billions of dollars into developing Alberta’s oil sands. “What’s required to implement Kyoto seriously is too expensive,” says Peter Dungan, a professor at the Joseph L. Rotman School of Management and an associate of U of T’s Institute for Policy Analysis. Instead, the government is pumping money into research. In the last budget, the Liberals earmarked almost $2 billion for sustainable energy technologies, including solar power, wind and hydrogen. As well, the federal government recently announced a deal with auto manufacturers in which the manufacturers agreed to voluntarily boost vehicle energy efficiency by four per cent – an improvement, but a good deal less than the 25 per cent Ottawa initially wanted, especially given that the transportation sector is responsible for a quarter of all greenhouse gas emissions. Macdonald and Dungan, among others, seriously doubt the effectiveness of Ottawa’s strategy. “In Canada, we’ve relied on voluntary action [in the past] and it hasn’t really worked,” says Macdonald.

While consumer and investor interest in clean energy is building, experts disagree over whether renewable energy sources will ever be able to supply more than a tiny fraction of Canada’s electricity needs. Currently less than one per cent of Canadian energy is produced from renewable sources (other than hydroelectric). In contrast, 40 per cent of Ontario’s electricity comes from fossil fuel-fired power stations that emit greenhouse gases.

Organizations that favour renewable energy, such as the David Suzuki Foundation, argue that wind power, hydroelectric projects and solar panels have the potential to slash Canada’s greenhouse gas emissions by as much as 50 per cent. “The worldwide growth rate of many renewable-energy technologies today is similar to the explosive growth of cellphones and computers in the 1980s and 1990s,” according to research cited in a 2004 Suzuki Foundation report on renewable energy in Ontario.

The studies that Chris Green and H. Douglas Lighthouse conducted for McGill University’s Centre for Climate and Global Change Research throw cold water on the predictions of environmental activists. Green, an economist, and Lighthouse, a retired mechanical engineer, publicly question the accuracy of official Kyoto estimates on the role of renewable energies. They conclude that even by the end of the 21st century such technologies will be able to supply no more than 30 per cent of the world’s energy demand.

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For scientists and entrepreneurs developing alternative fuels to compete with oil, the challenge has always been twofold: to produce an environmentally cleaner technology and deliver it to consumers at a competitive price.

It’s a stubborn problem, especially in a cold country with vast potential oil reserves (and therefore little incentive to investigate other energy sources), as well as a mobile population who think nothing of commuting an hour to work. Nor does it help that, after years of low fuel prices, North American consumers have fallen in love with SUVs – among the least fuel-efficient vehicles on the road. The development of hybrid cars such as the Toyota Prius and Honda Insight represent the auto industry’s most visible attempt to counter this trend. Typically, hybrid cars go about twice as far as traditional vehicles on the same amount of gas.

Equipped with a conventional engine as well as a battery-powered motor, a hybrid car uses fuel combustion for acceleration and when travelling faster than 60 kilometres/hour. The battery is used at slower speeds and to keep the car going when it’s stopped (at a red light, for example). That’s why the Prius gets a better fuel economy rating (60 miles per gallon) for city driving than highway driving (51 miles per gallon) – the opposite of a gasoline-fuelled car.

Consumers can currently choose from only a few hybrid models, but automakers recently began selling SUV hybrids with considerably improved fuel economy. By 2011, it’s expected that 38 hybrid models will be on the market. However, research firm J.D. Power and Associates predicts U.S. sales of these vehicles – estimated to be 200,000 this year, or one per cent of total units sold – will reach just three per cent of the American market by the end of the decade.

Environmentalists would prefer cars that do away with the gasoline engine altogether and rely exclusively on hydrogen-powered fuel cells. For almost two decades, scientists, the major automakers, and Canadian companies such as Ballard Power Systems and Hydrogenics Corporation, have been working to develop hydrogen-fuel systems for a wide range of commercial energy applications, including cars, buses and portable generators. U.S. President George W. Bush has dubbed hydrogen “freedom fuel.”

Hydrogen fuel cells use hydrogen and oxygen from the air to create electricity, and in the process emit only heat and water vapour. Electrical motors powered this way are three times more energy efficient than traditional combustion engines (meaning they get three times the power out of a unit of fuel), according to the National Hydrogen Association. And unlike conventional electro-chemical batteries, fuel cells don’t need to be recharged, so they last much longer.

Significant technical and cost problems must be overcome before hydrogen-fuelled cars can be mass-produced. Physically storing the hydrogen is the Achilles heel of fuel-cell technology, says Steve Thorpe, a professor in U of T’s department of materials science and engineering. Researchers have devised a variety of ways to contain this light, volatile fuel, including compressing the gas in high-pressure containers, bonding the hydrogen to substances known as metal hydrides and storing it in liquid form in specialized tanks. Most prototype hydrogen-powered vehicles use high-pressure gas tanks, although BMW is developing models that use liquid hydrogen. The tanks for the prototypes tend to be bulky and are stored provisionally in the trunk while the vehicle manufacturers work out the kinks. Most can hold about 250 to 800 kilometres worth of fuel, which is slightly less than the capacity of conventional gas tanks. “The big issue,” says Thorpe, “is one of packaging, efficiency and cost. None of these solutions are cheap.” The hydrogen tanks being developed now cost between $1,000 and $4,000, compared to $150 for a typical gasoline tank.

At present, the most daunting impediment to commercially available hydrogen-powered vehicles is the high cost of making them. Firms such as Hydrogenics can manufacture fuel cells by the hundreds, according to Thorpe. “But no one’s tooled up to make enough for a million Corollas. No one has the infrastructure to do it at the moment. But it will come,” he says.

Thorpe’s confidence is derived from the fact that automakers such as Ford, General Motors and Toyota are spending millions to develop hydrogen-powered cars, while energy giants including ChevronTexaco and Petro-Canada are backing hydrogen-fuel research. GM vows to be the first to sell a million hydrogen-powered vehicles. But fuel-cell proponents remain thwarted by a critical roadblock associated with hydrogen and other alternative fuels. Vehicles powered by hydrogen won’t sell unless there’s a fuel supply, yet no one is going to invest in a fuel-distribution infrastructure unless there’s demand for hydrogen-powered cars. “It’s the chicken and the egg problem,” says Jim Wallace, chair of the department of mechanical and industrial engineering. Heather MacLean, an assistant professor in U of T’s civil engineering department, comments that gasoline prices in North America are still too low compared to other regions, such as Europe, to prompt a large-scale switch to other fuels. “Recent advances in gasoline vehicles, the low petroleum price and the extensive gasoline infrastructure make it difficult for any alternative fuel to become commercially viable,” she says.

Researchers and hydrogen companies are therefore looking closely at niche markets – fleets of buses or forklifts – that don’t rely on retail gasoline. One model is the taxi industry. It has adopted propane- and natural-gas-powered vehicles, which can be refuelled at a handful of specialized retail outlets. “We need to identify potential markets,” says Wallace.

Dozens of North American firms are trying to solve the technical and systemic riddles associated with hydrogen. Among these companies is Hydrogenics Corporation, a hydrogen-fuel firm based in Mississauga, Ont., which a pair of U of T engineering grads established in 1995 (see “Hydrogen Village”). The company, which trades on NASDAQ and maintains strong ties to U of T, recently signed deals with GM, ChevronTexaco and a German transportation authority to develop hydrogen-powered buses and forklifts. It is also working with Purolator to convert a fleet of delivery vehicles based in downtown Toronto.

Taking its strategy one step further, Hydrogenics recently acquired Mississauga-based Stuart Energy, a leading manufacturer of electrolysis-based hydrogen-fuelling equipment. Stuart has acquired the rights to patents held by U of T scientists Steve Thorpe and Don Kirk, who developed new materials that reduce the cost of producing hydrogen through electrolysis. In 2000, Stuart hired Thorpe for two years as vice-president of technology. Thorpe joined a team that raised $150 million through an initial public stock offering to commercialize the firm’s hydrogen-fuel systems (which include generators, compressors, storage tanks and specialized fuel pumps).

Such market interest is a healthy signal. Yet for all the research and development and venture-capital financing, huge questions about the commercial viability of hydrogen fuel remain unanswered. In 2003, the Canadian hydrogen-fuel industry recorded revenues of $190 million, a tiny fraction of the overall energy market and a negligible figure compared to the $110 billion being invested in the oil sands in Alberta. California, home to 37 million residents and a leader in the development of hydrogen fuel, has just 15 hydrogen “gas stations” serving all of 65 fuel-cell vehicles.

From the perspective of climate change, there’s one more wrinkle in the hydrogen story. Hydrogen is rarely found in nature unattached from other elements, and energy is required to free it. If the energy that is used to produce the hydrogen in the first place comes from fossil-fuel powered generators rather than wind- or solar-powered ones, greenhouse gases are still being released. “If you haven’t captured the carbon dioxide when making the hydrogen, you haven’t helped the situation,” says Wallace.

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Outside Professor Thorpe’s office in U of T’s cavernous mining building, there’s a large schematic diagram of a hydrogen-fuelling station powered by a wind turbine. A team of undergraduate students developed the concept, which involves a “gas station” – serving only hydrogen – at the base of the new wind turbine on the grounds of the Canadian National Exhibition. Electrical power from the turbine runs electrolyzers to produce hydrogen fuel, which can be stored and sold from the pumps. Does such a system point to a future where turbine-equipped gas stations make and sell their own fuel? If the auto sector could produce hydrogen-powered cars, you could build the infrastructure and make money doing it, says Thorpe.

Wind energy is the best example of how to generate significant amounts of power without building huge plants or releasing greenhouse gases. The iconic turbines, arrayed on wind farms in California, Britain, Germany and Alberta, have become a potent symbol of green power, says Keith Stewart of the Toronto Environmental Alliance and an adjunct professor at Innis College.

Germany is ground zero in the wind revolution. German regulators have provided community-based green energy co-ops with long-term, guaranteed rates to give them a financial advantage over private-sector suppliers of power derived from coal- or gas-powered plants. That one move spawned investment by hundreds of small organizations. They purchase their equipment from Germany’s wind-turbine manufacturing industry, which now employs 45,000 people. Since 1991, Germany has installed an astonishing 14,000 megawatts of wind power, equivalent to nearly two-thirds of Ontario Power Generation’s entire capacity, including nuclear reactors, coal plants and Niagara Falls. What’s more, 300,000 Germans now own shares in renewable energy co-ops. “There’s definitely a dominance of small clusters of projects, compared to the large wind farms in California,” says Melinda Zytaruk, general manager of the Ontario Sustainable Energy Association. The regulatory tilt in favour of small suppliers has added wind-power capacity faster, she says, because large wind farms require more complex and time-consuming land-use approvals.

In the past, large electrical utilities have ignored green power because they’d sunk billions into megaprojects such as nuclear plants. Yet there’s no doubt the surging popularity of wind energy has attracted the attention of investors – and politicians. During last year’s federal election, Paul Martin (BA 1961 St. Michael’s, JD 1965) spoke often about wind power; now Ottawa plans to invest $200 million in wind projects over the next five years. Last November, the Ontario government – which has promised to phase out the province’s coal-fired power plants by 2007 – announced plans to purchase about 350 megawatts of wind power from five small producers. This purchase is part of Ontario’s push to expand the production of renewable energy to 2,500 megawatts – roughly 10 per cent of the province’s generating capacity – by 2010.

These projects represent just a drop in the bucket, according to the Canadian Wind Energy Association. It maintains that it’s possible to harness 10,000 megawatts of wind energy in Canada by the end of the decade – enough to replace the energy produced in Ontario’s coal-powered generators.

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Given that Canada’s approach to Kyoto continues to be more about R&D carrots than regulatory sticks, it’s fair for taxpayers to ask if they will see a return on the deluge of funding being directed to the development of sustainable energy. Since there’s no real penalty if Canada doesn’t reach its Kyoto targets, Dungan predicts that the country’s Kyoto spending will simply “bubble on and on and on.”

Scientists such as Thorpe stress the importance of using such funding sources to develop marketable technologies, as well as the need to build public support for green-energy pilot projects, many of which have evolved from university-private sector research partnerships. “Getting these kinds of demonstration projects out in the public is very, very important,” he says.

Dungan adds that when governments become early adopters of green energy, their purchasing power creates economies of scale that make it easier for corporations to follow suit. “You’ll get a bigger bang if you have all the police cars go to hybrid or all provincial buildings retrofitted with energy-efficient heating systems.”

Still, new technologies won’t be a cure-all. “The idea that we can solve everything with technology is nice,” comments Wallace, “but it’s the consumer that has a huge role to play.” In effect, the real one-tonne challenge for policy-makers is to ensure that consumers have genuine energy choices and pay prices that reflect the real cost of the power they consume. That’s the true alternative.

John Lorinc (BSc 1987) is a Toronto journalist. He is working on a book about the new deal for cities, to be published by Penguin Canada in March 2006.