Cariboo Low Carbon Fuels …

Cariboo Low Carbon Fuels (Cariboo) is pleased to submit comments on the IESO Pathways to Decarbonization Study. Cariboo is a developer of green hydrogen, renewable natural gas (RNG) and other low carbon fuel projects in Canada. As the use of hydrogen and other low carbon fuels is contemplated in the P2D study, we have focused our comments on our experience developing green hydrogen projects in other provinces (specifically BC and Alberta). Our responses to the 8 specific questions included in the request for comment are as follows.

1. The IESO’s Pathways Study recommends streamlining regulatory, approval and permitting processes, citing that it can take five to 10 years to site new clean generation and transmission infrastructure. What are your thoughts on the appropriate regulatory requirements to achieve accelerated infrastructure buildout? Do you have specific ideas on how to streamline these processes?

The blending of hydrogen and RNG into the natural gas distribution system offers significant potential for greenhouse gas reductions. This has been recognized in other jurisdictions such as British Columbia, where the BC Utilities Commission has approved the blending of both hydrogen and RNG streams into the natural gas distribution system.

Blending of RNG into the natural gas system is widely used throughout Canada, and accepted by the regulators. However, there are currently 2 regulatory obstacles to the blending of hydrogen into the natural gas system. Firstly, from a technical perspective, the Canadian Standards Association has not yet issued final acceptance of blending. Advocacy by Ontario in expediting this acceptance would certainly be helpful towards this.

Secondly, provincial and municipal approval requirements for hydrogen production, storage and dispensing systems are not well defined. Updating provincial building and fire codes, approval regulations/ guidelines, and environmental assessment regulations, as well as assisting municipalities with updating land use bylaws and development guidelines to address hydrogen facilities would serve to expedite approvals for projects.

2. The IESO’s Pathways Study recommends beginning work on planning and siting for new resources like new long-lived energy storage (e.g., pump storage), nuclear generation and waterpower facilities. What are your expectations for early engagement and public or Indigenous consultations regarding the planning and siting of new generation and storage facilities?

Our experience has shown that between raising capital, obtaining approvals, environmental studies, engineering, procurement and construction, green hydrogen and RNG projects take approximately 4-5 years to bring onstream. So, early consultation and engagement with First Nations, local residents and other stakeholders is critical to project success. Particular opportunities exist to include local First Nations as development partners.

3. The IESO’s Pathways Study shows that natural gas-fired generation will need to continue to play an important role in the system for reliability in the short to medium term. The IESO’s assessment shows that most of the projected Ontario demand in 2035 can be met with the build out of non-emitting sources, but some natural gas will still be required to address local needs and provide the services necessary to operate the system reliably. Do you believe additional investment in clean energy resources should be made in the short term to reduce the energy production of natural gas plants, even if this will increase costs to the electricity system and ratepayers? What are your expectations for the total cost of energy to customers (i.e., electricity and other fuels) as a result of electrification and fuel switching ?

Blending of RNG and low carbon hydrogen (green, turquoise or blue in conjunction with carbon capture and storage) into the natural gas system, as well as the co-firing of hydrogen with natural gas in boilers, kilns, turbines etc, offers the opportunity to maximize the use of natural gas infrastructure, while reducing natural gas consumption and associated carbon emissions. That said, production of both RNG and green hydrogen is more expensive that natural gas, and so costs to customers will increase. For reference, in British Columbia, the BC Utilities Commission has approved a rate of $32/GJ (2022 $'s) for both hydrogen and RNG introduced into the natural gas system. This compares to the current natural gas price of approximately $4.00/GJ.

4. The IESO’s Pathways Study highlights emerging investment needs in new electricity infrastructure due to increasing electricity demand over the outlook of the study. The IESO pathway assessment illustrates a system designed to meet projected demand peaks almost three times the size of today by 2050, at an estimated capital cost of $375 billion to $425 billion, in addition to the current system and committed procurements. Are you concerned with potential cost impacts associated with the investments needed? Do you have any specific ideas on how to reduce costs of new clean electricity infrastructure?

As noted above, blending of hydrogen and RNG into the natural gas system, and co-firing of hydrogen with natural gas in boilers, kilns, turbines etc, allows for the continued use of natural gas infrastructure, which will minimize cost impacts to customers.

5. The IESO’s Pathways Study recommends that for a zero-emissions grid by 2050, investment and innovation in hydrogen (or other low-carbon fuels) capacity could be required to replace the flexibility that natural gas currently provides the electricity system. Do you have any comments or concerns regarding the development and adoption of hydrogen or other low-carbon fuels for use in electricity generation? What are your thoughts on balancing the need for investments in these emerging technologies and potential cost increases for electricity consumers?

As noted above, blending of hydrogen and RNG into the natural gas system offers the potential to utilize existing infrastructure, while reducing emissions associated with natural gas combustion..

6. The IESO’s Pathways Study recommends greater investment in new non-emitting supply, including energy efficiency programs. Following the end of the current 2021-2024 energy efficiency framework how could energy efficiency programs be enhanced to help meet electricity system needs and how should this programming be targeted to better address changing system needs as Ontario’s demand forecast and electrification levels grow?
No comment.

7. The IESO’s Pathways Study includes a scenario for over 650 MW of new large hydroelectric capacity to meet system needs in 2050. A recently released assessment estimates that there may be potential to develop 3,000 to 4,000 megawatts of new hydroelectric generation capacity in northern Ontario and 1,000 megawatts in southern Ontario. What are your thoughts on the potential for development of new hydroelectric generation in Ontario by private-, Indigenous- and government-owned developers? While the capital costs for hydroelectric generation may be higher than nuclear, wind, solar, and natural gas, do you support investing in large scale hydroelectric assets that may operate for over a hundred years?

Power and water are the feedstocks for green hydrogen. As such, development of large-scale hydroelectric generation has good synergies with green hydrogen production, as hydrogen can be produced during off-peak hours when power is less expensive. This serves to improve the efficiencies of both energy sources.

8. The IESO’s Pathways Study suggest that significant transmission capacity will be needed to help balance intermittent sources of electricity (e.g., wind and solar) and to ensure cost-effective supply can be delivered to meet growing demands from electrification and economic growth. Transmission will also be required to balance intermittent supply with dispatchable supply (such as natural gas and energy storage) and meet demand in regions with retiring assets. What steps should be taken to ensure that transmission corridors can be preserved and lines can be built as quickly and cost effectively as possible ?

Include hydrogen pipelines in planning transmission corridors. In addition to fuel transportation, they provide initial storage, peaking fuel supply and opportunities for mobility dispensing along the corridor.

We would be pleased to review this with you at your convenience. Should you have any questions, or require any additional information, please do not hesitate to contact the undersigned.

Yours truly,

Cariboo Low Carbon Fuels

Bob Blattler, CEO and Founder
www.cariboolcf.com