Focus on BC Fuel cells initiatives making ambitious plans despite being starved for cash

Backers of British Columbia's emerging fuel cells sector say there is an urgent need for the federal government to act quickly with a targeted national program to fund research and demonstration projects, or risk losing the investments made to date. The two key elements of the haphazard Canadian fuel cells strategy - the National Research Council's Fuel Cells Technology Centre (FCTC) and Fuel Cells Canada - remain woefully underfunded, while other nations are beginning to put serious money into the technologies and their commercial application.

Officials at both organizations are convinced that there is enormous potential for fuel cells development and production in Canada, but with money in critically short supply, they fear the time to capitalize on that potential may be slipping away. Funding for the FCTC, which is located on the campus of the Univ of British Columbia at the NRC's Innovation Centre, was cobbled together last year when a funding request to the federal government was ignored. It received $6 million over five years to commerce operations and has access to another $14 million through the joint NSERC/NRC Fuel Cell Research Partnership Program. An additional $10 million is apparently forthcoming from Natural Resources Canada (NRCan) through the Climate Change Action Fund, but to date those monies have not been targeted for release (R$, August 25/99).

Fuel Cells Canada (FCC) finally received funding in October more than two years after an initial industry-led request for funding to launch fuel cell demonstration projects. But the amount is a small fraction of what was originally requested. Instead of $26 million, FCC received $980,000 to run its operations, which are currently housed at the NRC Innovation Centre. Another $12 million was made available for demonstration projects. But that funding comes from the federal and BC governments under the Western Economic Partnership Agreement (WEPA), and as such will only fund demonstration projects undertaken in BC. Proposals will not be made to FCC but to a WEPA management committee, complicating a process already cluttered with numerous players.

"I don't know why the rest of the world sees this as a technology of the future, but we don't," says Chris Curtis, FCC's VP. "Dem-onstrating this technology is critical to its success but it's very high cost. It's not done anywhere without government support.

Curtis recently moved to BC and joined FCC after a career in Ottawa with Industry Canada's automotive and transportation branch where he oversaw the file of Ballard Power Systems Inc, Canada's largest fuel cell company. He contends that the preference of the fuel cells industry is to have a targeted program of at least $25 million, with FCC acting as a third party funding agency along the lines of PRECARN Inc or CANARIE Inc. He says FCC is encouraging either Industry Canada or NRCan to prepare a memorandum to Cabinet to allocate funding. If that fails, individual provinces may be approached to fund demonstration projects by firms within their jurisdictions. At present, several Canadian firms are participating in demonstration projects in the US and overseas, and none are slated for Canada.

"We need $25 million for buying down the cost of demonstration projects. One dollar would lever three to eight dollars from the private sector and other organizations," says Curtis. "Timing is extremely important because you have to have the money early to order demonstration units. If you miss the boat, then the demonstration project will go elsewhere and you'll have to wait for the commercial product."

FCTC REQUIRES MORE CASH

At the NRC's FCTC, financial constraints are also limiting that organization's ability to serve the needs of the fuel cells sector. Innovation Centre DG Ed Capes says the FCTC's role is to showcase Canadian technologies and focus on "balance of plant technologies" surrounding fuel cells development. Capes credits Des Mullan, director of the BC Regional Innovation Initiative, for getting FCTC off the ground. But the Centre requires $7 million annually in steady funding to have optimum impact and provide addition space for company incubation. FCTC is a key R&D platform for the National Fuel Cell Research and Innovation Initiative and is working closely with FCC, industry and universities under the direction of a 20-member user committee chaired by QuestAir Inc president Denis Connor.

"The NRC and universities perform basic research up to and including demonstration, while FCC focuses on demonstration and commercialization," says Capes, who joined the Innovation Centre in August after serving as DG of the NRC's Institute for Chemical Process and Environmental Technology. "We still need to design the actual programs, but we still have no new money for this. The drastic need is to have a couple of more dedicated groups added to the Innovation Centre on the fuel cells side."

Also required are additional hydrogen research labs, but the cost of outfitting the existing space is expensive and funding has yet to be identified. The two existing labs are occupied by QuestAir Technologies and Cellex Power Products, which are currently conducting prototype testing.

NEW FUNDING THE NEXT STEP

So where will the necessary funding comes from to give Canada a chance to realize its potential in fuel cells. A targeted federal program is obviously the best answer for FCC, but failing that, programs such as the new $120-million Sustainable Development Technology Fund could provide project-to-project funding, as could the Climate Change Action Fund.

For the NRC, the funding solution may lie in the details of the Finance minister's October Economic Statement and Budget Update,and the Liberal Party's so-called Red Book III election platform. NRC officials contend that the commitment to fund regional clusters, and boost R&D funding by $1 billion by FY04-05, could generate $80 annually for the NRC, with a portion sure to be allocated towards fuel cells R&D.

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