When natural gas utility ATCO Ltd. would apply for federal government funding to develop low-carbon technologies, it would sometimes take six or eight months to get a decision.
By then, the technology providers had gone to other funding sources.
While innovation was occurring in areas such as renewable energy, ATCO and other major Canadian gas utilities believed there was a technology gap in natural gas innovation.
So the utilities pooled resources and created their own fund, the Natural Gas Innovation Fund.
The experiences of dealing with federal bureaucracy, and the utilities’ response to the technology gap, were described by Greg Caldwell, senior manager of research and innovation at ATCO Pipelines & Liquids, a division of ATCO Ltd.
Caldwell was part of a panel discussion titled “Need for Speed: Accelerating the Innovation Cycle Time” during a Low Carbon Innovation Forum at last week’s Global Petroleum Show.
The ATCO manager was responding to a question from the moderator about barriers to accelerating the low-carbon innovation cycle time in the Canadian oil and gas sector.
Caldwell, who represents ATCO Gas, among other ATCO companies, at international events on how the gas industry can slowly decarbonize and reduce emissions, said the first challenge he sees in Canada is lack of regulatory clarity.
Canadian gas utilities have an extensive natural gas system with more than 450,000 kilometres of transmission and distribution pipeline serving roughly seven million customers. Yet there is no policy in place that says utilities, distributors or upstream producers are responsible for decarbonizing, said Caldwell.
“Without that policy in place, it’s very hard for businesses like ours to not only convince our shareholders, but also our customers, that they should pay for some of this,” he said. “I’m there and my team is there, but it goes a lot deeper than that.”
Caldwell said there are a few exceptions. For example, British Columbia has a policy in place that allows utilities to invest in bioenergy and Ontario is developing decarbonization policies.
The second challenge he listed is the traditional corporate resistance to sharing information and “crowdsourcing ideas.” (The Oxford Dictionary of English defines crowdsourcing as “the practice of obtaining information or input into a task or project by enlisting the services of a large number of people, either paid or unpaid, typically via the Internet.”)
“In most large corporations in Canada, if you walk in the boardroom and say, ‘I want to crowdsource ideas’—it’s a pretty short conversation,” Caldwell observed.
He suggested that another barrier to speeding innovation is that not all shareholders have a long-term outlook.
“This is a long-term problem that we’re trying to solve. And you’re not going to necessarily see any of the projects that I work on returning in the next 12 to 24 months. And that can be a hard discussion when you’re asking for millions of dollars.”
When it comes to applying for funding, Caldwell found Alberta has been quicker to decide than the federal government. But he quickly praised the current federal government “because they are trying to make changes,” and cited last month’s supercluster announcement as an example.
Alberta funding agencies such as Alberta Innovates and Emissions Reduction Alberta (ERA), and even some Alberta municipalities, “are very quick to make decisions and to provide support,” he said.
“Federally, it’s almost another story,” he added. “You can wait six or eight months to hear anything on a proposal. ... We don’t move at the pace of government. No company does, generally.”
“For me to throw in a proposal and wait eight months — it’s hard to sell internally,” Caldwell told the Bulletin later. “If it’s two or three months — OK. ... Eight months, you want to be moving on the project.”
For the gas utilities, there was a solution. “We created our own innovation fund,” said Caldwell, adding that funding is just one piece of the story which also involves sharing knowledge and expertise.
The Canadian Gas Association, which represents Canada’s gas distribution industry, launched the fund last October.
“And the Natural Gas Innovation Fund has really been designed to accelerate clean-tech innovation in the natural gas sector,” said John Adams, the fund’s managing director. “It was a response of a technology gap in natural gas innovation.”
“There’s a lot of innovation in electrification, in renewables. But when the [gas] utilities and industry wanted innovation within their sector ... and projects were in front of the federal or the provincial funding organizations, they weren’t often getting funded,” Adams said in an interview.
“The Natural Gas Innovation Fund is a solution. So it’s going to fill a technology gap. It’s going to pool money from the utilities, pool all their technology, intelligence and experts.”
So far, the fund has provided grants to 30 projects in research, demonstration and deployment of gas technologies. Adams said total grants of $5.4 million to date came from CGA utilities’ pooled contributions. Another $41.2 million came from direct industry and government contributions through project co-funding.
“All projects are directly working with end-user utilities towards a path for commercialization,” Adams told the Bulletin.
Besides cash, the fund offers gas technology entrepreneurs access to gas utilities with their technical teams who can mentor companies during their funded projects, as well as a setting to field-test technologies.
Companies the fund has invested in (and their projects) include:
Char Technologies Ltd. (Biogas cleanup technology for renewable gas);
Hydrogenics Corporation (Converts surplus energy to hydrogen by electrolysis);
Nextgrid Inc. (Residential combined heat and power (CHP) system with 50 per cent higher fuel efficiency powered by natural gas);
G4 Insights Inc. (Thermo-chemical process to convert biomass into pipeline-grade renewable gas); and
iGEN Technologies Inc. (Self-powered i2 Hybrid Smart Furnace retrofit or new installation replacement for conventional residential gas furnaces).