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The Canada-Germany Hydrogen Alliance Scandal?

James Fleay

Saturday, October 22, 2022

Chris Keefer  0:00  

Welcome back to Decouple. Today I'm joined by James Fleay. When it comes to energy, James has done it all. He's an Australian engineer and project manager who has worked in the power and oil and gas sectors as well as the solar industry. Most recently, he is the founder of Dune down under nuclear energy. He's also a podcast veteran here at Decouple with two previous appearances to talk about hydrogen. That episode is called hydrogen, hyper hope. And another very interesting one, looking more at the politics side of decoupling, which is titled can the left and right come together to Decouple and recommend both of those episodes very highly. So James, a warm welcome. But we're going to save yourself intro until a little bit later because I do have a special introduction that I need to get through. So folks, this is a breaking news situation and a rather exciting thing to be covering here. I just got back from Ottawa, where I met with the Prime Minister with the Minister of Labour Minister of procurement, Deputy leaders of the official opposition and a whole bunch of different parliamentarians. And I was talking to them about the role for nuclear energy and the need to center that in our Deputy Prime Minister Chrystia Freeland is call for Canada to fast track its energy and mining projects in order to assist our European allies, in liberating themselves from Petro dictators and essentially not freezing to death over the next few years. She cited as her example, that we would need to sacrifice some social capital in order to do so. And I think really, this means that the Liberal Party is deciding that they are going to go in on LNG and LNG exports at the insistence of their allies, but she didn't talk about LNG. She focused instead on the Canada German hydrogen Alliance, which was a plan announced when German Chancellor Olaf Schultz came to Canada on a tour, I think behind the scenes too big for LNG, and was told by Mr. Prime Minister Trudeau that there was no business case for LNG and offered a Canada German hydrogen Alliance instead. Now that struck my interest back then, because from a energy return on energy invested standpoint, this made absolutely zero sense to me. I confirm this with several energy experts who consult on the Decouple podcast, one of whom will actually ran the numbers on what this would look like. So in short, the Canada German hydrogen Alliance involves building a massive wind fleet on the east coast of Canada in the Maritimes. This wind fleet would be as large as every wind turbine that is currently operating in Canada built brand new from scratch. It would then be hooked up to electrolyzers, which would crack distilled water highly purity mineralized water into hydrogen molecules. Those hydrogen molecules would then be run through a number of processes, but the most essential one being the haber bosch process to create ammonia. And just remember, the haber bosch process uses one to 2% of all global primary energy because ammonia is a vital source of fertilizer, which feeds 4 billion people around the world. No synthetic fertilizer. Half the world's population starves to death, not in 1020 30 years, in two or three years. That ammonia then shipped to Germany to be burned in power plants to backup intermittent wind and solar. Today's guest has said that the Canada German hydrogen alliance is the least efficient way to get electrons on the German grid imaginable. Wait for it, it's going to be great. But the story became even more interesting because of some breaking news I'm going to discuss right now. The CBC our national broadcaster has reported that the premier of Newfoundland, Andrew fury, this is the premier of Canada's easternmost province, where the Canada German hydrogen alliance will be partially based, is facing scrutiny and possible allegations of impropriety or even corruption for his luxury trip to a lodge owned by a Canadian billionaire John Risley. Now John Risley happens to be one of the principal investors in the world energy G h2 Consortium, which is looking at financing one of three of the large wind projects that would be part of the Canada Germany hydrogen Alliance. The resulting outcry has led to calls in Newfoundland to set up an Ethics Commissioner to examine potential conflicts of interest involving members of the House of Assembly, including the premier


the project that was proposed by billionaire John Risley. is called ni new geohash unique. It's based off of an MC mug or meaning where the sand blows. Again, this would be one of the three projects competing to be part of the Canada German hydrogen Alliance, alongside everyone fuels in Nova Scotia and the port of Bella dune project in New Brunswick. Interestingly, the Germans said they won't take hydrogen from the portabella dune project, because it would use electricity from the New Brunswick grid or point Lowepro provides a significant amount of electricity in that province. The new geo Hornik facility, it would involve 164 onshore wind turbines, totaling three gigawatts of power hooked up to 1500 megawatts of electrolyzers, which would deliver 250,000 tons of hydrogen per year in the form of ammonia. All of these projects, of course, will require some degree of provincial and federal support in order to get off the ground. And again, my guest is going to go through the business case and the energy case or lack thereof for this initiative. Suffice it to say that wind and solar projects around the world have been famous for harvesting subsidies and rewarding the investor class, often at the expense of the ratepayer who have seen their electricity bills skyrocket in jurisdictions like California and Germany with the highest wind and solar penetration. In the words of one of the world's most famous investors, Warren Buffett, quote, unquote, we get a tax credit, if we build a lot of wind farms, that's the only reason to build them. They don't make sense without the tax credit. Again, I was in Ottawa saying that nuclear energy must be centered in this call by Deputy Prime Minister Chrystia Freeland to fast track our energy and mining operations in order to assist our European allies. nuclear energy is obviously the ultimate play in terms of energy security, just within a reactor, there are two years of fuel as it operates and many more years can be stored on site. In addition, there's a huge benefit not only to our European allies who are actively calling for us to assist them, we need to replace for instance, Russian nuclear fuel exports. And Canada has a big opportunity to step in and do this. There's also unfinished reactors, Canadian reactors in Romania, where the US government will finance our government to finish those big opportunities here. And I think my my, my advocacy fell on receptive ears. But again, this candidate German hydrogen Alliance seems to have an element of scandal brewing within it, a scandal that is both based on the very poor energy efficiency and questionable economics, but also potentially now spilling over within the provincial government and potentially beyond. Stay tuned for a very interesting show. And James, welcome back to Decouple.


James Fleay  7:58  

Thanks, Chris. Good to be here.


Chris Keefer  8:00  

Okay, my friend. So again, you know, Justin Trudeau at the time of this announcement was also being asked about Canadian LNG exports. I think the visit of Olaf Schultz was really widely seen as a cry for LNG, liquefied natural gas to replace the German natural gas pipeline flows. At that time, Justin Trudeau said there's no business case. for that. I guess what I'm interested in talking with you about is whether there's a business case for the Canada German hydrogen Alliance, I'm really interested in picking your technical brain as a power sector engineer to look at this. So I'm not sure exactly where you want to start, I guess we'll kind of collaboratively come up with a bit of an architecture for this interview. But I'm just going to let you sort of take it away to give us some of your thoughts, maybe an overview, and then very much based on our previous discussions, looking into deep diving, some of the components of this plan.


James Fleay  8:59  

So I guess we can quickly touch on the claim that there's not a business case for LNG exports, without being intimately familiar about the source of gas in Canada. I do know that the price differential between Canadian gas and landed LNG in in Europe, based on the Dutch price is enormous. We see similar price differentials. In my own locality of Western Australia where we have cheap domestic gas, we export large amounts of LNG, and the Japanese and Korean landed price is very good. So LNG plants are a license to print money at the moment. They're not always but they are at the moment.


Chris Keefer  9:42  

What kind of differences specifically do you have any numbers? I know Henry Hub in the US has been sitting you know, between six and about one almost as high as $10. What about those Dutch prices? Where have they been sitting in


James Fleay  9:54  

the last I saw they were around 50 euros for the same. Okay, this them equivalent unit of energy. So I think Canada because it's a trapped market. As far as I can tell, I believe it's even cheaper than Henry Hub prices. I'm going to I'm going to go out on a limb and say, around $4. That's what I'm happy to have someone proved me wrong, but it won't be wrong by much. And so there's an enormous price differential. So I don't really know why there's not a business case, that middle LNG take. LNG plants are expensive to build, it take a long time to build, maybe maybe they think the business case will disappear by the time it's built, hard to say. But that equally applies to hydrogen, hydrogen production and conversion to ammonia, not to mention the receiving facilities at the other end. And the power generation and industrial infrastructure that has to be built in Germany to use that ammonia and to use that hydrogen will also take a very long time to build probably longer than an LNG export terminal because we haven't had as much practice. So it's a long day to decision. When I first saw this announcement, I think I'm going to I think it was back in maybe August. I didn't make the connection. It was about energy. To be honest, I actually thought it was about fertilizer. The press release was very short on detail. So I wasn't aware of any quantities, it just said, you know, ammonia was going to, to Europe. And that made sense because Europe are really not enormous, but but a not inconsequential manufacturer of ammonia. And they obviously use it for agriculture. And it sounded like there was a there was a case to get off Russian gas, and to and to have their own supply of fertilizer. But then, earlier this week, I did see a press release coming out that said the two customers in Germany that have signed non binding mo use. Another feature of hydrogen export projects is the non binding nature of the of the MO use is Europe. So Germany's largest utility recently nationalist, and eon. And I'm pretty sure these companies aren't in the business of agriculture or fertilizer, their utilities. And so I think the game is for the, for the hydrogen to be produced in Canada shipped as ammonia, and to be converted to electrons when it gets to Germany to put onto the German grid. They have a shortage of electrons at the moment. It may be more acute from the winter. So there's a need. But as I said, Do you want to call the other day converting a very high entropy energy like wind on the other side of the world, into a high entropy source carrier of energy like hydrogen and ammonia, to ship it across to Germany, and then to an end to use it with all the losses along the way is it didn't stack up well at first glance, and I've since had a closer look. And it looks even worse. To


Chris Keefer  13:24  

be honest. This honestly reminds me a lot of something like the Drax plant in the UK, which is a four gigawatt biomass plant, which has been labeled Green has benefited from subsidies. And as involved not just in the US substantial logging, they say it's all kind of waste wood that they're, they're burning. But again, you know, massive logging operations in the US in the Canadian West for God's sakes, turning that waste wood on there's been an investigative report in Canada demonstrating this was not just waste wood, turning it into pellets, I guess if it's being logged in the west coast of Canada, shipping it across the country onto ships running on bunker fuel sailing across the pond, as we call it, loading it onto trains bringing it to this massive I guess it was a coal power plant that was retrofitted to be green and burn trees instead, you know, with similar missions to coal in terms of the co2 at the stack, and similar levels of air pollution. And this is kind of yet another for me Rube Goldberg machine, fly by nights, attempts to really trick the public into thinking that they're doing something green and good for the environment. And there are moneyed interests that are making off like bandits. And this this really frustrates me and so, again, I mean the political nature of this this is a breaking news story and this is kind of 24 hours old that You know, these allegations against the premier are coming out. And I want to focus much more on the technical details. But you know, I have and you've done a better job of briefly briefly summarizing the kind of mechanics and the energy flows within this Canada German hydrogen Alliance, but I really want to get a bit more granular. So you mentioned we start with wind turbines. And I believe these are going to be on the east coast of Canada. Walk us through capturing that wind and just, you know, every step of the way, what's happening there, because I think there's some some key parts of the steps


that it's useful to be able to sort of look behind the curtain and have a deeper understanding in order to really understand whether this is viable or not.


James Fleay  15:49  

She'll, so firstly, I haven't looked, you just mentioned three potential projects. In Germany Canada, hydrogen Alliance, I've not looked at these individual projects, I've attempted to the details are scanty, except to say that wind is the primary the primary source of energy, where I've, where I've decided to, I guess, center, the analysis is the export agreements, of 500,000 tonnes each to eon, and Europa. So summit somehow, out of the east coast of Canada, there are plans to ship a million tonnes per year of ammonia. So if we, if we start our analysis there, and we work, we work out both ways, we'll work towards Germany, and we'll, we'll work back towards Canada. So let's go to Canada first. A million tonnes of ammonia. So how much is that? How much is that in ships? Well, the largest ammonia ships in the world at present are 60,000 tonnes. Now, there may be plans in time to make bigger ones. I'm sure that I'm sure there might be if an ammonia economy gets off the ground. Ammonia is a much more sensible way to ship hydrogen in my view, then then then liquid nitrogen or liquid hydrogen or compressed hydrogen. And so what that means if you've got about between 16 and 17 ships a year, big ships planes to go from Canada, across the Germany. So currently, at scale, there's only one process that can create industrial quantities of ammonia. Okay? That's the haber bosch process. You and I have discussed that. Discuss this on the show previously. There are some benefits, I will say there are some trade offs. There's never there's never there's never a free lunch. But there are some trade offs. And there are some benefits to using the haber bosch process with an electrolyzer potentially. And there are some firstly, you know, it doesn't produce co2. So, in a normal haber bosch process used in the oil and gas industry fertilizer industry. For every three molecules of natural gas, about one molecule is used to create the energy to drive the first part of the reaction to steam methane reforming. And to molecules are used as ingredients to provide the hydrogen for the actual haber bosch process. So natural gas has got ch four has got the hydrogen atoms that you need, you need to strip them away from the carbon, you can do that with water at very high, very high pressure, a very high temperature other and you can free them up into just hydrogen gas that I want to do that that's why you have to use a lot of energy. That hydrogen gas is then rinsed, it's dried, and it's sent to the haber bosch it's sent to a mixer where it's mixed with nitrogen. You know, nitrogen is very plentiful, it's pretty cheap to make. We can make it in industrial quantities. And so the hydrogen the nitrogen blended they're compressed. And they go into a reactor.


Chris Keefer  19:16  

When you see when you say compressed air because there's one to understand the energy inputs into the haber bosch process because I've heard that, you know the haber bosch process again feeds the world 4 billion people would not be able to survive on this planet without synthetic fertilizers created by this process. And so we expend something like one to 2% of all of the energy from all sources that humanity creates global primary energy on this process is energy intensive. Like why is that? So I've heard extraordinarily high pressures and pretty high temperatures in terms of process heat. And in this process, what we'll be providing the energy for that compression and heat in


James Fleay  19:53  

the traditional hoverwatch process. The heat comes from one primary source which is combustion of natural gas. And that is actually for the, for the first part of the it's you've the whole processes, in short called haber bosch but actually have a Bosch is the last part of the process, there is a reaction to for that called steam methane reforming. Still methane reforming means that you spray steam at very high temperatures up to 1000 degrees into contact with natural gas, it's really hard to heat water to 1000 degrees. So it uses an enormous amount of energy.


Chris Keefer  20:35  

Okay, this is where the the electrolyzers making hydrogen are potentially going to save a bit of energy, potentially, to avoid the steam methane reforming?


James Fleay  20:45  

Well, what they do is they substitute one form of energy for another, you know, in that process of combustion to heat up the water for Steam methane reforming, not to mention the actual stripping away of the carbon from the from the natural gas. During the reaction, you create a lot of co2, a lot of co2, the the electrolysis process does away with all that happens at a low temperature at relatively low temperature. There's no steam. But it uses an enormous amount of electrical energy to split the hydrogen and water away from the oxygen and water. The oxygen is a waste product that goes to atmosphere, the hydrogen is moved into the next phase of the process where it's blended with nitrogen. So you do away with that front part of the reaction, but you're just substituting one sort of energy heat for another sort of energy electricity. So just Yeah, I guess keep that in mind.


Chris Keefer  21:48  

But presumably, that that electricity has the potential to be carbon free. And hence, the idea that we can find more environmentally friendly ways lower emission ways to do some of these critical processes. And the arguments that I hear, you know, from folks like Michael libre, and others are there are good uses for hydrogen? And you I mean, also, I've heard it from you, actually, before I heard it from. But you know, on our previous episode, he went into some detail on this, that, you know, in terms of green hydrogen, whether that's from wind, solar, or nuclear, some low carbon source, we have a lot already to displace, in terms of things vital things like fertilizer production, and as a feedstock and other vital chemical processes. And that it's best to make that hydrogen on site and use it directly in those processes. And instead of trying to store you know, literally the the tiniest element on the periodic table that wants to leak and and brittle and everything else, let's let's leave that aside is going to throw them in a little comment, but just yeah, the next stage of the haber bosch process, and I think this is interesting in terms of where this energy would come from.


James Fleay  22:49  

Sure. So the next stage is to compress the blended nitrogen hydrogen up to quite a substantial pressure range between 150 to 300 bar, let's just call it 200. It depends on how the reactors are configured.


Chris Keefer  23:06  

And for the for the dummies, that's that's 200 times atmospheric pressure, essentially, yes, that's that's pretty high pressure. Yeah, huge,


James Fleay  23:13  

huge pressures. And that happens that that gas is heated to between four and 500 degrees. When you're starting up, a harbor Bosch reactor, you have to have a startup source of heat. That can be what's usually it's just combustion of gas to get that initial heat, but once you have the reaction going, once the catalyst is hot, and you're producing, but you know, you're successfully combining the notch and the hydrogen into the ammonia molecule, it's actually an exothermic reaction. So the, the haber bosch reactor itself produces heat. And you actually use that heat to preheat the gas. So people if they're familiar with how the Bosch process will think of the large reactors, where this where this conversion takes place, with this reaction takes place over catalyst beds, but there's actually lots and lots of heat exchangers as part of the process as well to try and get that efficiency to try and reclaim every little bit of useful heat possible to preheat that gas.


Chris Keefer  24:23  

So in this process, in terms of the green hydrogen process, or green ammonia, so called you'd have to still expend a lot of energy just to get the reaction going. And that could be electricity again, although unlikely if it's an intermittent source, so probably you'd have to wet burn hydrogen in order to achieve that, you know, four to 500 degrees Celsius process heat.


James Fleay  24:45  

I mean, technically you could do it with electricity, you know, heating elements can can heat gas up to that temperature. But this is a really significant these are significantly sick. To begin industrial projects, let's say you're talking a large amount of gas that you need to heat up before that reaction starts to become self sustaining. And so I think it's far more likely that they either use natural gas to get started before the before the process produces sufficient heat. Or they will use some of the ammonia they have in storage, maybe split it out to make hydrogen and try and use hydrogen to start up heat. So you've got some extra complication there. But you need that heat to get it started. And this is, this kind of gets to something else, Chris, with the haber bosch process, it needs to stay at a constant temperature and a constant pressure. It cannot be you cannot turn it on and turn it off. You can't really even ramp it up and ramp it down very easily, you run the risk of really damaging the catalyst. And you don't want to do that to see it's a significant job to shut down the reactor replaced catalyst, because if you destroy it before the end of its useful life, so it needs to be run at a constant temperature and pressure. And this, and this creates a little bit of a challenge. When you've got an intermittent source of primary energy, providing the hydrogen, you can imagine the electrolyzers and maybe we can come back to this shortly, but the electrolyzers at the front of the process producing the hydrogen, if they're directly powered, and exclusively powered with wind, even in a really good even in even somewhere like the east coast of Canada where understand the wind resource is really good. There are periods of time where you know, you're in the doldrums, right. And you'll have to ramp production down. If you starve the haber bosch process of hydrogen, where you can't, you basically have to slowly shut down the process until you've got hydrogen again, and then start it back up. So you know, those electrolyzers need to be producing hydrogen very reliably. And there's a couple of ways you can do it. One is you can have wind combined with something else. And so your electrolyzers are running constantly. You're getting this is a really, this is a really smart way to do it. Because you get the electrolyzer is the most expensive part, that's your highest cost capital item. More expensive than the haber bosch more expensive than the compressors more expensive than anything you're electrolysis units are your biggest capital cost. Consequently, they're the part of the plant, you need to achieve the highest utilization, you really need to be running them and ringing their neck. So you want to combined wind with something else. In the case of Canada, I think I'm gonna go out on a limb and say, Hydro Quebec are going to be they're going to be making hydrogen. I don't know if they know it yet. But hydro is a really good resource because it can ramp up drop down very quickly. It's highly reliable.


Chris Keefer  28:15  

The only problem in Quebec is you know, they have these extraordinary resources but they heat with with electricity and Quebec, so they actually become net importers in the winter. You know, Ontario and Quebec have a have a supply sharing agreement or having till very recently, where Quebec provides surplus hydro in the summer when they've got just plentiful hydro, but they actually import because of these frigid winters. And they're actually talking about building new hydro because they're they're running out, particularly with some of their electrification goals. So it's interesting. Obviously, there's a lot of people that talk about, you know, nuclear using nuclear to create hydrogen. I don't want to go too far into the weeds, but I think you've presented a pretty clear case as to why this is a challenging set of processes to get intermittent wind sources I understand these are these are comparatively good resource capacity factors in the 40s, maybe 45% off the east coast, wind turbines producing 45% of their rated power but again, sometimes none at all in the doldrums you know, turning those using the electricity to split water running it through into hot start turning his hydrogen and running it through this this haber bosch process and just briefly explain to us why why not just ship it directly as hydrogen to Germany. What are some of the challenges of storing and moving hydrogen long distances, particularly by boat?


James Fleay  29:35  

There's there's really two ways and neither of them are very good of concentrating the energy of hydrogen and allowing it to keep its chemical form. The first is compression, which basically means squeezing the gas in big compressors and putting them in very, very high strength, steel pressure vessels. And so, you know, this is there are limits to how big you can make pressure vessels that can withstand safely withstand that amount of that amount of pressure. And so there's real challenges with compressed hydrogen, its energy density, at safe working pressures is comparatively low. Liquid nitrogen is better. Sorry, liquid hydrogen is better. But it still requires, you know, I've seen, I've seen different reports on different designs of ships and how low the temperature is going to go. Because, of course, you know, you can use a combination of temperature and pressure to try and achieve stability in a liquid hydrogen. But you know, you can go down to as low as I think mine 100 minus 230, minus 240. I've seen some proposals. Again, I've never no one's shipping hydrogen at the moment. So we don't know how that's actually going to happen. But these are the sorts of challenges that coming up against that is an extraordinarily low temperature, you know, to manufacture, even though it's low pressure, but to manufacture materials that can rely reliably contain, not in brittle, not leak, for those for those pressures is for those temperatures, rather, is a real challenge.


Chris Keefer  31:24  

And I'm remembering, I'm remembering just from, you know, my first year, physics courses in chemistry courses had to take to get into med school and long since I've stopped using on a daily basis that you know, absolute zero. Kelvin is minus 271 minus 273. Kelvin. So we're what within 2030 degrees of absolute zero and like, just super briefly, what is absolute zero mean? How cold are we talking? And how does that compare to natural gas?


James Fleay  31:50  

Yeah, I mean, natural gas is about minus 160. When you turn it into LNG, yeah, to liquefy it, right. And that's a that's a really energy intensive process just by itself. But you know, you can be more or less atmospheric pressure minus 160 degrees, really high energy density. You know, by the time you store it for a little while, you send it to Japan and Korea, in our case, you know, it's, it works, it makes sense, you know, hydrogen, again, like I have, there's, there's no hydrogen tank is there's not a big fleet of hydrogen tankers around the world, I believe there is one hydrogen tanker, much smaller vessel that's operating out of out of Australia. But it's not, you can if you have to go to a store at atmospheric pressure, you would have to go down to minus, say, minus 250 degrees, like it's, it's getting extremely close to absolute zero. Now, you can store it at a slightly higher temperature than that, but then you've got to start storing at a higher pressure to maintain the stability of the liquid, right? So it doesn't, so it doesn't boil off into a gas. So there's always this trade off, you know, that we go super cold, or do we go really cold but a little bit of pressure? Or do we go? Not that cold and super high pressure. So it's like a sliding scale you can use. Ammonia, on the other hand is, you know, can be shipped at, you know, minus 10 degrees. It's, it's shipped all the time. Now. We know how to do it. There's there's dedicated ammonia ships around the world. There's lots of infrastructure for it, perhaps not in the quantities that some people are envisioning. But, but we know how to ship ammonia. So it makes sense.


Chris Keefer  33:49  

You've mentioned there's no shortage of molecules in Europe, in terms of, you know, fossil fuels that use for heating and transportation, etc. There's a shortage of electrons, sort of electricity. I mean, globally, we're facing a global fertilizer shortage. And we've seen, you know, countries melt down like Sri Lanka, where it was actually more of a just a political decision to try and phase out synthetic fertilizers over the Crash Course of something like a year. But because of these cripplingly high natural gas prices, a lot of fertilizer plants politically in Europe have had to shut down. And so we're facing a global shortage of precisely what they're talking about making with the Canada, Germany, hydrogen Alliance, ammonia. And the plan is you're saying based on the utilities, the non binding MOU that had been sound signed, it looks like the plan is to ship it over to Germany, which you said again, it's kind of a viable part and shipping ammonia much easier than shipping hydrogen, but then to burn something that is in an absolute shortage. And again, something upon which half of the world's population depends on to live like there would only be 4 billion people on this earth if we were doing organic agriculture and had no synthetic fertilizer inputs. So I mean, to me, this just seems absolutely bonkers that you would burn ammonia. Am I getting anything wrong?


James Fleay  35:09  

No, you're not getting anything wrong. I guess the only the only question in my mind is maybe eon and Europa are going into the fertilizer business. Maybe we've got that wrong, you know, maybe they're maybe they're not going to use this for electricity. But as far, as far as I can tell, they're utilities. Certainly they were previously. And it looks like that's going to be used for either heat energy or electrical energy.


Chris Keefer  35:35  

I mean, certainly there's this category air where hydrogen is thought of as an energy source, rather than energy carrier. I think many, many people, including some of our most senior politicians, make this category error and basically think that methane or natural gas is interchangeable with hydrogen, there's just the same things. But hey, there's no carbon hydrogen, which of course, as you've shown us is not true. It's actually something that needs to be manufactured with significant energy inputs.


James Fleay  36:03  

Yeah, I think I think it's a really good point, Chris, people confuse the source of the energy with the energy vector. There's only ever been two sources of energy. One is sunlight. And you can have ancient sunlight. And here I'm stealing some terms of note Hagen's, because I think they're really cool and easy to understand ancient sunlight, oil, gas, coal, you can have old sunlight, which is wood, heat, and you can have recent sunlight, which is solar, it is wind, because the sun drives the wind cycle hydro, because the sun drops the water cycle. But at the end of the day, the sun is the primary source of energy. Okay, so ancient ancient sunlight in the form of hydrocarbons is providing the vast majority of the world's energy it has for the last 100 years. And that's what natural gas is, it comes out of the ground as a really useful low entropy fuel. You know, the other form, of course, you know, we may even get to this later is, is, you know, from the depths of ancient stars, and that's, that's, that's nuclear and geothermal. To a lesser extent, but you know, so there's, the energy vector, in this case we're talking about is really complicated, because you're going from wind, to electricity, electricity to you have to produce water, you have to produce hydrogen, and you have to produce nitrogen. So that to produce hydrogen, you have to produce a reasonable volume of water. So that needs energy


Chris Keefer  37:39  

and pure impure water, right? I mean, we're talking like distilled water for running it through this process,


James Fleay  37:44  

super pure. So I'm assuming that this is going to be located on the coast, and it's going to be using seawater, but perhaps Perhaps they're planning to use fresh water, I don't know, regardless of which it has to be demineralized water. Now, if you're if you're converting seawater to demineralized, water, you can't do that with reverse osmosis, you need mechanical vapour compression, that's more energy intensive. And so you know, there is a there is an energy cost to convert wind into electricity into mechanical energy to make the water. Right. So that's a complicated


Chris Keefer  38:18  

process here.


James Fleay  38:20  

So when you've got the nitrogen, you've got to make the nitrogen that's reasonably modest compared to the hydrogen but you're still converting wind energy to electrical energy. And then eventually into, I would say, a low entropy ingredient, which is, which is pure nitrogen that doesn't exist in nature. And then hydrogen hydrogens like that's the that's well and truly the most energy intensive part of this process. And you're converting wind into electricity, electricity into pure hydrogen. That's a really low entropy, chemical. It just doesn't exist in nature in that form. But you know, we manufacture it. And so by the time you get to this point, you've spent an enormous amount of energy and you're not even at the hub of Bosch process yet. So we run did you go through the hub of Bosch? Sorry, you had a question?


Chris Keefer  39:17  

No, no, go ahead. Go ahead.


James Fleay  39:19  

Yeah, so then you you, you compress the mix gas up, you go into the hub, a Bosch process, you need electrical, so wind to electricity, electricity to mechanical compression. For there. Luckily, you do get to get some heat energy back from the process being an exothermic reaction, so that's good. And then you go through some some flash chambers on the back and you drop down that pressure and the temperature of the ammonia and it it's condensed, basically, it's all liquid and you store it as a liquid. Minus Batman 3035 degrees, you know, fairly low pressure, it's less than less than five atmospheres five bar. And it stores pretty well. It doesn't, it doesn't weather and it doesn't boil off. So you can, you can store it for pretty long periods of


Chris Keefer  40:14  

time shipping. So we this is sort of almost done with this this process. And I mean, I think it's instructive that it takes us, you know, 1520 minutes maybe to just analyze it, break it down, talk about all of the energy flows that go into it. And again, this is why I often refer to these sorts of schemes as Rube Goldberg machines that are far simpler ways to do this. Obviously, one of them is not friendly to the climate. And one is, and that's why I'm a nuclear energy proponent. We could just leave nuclear reactors running in Germany, or call a colleague, Noah Rettberg, has run calculations on, you know what this looks like energetically. And essentially, it's the equivalent of, of rebuilding or doubling our entire wind fleet we've ever built across the country on the maritime coast. Again, running us through this process. If we burn that ammonia in Germany, it will equal the output of ice our two, which is one of the three remaining German nuclear stations in terms of electrons on the grid over there. But James, there's more. But wait, there's more. If you want to combust ammonia, how do you do it? Can you just light it on fire in a power in a nice clean power plant? Or what happens? leading question?


James Fleay  41:24  

Definitely can't. It definitely can't. So now. So now we've got the ammonia on the ship. And it's headed to Germany. And it gets to Germany. And so what do we do? How do we turn it into useful, useful energy? Not food, that would be more useful, but but let's say electrons on a grid or heat. Now, ammonia is, is combustible, but it's not easily combustible. What do I mean by that? Now, I will say very quickly, you know, my background, I'm an electrical engineer, I happen to work with some of the very best process engineers in the world. And I've worked alongside some very good combustion engineers. You know, we have lots of gas turbines and fired heaters and in my industry, and so I've got to work alongside them. The problem with ammonia is you can't easily achieve a stable flame. And you really need for for pieces of equipment like a gas turbine, you need a stable flame, you need a fast, you need your flame speed, your flame travel speed needs to be high. And you need a stable flame. We haven't achieved that with ammonia. There is no ammonia fired 100% ammonia fired gas turbine, the Japanese IHI are doing some work. development work at the moment, they're pushing up to 70%. You know, again, this is a prototype, this is a very long way from being commercial that we don't have, we can't put ammonia into a turbine the same way we could put natural gas, or even pretty soon we'll probably be able to put hydrogen into a into a turbine. So you can spray ammonia into coal plants. The Japanese have been doing that successfully trialing trying that recently, where you, you can spray.


Chris Keefer  43:18  

You can spray fertilizer, essentially into a coal plant like this, this is this is in this context of people potentially starving over the next year or two, you know, with the compounding effect of you know, decreased Ukrainian imports of weeds. You know, we had Doomberg on and he went through, you know, what the way that this whole energy crisis and supply chain shortage is threatening, you know, potential, not global famine, but localized famines all over the world in terms of whoever can afford to buy imports that are vulnerable and imports, you don't own a first fertilizer, you don't have diesel or propane to dry out your seeds, if you don't have add blue, which is what a lot of sophisticated diesel machines require in order to run to meet emissions targets that will actually even let the vehicle operate. You know, go back to that Doomberg Episode To learn more about that. But this idea of again, burning fertilizer in a coal plants, in order to be green is even more preposterous than the again this biomass burning facility. I think it's the largest thermal station in the UK, logging the world's forests, turning them into into pellets to burn them and claiming they're green. You know,


James Fleay  44:27  

the less than and it's not just the West a lot, I guess. But whether we're particularly bad culprits but the rich world is so blinded by our bad our concern for carbon that we are completely blind to the challenges that that the developing world face every day just feeding themselves. You know, and it's people don't make the connection between energy and food. You know, in our own society, just the connection you have with food is when you go to the shop And since they're all, you know, gotta take away facility, it's always there. Of course, that's not the case it gets grown. And we are, we are using ammonia for its least valuable application


Chris Keefer  45:13  

in this process. I mean, that grocery store analogy is brilliant, I think about this all the time, right? The city person who, you know, goes to the grocery store, it gets picked up their chicken picks up their veggies, and you know, or even the child growing up in the city who was shocked to learn about farms and animals and you know, even animal slaughter and turns into a vegetarian, or, you know, again, just just, I'm really grateful in my own life that I've been able to take my childhood since the age of about one and a half, to a great big sheep farm and have them see, you know, the lifecycle and see lambs being born and sheep dying, sometimes they're really good at dying, etc, right and appreciate where his food comes from. But there's something so analogous with energy, where, you know, our governments are racing to put in electric charging stations, and they think that's where the green energy transition ends, and there's no thoughts given over to the power generation behind it. And I think, you know, you and I, we have, you know, this was something that came up in a Mark Nelson episode or masterclass on coal, you know, one of the lines that we came up with was, you have to put some respect on the name of coal, if you want to replace a fossil fuel, and you don't understand all that it offers, in terms of the all of the services that it offers, then you have no chance in hell of making the right choices, to find that replacement. And probably there's some fossil fuel uses that we will never be able to replace, or are centuries or maybe even a millennia away. You know, that was the I think that's the last meal line, you know, there are four pillars of civilization, cement, steel, fertilizer, and plastic, which are all critically fossil fuel dependent. And of course, we can have these demonstration projects, right. And we might find a process around it. But when you go to scale to feeding 8 billion people to try to keep the lights on or have everyone having electricity, it they're simply not scalable, certainly on six years notice or 12 years notice or decades or centuries, and that's not me being a climate denier, someone who's not concerned about climate, or wants to move on it as aggressively as possible. That's that kind of energy realism is is driving my enthusiasm to advocate for, you know, a power source that can not replace all fossil fuel services, but essentially do it the best. Like that's, that's why I do what I do. And, you know,


James Fleay  47:30  

fossil fuels are a hard act to follow Chris, yeah, they're a hard act to follow, they are so versatile, they're so low entropy, they come out of the ground in near perfect form, we've got 150 years of technological development, to make use of them both in their chemical form. And as a form of energy, you know, whether it's electricity, whether it's, you know, mechanical transport, you name it, they're a hard act to follow. You and I obviously, both supportive of nuclear, I'm a big proponent of nuclear, but you know, and it's got a huge role to play. But you know, as our society is, again, as Nate Hagens likes to say it's energy blind, and we don't even make the connection that what we're really talking about here is, is shipping electrons to Germany, from Canada. That's what it comes down to. And we're finding the most torturous path to do that with, you know, we mentioned when, when,


Chris Keefer  48:28  

when, when the Germans have not access our electrons on their grid, but they have a vital source of stable electrons on their grid. Sure, they're critically dependent on which they're vandalizing and shutting down unnecessarily. You know, it took the severing of that final tie, that direct tie between Germany and Russia of the Nord Stream pipelines, that's what it really took, when it comes down to the energy, real politic for Germany to finally say, Okay, we're actually going to extend our three remaining nuclear plants, just through the winter till April, I think we're gonna see ongoing extensions and some sense come back to that country. And you know, those those those plants extended for decades, and the plants were recently shut down, restarted, you know, and I'll fight for that. But, you know, just to emphasize again, we're shipping electrons to a country that is happy to vandalize the electrons they have and again, coming back from Ottawa, when our Minister of natural resources when asked, you know, is Germany doing everything it can, should it be shutting down its nuclear plants? He said, you know, nuclear plants in Germany don't decrease gas burning gas. He said this is your factually incorrect gas is used in Germany for process heat. Industrial and for heating. So nuclear plants do not displace gas. That was his line. Right. That's contrary to so he said it's their internal affairs. I will not comment. I will not condemn it. Right. You had Greta Thunberg. A month and a half later, condemning The German government for shutting down his coal plants because of the way it's pivoting, started shutting down his nuclear plants because the way it's pivoting to coal, and it's like, okay, that's a false premise. Clearly the Germans are burning gas, they're burning a bit less of it because they're burning more coal, because they just don't have the gas. But you're a natural resource minister, who's climate concerned, even if nuclear was just displacing coal, you should be clapping your hair, your hands, but instead, nothing. And I mean, and that's, you know, this minister has become more pro nuclear. I think actually, even just since my visit to Ottawa, I was at the Canadian Nuclear financing conference that the CNA put on the Korean nuclear sociation put on and he said the most bullish things I've ever heard him say about nuclear, still a little lukewarm ish for my liking. But I said that's not enough. You need to align yourself with, you know, the world's most celebrated climate heroine, Greta Thunberg, and actually make a stance here. I think we can all say that nuclear is better than coal anywhere in the world, but particularly in Germany, where they have the best run nuclear plants in the world speech over James back.


James Fleay  51:05  

Well, I would say just, you know, the devils in the detail, Chris, and I, I agree with a broad sentiment of what you're saying no question. But there are applications for coal and gas, particularly around heat, and high grade, ultra high grade heat that nuclear doesn't feel. And so you know, there is there is something and obviously, particularly gas, but also college or lesser extent, are also useful ingredients because of those hydrogen carbon bonds. So there are applications for those two hydrocarbons that nuclear can't fill in the near term, and will likely never feel as if cheaply, to be honest. But when it comes to electricity, and maybe maybe all of this ammonia, there's a million tons a year that Canada is planning to ship to Germany of ammonia, maybe not all of it is for electricity, right? Maybe some of it's for, for heat. I'd much prefer if it was for food, because there's people in the world who needed a whole lot more. But let's say some of it is for heat, at least some of it's also for electricity, we know that the Germans have a massive dependence on gas, basically, to fill in the gaps between sunlight and wind, you know, they've got a high amount of high penetration of intermittent renewables. And there is unequivocal evidence now from multiple places around the world, including Australia, as solar and wind go up as a portion of grid penetration, so does gas. So you know, I don't know what portion of this a million tonnes of ammonia is going to be combusted to make electricity. But it's not zero.


Chris Keefer  52:51  

Kids are three thoughts that have to deal with.


I guess the first is, again, more philosophic. Like, for me, as someone who is remains a climate Hawk, you know, my initial theory of change, my initial model was, I think, very common on the progressive environmental left, we just have to convince everyone, not everyone's taking this seriously, we just need to do dramatic, you know, extinction, rebellion type action, so everyone's going to realize how they're all going to die if they don't do something next, right. I'm not saying I was an extinction rebellion activist I wasn't. And I was appalled by them gluing themselves to public transportation, for instance, in the subway of in the UK, in the tube, okay. And as they become more and more educated energy, there's this kind of tragedy to climate change, where a certain amount is, and I mean, we it already is inevitable, there's no doubt about that. There's inertia in the system, where you start looking at, you know, the IPCC modeling, and everything ends in 100 years, and they're always just kind of trying to find ways to curve the lines to achieve this net zero, which I honestly don't think is possible. And it relies on ridiculous stuff, like enormous amounts of bioenergy with carbon capture and storage, you know, growing crops, cutting down enormous numbers of trees, and burning them and capturing the carbon I guess, is how we're going to balance out the equation are things like direct air capture, we've done a show on that with Sean Wagner, in reverse geoengineering, essentially. And that's to me, it's like this, you know, I'm, I'm very concerned about climate change. I have a four year old son, you know, there are real changes that we will see that two or three degrees Celsius, you know, the Amazon will turn into a savanna, for God's sakes. At least, you know, there's, it's multifactorial, we will see some sea level rise, it may be dramatic, it may not be as dramatic. You know, there's a plethora of changes, we're gonna see stresses on civilizations, probably big changing attitudes towards refugee flows, all kinds of things. This is concerning, not just concerning. We could say it's terrifying on a long term basis. But there's this tragedy to it, which simultaneously if we were to follow the dictates of extinction rebellion, or the no new oil people in the UK, 4 billion people would die in two or three years because there'd be no fertilizer. You know, and this appreciation from folks that are frankly climate skeptics write that, you know, methane or natural gas is the food of food. It just the world becomes a lot more complex. And I think it's just a journey as you age in general use the world's less black and white. And I remember as a youth looking up to my my elders and saying, you know, you've sold out, like, where's your passion gone? And being frustrated by that I haven't lost my passion. Right. And I do realize how humble, you know, my Interjections are because even if I'm able to save a nuclear plant here, you know, it's it was 1% of Canada's oil sector emissions. Not bad, right. But there's, it's on the grand scale of the world's emissions. There's, there's a lot to do. So for a lot philosophical Rant over. Next thing is just briefly, I'll pick


James Fleay  55:42  

a pick pick pickerings A bit more than about it. I think that's that's an extraordinary achievement. You know, just remarkable. I mean, just, let's finish


Chris Keefer  55:53  

on one thing here, which is, you know, burning ammonia. At high temperatures, that's there's nitrogen there, you're turning it into nitrous oxides, which are, you know, an ingredient in smog worse, and asthma and air quality? It's not like ammonia is squeaky clean. My correct on that?


James Fleay  56:12  

Yeah, that's correct. So that's one of the challenges with ammonia combustion, it's not just the stability of the flame. It's also you know, it has the potential to be 100 times more concentrated in NOx. So not oxides of nitrogen than natural gas at times. And so, you know, this is not this problem isn't solved, but work is being done. And, you know, there are some technology companies, no, they're not technology companies, they're industrial companies in Europe, North America, Japan, who are looking at ammonia very seriously as marine fuel. And so they're already going down the path of, you know, selective reductive catalysts for the exhaust to manage nitrogen. It's, it's a, it's a difficult problem, but it's been worked on. The big the big challenge, like if we kind of, if we step back and look at the energy vector, again, we say we've landed the ammonia in Germany, it's off the ship, it's in these big old tanks. What do we do with it? Is okay, maybe maybe some of it will be used as fertilizer, that would be terrific. Maybe they'll convert the ammonium into fertilizers that can be then transported to other countries, you know, like ammonium, phosphates, ammonium, sulfates, you know, that sort of thing. That will be great. But any, any ammonium they actually plan to use, or not ammonia, sorry, they plan to use for energy, I believe they're going to convert to hydrogen first, I believe they have to convert it to hydrogen first, there is a near term pathway for very high hydrogen content, combustion and combined cycle gas turbines. I think 100% will probably be achieved before this decade is out. So I think they'll convert the ammonia back to hydrogen. But the there's a problem here. You remember where we said back in the haber bosch process? It was an exothermic reaction, it actually released heat. Yeah, well, we're now doing it back to front. That means we need to put heat into it. Oh, my God. And it's a lot of heat. And so to crack the hydrogen, and again, the details are scanty, you know, hopes, maybe someone from Juniper or eon reach out to you and say, no, no, that's not what we're doing. We're doing it differently, I hope I'm hope to be corrected. But if they're going to crack the hydrogen out of the ammonia, which is the most practical, industrial scale vector that I see, then they're gonna suffer a loss of about 20% of that hydrogen. Okay, some of it's literally just lost through losses in the process. And the rest of it is combusted as heat in order to drive that process. So straight away, you're getting a 20%. And this is using German technology, tossin, crops, ammonia cracking technology, you know, which is supposedly among the best, you'll lose 20% unreal. And so you can't bear that loss that you've suffered along the way from everything from the wind, now to the hydrogen being sent to these new power stations that Germany is going to build that can take it. And, you know, I've sort of got all the calculations here in front of me. And I also just quickly get a little bit of recognition to a terrific study from University of Oxford, back in 2015, where they really laid out ammonia from wind as an energy factor and a lot of details. So I've really learnt on that, as well as the ammonia Energy Organization website. They're very pro ammonia and pro hydrogen pro ammonia in particular. But the technical papers are excellent. So they're the two sources I've used to do this sort of series of calculations. But the University of Oxford found that in terms of electrons to electrons, the electrons produced by the wind to the electrons available to the consumer,


Chris Keefer  1:00:24  

right through this through this whole, this whole process through this whole process, excluding shipping, excluding shipping through the Canada German hydrogen line, excluding shipping, it's 20% efficient.


James Fleay  1:00:35  

This is a 2000. This is a 20. This is 2015 study. And so this study looked at wind turbines with an ammonia storage system on the side connected to the grid. They weren't transport they weren't transporting the ammonia that was using it to store it and then later combust


Chris Keefer  1:00:52  

it as hydrogen or as ammonia.


James Fleay  1:00:55  

They had done the calculations based on ammonia combustion, but I can't find any viable technology for that. And there are theoretical value, what


Chris Keefer  1:01:03  

percent efficiency Did you say? They found 23. And you're taking an electron that you're making with a wind turbine running through all these processes, combusting to make another electron at the other end? And you lose? Yep. 77% of energy. Without without transporting it. This is insane. I mean, this this is like, is there? Is there a net energy loss to this whole process? And like, you know, we have to bridge because we, you know, I'm gonna keep you on longer than the average episode here, James, because this is, you know, enjoying this deep dive, but we have to get to the Grifters who are going to harvest the subsidies on a process, which, from what you're saying, I mean, the shipping is going to add a bunch to this. We're again, potentially really not even pulling much net energy out, right? The even if we use it for fertilizer, I'm guessing that it might even be lower emissions just to use the methane for fertilizer than this Rube Goldberg machine. Right? Even if we do the ethical thing and use this ammonia to feed the world as we should be doing. But yeah, who benefits? And I mean, again, this is where there's a potential scandal, you know, political scandal brewing in Canada, certainly on the provincial level, it may extend federally, I'm not sure. one of Canada's wealthiest businessmen, billionaire, John Risley made his fortune in the seafood industry and is now a big player in a major kind of hydrogen conglomerate, you know, about to potentially I think it's a $12 billion project and Newfoundland, like is venture capital, so energy literate, that they're putting their money into this is this, I don't expect you to know all these details here. But just globally, you know, Warren Buffett, again, we have a different model here. But much of the wind in the States was financed by big banks, through production tax credit, where they got to cheat the system, not pay their taxes, not paying to all of the social services that we all rely on. Because they built a wind turbine, which in the end ended up making electricity very expensive and had a incredibly low value proposition in terms of deep decarbonisation, as we've seen in California, where emissions are down slightly, but not very much. And they still have to use a critical amount of gas and have an unstable grid where they say you can't have an electric you can't have an internal combustion vehicle, but four days later, sort of the grid is going to crash, don't charge your car for a few days, you know, or the German situation. You couldn't, you couldn't you couldn't make this stuff up. So what do you know, I don't know if you can comment specifically or maybe just more globally. Just your thoughts, I guess, about, you know, the Grifters that run the Ron ta rentier class that is harvesting the subsidies on a process which is, you know, immoral, I will just call it immoral, you know, just an utter mis allocation of resources at a time when we are supposedly needing to rush forward on climate change. Or we shouldn't be rushing forward on air quality issues, etc. Going through his inefficient process, and literally burning fertilizer for a trivial amount of energy when you could leave a nuclear station on in Germany, which would be enough to power this whole ridiculous adventure. Just leave that nuclear station on, it's perfectly good. It's one of the best run nuclear stations in the entire world capacity factors of 94%. The German engineers running nuclear stations if only they ran Frances stations. So rant over, what do you think about the financial side of this?


James Fleay  1:04:28  

See, you know, other than a very, very short period in I would say the 90s in the 2000s. And this really only ever applied to gas fired power generation. There's this tiny little window where a few investors took merchant risk in the electricity sector. Okay. But because we've got to market quote unquote, people think that there is competition and that Investors are putting their own money at risk to build electricity assets and hoping they'll get the revenues from the market. That doesn't happen, that's never happened. There will be no money put into these sorts of projects by the investors. 12 billion, I think I heard you say before, I haven't seen that figure, that's an awful lot of money. No one puts down $12 billion, without guaranteed returns, they will have some risks around how they run the plant, how they deliver the project, sure, fine. But they will have guaranteed revenue from that investment. And it won't be dependent on how much hydrogen they sell. And I won't be dependent on the market price of electricity in Germany. And it won't be dependent on the cost of wind power to deploy. Okay, so someone will be picking up the bill for this. Now, I don't know what it's going to cost, like, you know, my day job for longer than I'd care to admit, is working for a super major integrated oil and gas company. We look at these sorts of things, for years, sometimes decades before we move. Okay, because they're very complex, it's very hard to be sure how much something's going to cost or if the technology is going to be viable. And often, it's very hard to find a buyer at the other end, right, and you need buyers on long term contracts off take contracts. So how how these hydrogen and ammonia projects are being announced, ahead of all of that work, and ahead of those offtake agreements, and ahead of viable technology demonstrations is beyond me, because it's, it's never happened in the traditional energy sector, you know, like the one that's kept everything running for the last 100 years. So it's a departure from everything we've ever done. But that $12 billion investment, that will not be taken much at risk, someone will be taking risk for that. And it will either be a Canadian taxpayer, or it will be a German taxpayer, though the only two people who will be footing the bill for this at the end of the day. Now that University of Oxford study that this is back in 2015, they were watching the price of wind turbines come down, obviously wind picked up again in in its levelized cost a couple of years ago, but they were watching wind prices come down, they were looking at electrolyzers going okay, this is sort of what's trending now, that would take into account some of these cost curves. And they had calculated and they looked at all different types of catalysts. They looked at different water desalination technologies, different electrolyzer technologies, that's the cheapest that they could see it being done. It was 253 US dollars per megawatt hour,


Chris Keefer  1:07:47  

which is about double Ontario's price right now. We're I think we're about 1112 cents a kilowatt hour. So


James Fleay  1:07:56  

like that's what they calculated, let's say the technology should prove maybe it's come down a bit, I'd be prepared to go along with that. But, you know, enormous, enormous. So that's that's the levelized cost. I mean, you haven't got financing costs in there, you haven't got shipping costs in there, you know, that you haven't got the cost to the other end to convert it back into hydrogen. You know, they never looked at the cracking the hydrogen out of ammonia. They didn't. That was not the vector that they they thought but I believe that the scholar Germany would need it, that's what you need to do. So all these other costs, it's an extraordinary, extraordinarily expensive form of energy, who pays who's buying it,


Chris Keefer  1:08:36  

the taxpayer, the ratepayer? Someone's making a lot of money off this in the if, if it goes through, you know, and you know, who pays I mean, one example is we have this green bond in Canada, which, you know, lumps nuclear alongside the sin stocks of gambling, tobacco farms manufacturing, but you know, it does fund some a wide range of product projects, and a lot of them that don't really seem to offer much of a return, but hey, it's just government backed debt. And this again, kind of historic misallocation. If if Canada's green bond is used to back, you know, the private investors that are going to scoop billions off of these kinds of contracts. That is that is a historic misallocation. And it's it's contradictory to doing anything about climate change, because you're for stalling effective, efficient action, namely, putting a nuclear plant on the grid, decarbonizing your grid and electrifying transportation, heating other things directly in a very efficient process, right, or what you've described. So, you know, and this, this really, you know, I'm a pretty cynical person. I've always thought that this announcement probably would never get built. But now maybe it will in terms of some of the political influence that this billionaire may or may not have. I want to be very careful not making any formal allegations of anything, may or may not have with provincial or federal politicians, but Is this a $12 billion fig leaf of virtue signaling just to justify LNG? Because, you know, when Chrystia Freeland said we're going to fast track energy and mining projects, she highlighted the Canada German hydrogen Alliance. Clearly, you know, the liberal base is quite climate concerned. And a significant portion of it will not be happy about Canada developing its fossil fuel resources, and becoming a significant LNG exporter. But clearly the real politic is such that I think that's what she meant in that announcement. And she said, we will sacrifice we will sacrifice domestic political capital to fast track energy and mining projects to help out our distressed European neighbors. And of course, my angle is well choose the very best ones, the best ones for Canada, the best ones for Europe. Nuclear is the ultimate energy security play for Europe, you can have at least two years of fuel in your reactors, you can store more on site, if you want, that reactor can be there for 80 years, right? There's reactors that Canada has half built in Romania that we could finish right away, we have things we can do right away, right, we could fill in the gap chemical, Brookfield renewable partners just acquired Westinghouse, that gives chemical the ability to make enriched fuel. And we can continue to sanction Russia and be the supplier of Europe of that fuel. Huge economic opportunity, that Romania deal that's that's CANDU technology that the US is going to pay for. Right as an as an undersea security play as a geopolitical play. This is this is a direct, enormous benefit. But instead, it looks like we're going to be doing a $12 billion, at least greenwashing exercise for Canadian LNG which let's face it, you know, it's lower carbon than coal, and I don't want my European friends freezing to death in the dark, or starving, because there's no fertilizers, you know, as a as a climate hawk. That's kind of hard for me to say, but, you know, it is there's energy realities out there. But, you know, we can and we can invest in nuclear, which is, again, the ultimate decarbonize, which will eventually, you know, in, in the kind of natural gas and nuclear progression, replace as many fossil fuels as are humanly possible to replace. And,


James Fleay  1:12:05  

well, the other thing, too, is, I also look at competitive advantage a little bit. Canada has a competitive advantage in producing nuclear fuel. Because of the price differential of gas between gas in Canada and Europe. If you build LNG plants on the Atlantic coast, you would have a competitive advantage, because you have the molecules and the Europeans don't. Okay. But but at the end of the day, like, I don't see the competitive advantage that Canada has to ship ammonia produced from wind, across the world, like the wind, the Europeans already have a lot of wind, much more than the Canadians. They are the undisputed masters of building very, very, very large offshore wind installations and tying them back to their grid. You know, I'm pretty sure if the Europeans really wanted to really wanted to produce vast amount of hydrogen, let's say from from wind, they would be able to do it more cheaply than the Canadians. I'm just putting that out there. And I hope we're wrong. I hope you know that maybe there's a case where particularly now that Juniper has been nationalized, maybe the German government are using it for more than just an electricity and gas utility. Now, maybe they are looking for ways, you know, ammonia has chemical applications, obviously, it has fertilizer applications, maybe they are looking to displace the ammonia that was previously produced by natural gas from Russia, with, you know, ammonia produced by wind from Canada for these applications. And it's got nothing to do with electricity yet,


Chris Keefer  1:13:47  

it may again, it'd be very interesting to run the numbers on it. But again, from the way you're describing this process, something like 23% efficient if you were just to make ammonia and burn it on site, you know, so with the shipping, even if it was used as fertilizer, that's going to be very, very expensive fertilizer, that's going to be you know, they could sell it Greenpeace Germany could sell it as you know, virtue signaling fertilizer and sell it at top price to, you know, maybe a rich country that could afford that, you know, pro win Vegan Gal for a win, you know, vegan fertilizer, the equivalent of their pro and vegan gas where they mix them bio methane into 99% Russian gas. But you know, like, when I look at Canada, when I look at Canada, we have like landlocked oil and gas in Alberta and Saskatchewan. I'm not sure if we have a big fertilizer industry there. You know, people talk a lot about ethical oil. It's been a way to sort of try and greenwash the tar sands, which let's face it, you know, are very energy intensive, the energy return on energy invested is not great. But there are significant gas resources in Canada. Maybe one of the most ethical things we could do with those is turn it into the things that are the hardest to replace. You know, which is things like fertilizer and maybe That would be cheaper, more abundant, and be able to assist the developing world and not starving. Especially in the next few years. I don't know. I'm, like shocked at hearing myself say this. But again, this is the kind of pragmatism which I think does achieve lower emissions. rapidly, especially, I mean, because it relies on the nuclear component. Again, I find myself, you know, I always say, my 16 year old self would probably put a hit out on my 40 year old self, if they found that I was a nuclear advocate, and my 38 year old self, and I put a hit out on my 40 year old self for saying that maybe we should be using, you know, Canadian natural gas really focused on fertilizer production, you know, which is just, yeah, okay. My four year old stuff says, yeah, obviously, we can't let people starve. We need we need to keep 4 billion people alive with haber bosch with ammonia.


James Fleay  1:15:48  

Yeah, it's, you know, I think you've had Doomberg, on your on your show before. I'm a subscriber, I read this stuff. And one of their favorite things that they quote is, there are no solutions, there's only trade offs. And we have as a, as a society as a, as a world. We have trade offs to make. And the trade offs can't be that the poorest and neediest of the 8 billion people in the world become poorer and more needy, that can't be the trade off. The trade off has to be something else. I'd also leave you with one other thing, Chris, like, just just as I was sort of finishing up this look into, you know, the range of proficiency to get electrons in the form of ammonia from Canada to Germany, I thought about where Canada does have a competitive advantage. And obviously, that's fabrication of nuclear fuel. You guys are really good at that. And so I had a bit of a look at what you could do to ship nuclear fuel. Now, admittedly, I haven't looked at uranium mining and haven't looked at fuel fabrication, energy input. I know they're relatively minor. But but they're not nothing. So I haven't looked at that. But I'm using ap 1000 as a test case, because there's it's, it's, there's lots of literature available for it. The German plans will be analogous, not exactly the same but analogous. In an AP 1000 produces 1110 megawatts nameplate capacity every 18 months, you swap out about 43% of the fuel. Okay. Some people say a third. But actually, if you're running it that hard, it's it's, you know, sort of closer to 40 42% 43 percents, the technical uppercase that I can find. So of the 157 fuel assemblies, 68 of them are being replaced every 18 months. Now you got a capacity factor of 90% with nuclear. And what that means is for every every year, every sort of every 18 months, you ship across 40% new fuel, okay, the rest of the fuel stays in there keeps making energy. That means for every shipment, you're getting 13.1 to six terawatt hours, okay. People probably scratching the head going well, how much really is that? That's about 7% of Australia's total electricity consumption from one reactor. Okay, over a year, that can be shipped in 6820 foot containers. Okay, so each fuel assembly, it's in a special travel case goes into, it fits inside a 20 foot container, you could actually put multiple, but we'll just say 20 foot. And so what does that mean? That means you could use a small ship. Alright, I mean, just like a little one that hundreds of 130 meters long and carries a about 1000 containers. That's a small ship, it would fit into any port. You know, that could ship enough energy. If you had built the reactors. It could ship 183 terawatt hours every 18 months ship. Okay, you could fuel 14 ap 1000 reactors every 18 months. Now, why am I saying this? Because it caused me to think about well, how many ships do you need to use of nuclear fuel to send the same amount of electrons from Canada to Germany? And again, I'm happy to be corrected on the calculations I've just use what's available in the literature. You know, maybe the ammonia is slightly better than what I put it out there won't be much better. But if we combine the two calculations, we find we need 1020 ammonia shipments and that's for the biggest class of ammonia ship we currently have 1020 to provide Germany with the same amount of electrons on the grid. As a single ship, small ship with with filled with fresh nuclear fuel. And so I'm not I'm not saying that we should do that, by the way. And this thing's complicating that, like Germany don't have the reactors to put the fuel in. But it should give people pause for thought that if we're talking about sending energy around the world, we really need to look at the densest, most the lowest entropy form of energy there is to ship.


Chris Keefer  1:20:33  

And what are we doing with Drax? I mean, how many? How many? Don't expect you to have that that answer? It's a rhetorical question. But again, these green solutions, quote unquote, the like bunker oil being burned, like that's the bottom of the drain, it's not quite ashphalt, right. But in terms of petroleum distillation, we're scraping the bottom of the barrel literally, for these highly sulfur rich fuels, highly polluting fuels, to send boat after boat after boat across the Atlantic, you know, idling in ports, ruining local air pollution, and no one Los Angeles has gotten better. They forced them to burn a different fuel when they're within, you know, 50 miles of the coast or something. But, I mean, this is this is just this energy literacy is driving climate, air quality and environmental own goals. I call it own goals over and over and over again. And you know, one of my big messages in Ottawa is that, you know, the federal government is at risk of losing, and I think around the world, so called progressive governments, who have their origins in labor, who used to be made up of actual people who'd worked in factories, who had engineering discipline, who understood supply chains, how the world worked. That's, that's the history of labor type parties. And now they've become, you know, those folks aren't, aren't a part of their their parties anymore, and a part of their movement. And they've been really commandeered and taken over by environmentalist organizations we have, you know, I forget her name, the one of the NRDC, former chairwoman is the official climate adviser to the Biden administration. In Canada.


Two or three of the most influential people in Canadian politics are not actually the elected politicians. It's the people who staff the prime minister's office and World Wildlife Fund. In British Columbia, one of our largest provinces, there were two candidates running in the equivalent of the Labour Party, the New Democratic Party there, one of them was disqualified. And it was because her she used to work for the Sierra Club and her previous environmental organizations and green environmental organizations in the province. One of them is called dogwood had actually paid for People's Party memberships. And it was ruled that it was unfair that, you know, these outside organizations had mobilized so many members to sign up and vote for her, you know, and there's been allegations that, you know, the her disqualification was influenced by someone with oil and gas ties, you know, I'm not saying I, you know, that this is a 100% crystal clear story, but just suffice it to say, if she had won that election, these who would have been her chief of staff, who would have been advising her what the environmental movement has done to the left, to the progressive governments around the world, even to labor. I mean, you go to some of these labor conferences, and they talk about a just transition. They're being advised by environmental organizations to do things which are entirely contrary to the interests of labor, you know, to transition fossil fuel workers to jobs and wind and solar, you know, look no further than my house of commons testimony to discover the labor dystopia or there's a great Vice News article we're going to interview the author of soon, these are difficult to organize transient low skilled jobs, which are not permanent, because there's no parking lots at a wind or solar facility. This is the kind of way that the left and labor has been, I think, really poisoned by an environmental movement, which over and over and over again, is demonstrating that they're in contrast to their stated goals and interests of reducing emissions, reducing pollution. And that's a beautiful example the number of tankers of ammonia or the number of you know, huge bunker fueled cargo ships carrying woodchips over to Drax, you know, that big biomass plant all of that being exempted from you know, carbon taxes and other environmental standards, because, hey, burning trees feels good. It's natural. It's green,


James Fleay  1:24:21  

apparently. Right. And the crazy thing is wood is wood has a lower entropy, a lower entropy source of energy than wind. So, you know, you could make the case that the Canadian to German hydrogen alliances is more of a Rube Goldberg than drugs.


Chris Keefer  1:24:43  

Alright, James, this has been really fun. I like to kind of conversational format. I think we should just have you back on and spitball. spit ball a little more. You know how I love to sort of break in with a rant every once in a while. It's been far too long. I believe you were last on April of two 2021 We will have you back again very soon, just an extraordinary breadth and depth of knowledge, engineering discipline. I mean, Emmet Penney is the one who first kind of put that on my radar. But, you know, you're a person who understands how the sausage gets made in terms of these really, you know, modern day life giving processes, which are complicated. You know, and so I thank you again, for being someone I can sort of speed dial one second decline, someone who I can speed dial across, you know, vast, vast oceans across continents and ask your opinion and we can, you know, in 24 hours schedule this this kind of, of a meeting. So, James, no, it's late for you in Australia. Thank you so much for for coming on the show. Real pleasure having you my friend.


James Fleay  1:25:53  

My pleasure, Chris. Thanks for reaching out. I look forward to next discussion whenever it is



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