Canadian Transit Suppose Tank CUTRIC Riddled With Conflicts Of Curiosity

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4 weeks in the past, I didn’t know the Canadian City Transit Analysis and Innovation Consortium existed. If I’d seen point out of it, I most likely would have assumed it as an innocuous little group stuffed with nice Canadians working diligently for the great of Canadian transit. However the onion retains being peeled. As we speak’s topic is the total extent of the conflicts of curiosity that CUTRIC’s funding mannequin creates for Board members, and the way they simply preserve doing nothing about it.

As a reminder, CUTRIC is the group that did a $9 billion price workup of a three-scenario bus decarbonization examine for the Metropolis of Brampton, a fairly large suburban metropolis within the Better Toronto Space. The situations have been battery-electric solely, hydrogen-only, and a blended fleet. Oddly, regardless of the hydrogen fleet having the best prices and requiring the biggest variety of buses, the blended fleet got here in cheaper than the battery-electric fleet by a non-material $10 million {dollars}. That’s 0.1% of the projected price, therefore a rounding error.

World technique and sustainability advisor and writer and co-author of a number of books on technique and innovation Michael Raynor and I recognized $1.5 billion in unhealthy underlying assumptions and modeling failures that overpriced battery-electric buses and underpriced hydrogen buses. The report is so unhealthy that I think about it an existential menace to CUTRIC’s continued existence.

Regardless of some light steerage in an open letter to the Board from me, CUTRIC responded to criticisms with doubling down and advert hominem.

So what’s occurring?

I had already recognized some issues of their funding and Board membership. Ballard, as a big personal enterprise, pays the most important charges to affix the consortium. It additionally has a seat on the Board. Provided that Ballard has misplaced a median of $55 million yearly since 2000, a complete of $1.3 billion as of the tip of 2023, and is on observe this yr to lose cash once more, one has to marvel what they’re getting out of being a transit assume tank member and Board member. As a notice, there’s no battery producer on the Board, so why is a gasoline cell producer current?

Three pure fuel transmission and distribution companies, Fortis BC, Fortis Alberta, and Enbridge, are all members, paying the following highest tier of membership charges. Enbridge has a seat on the Board too. This appears odd. Maybe CUTRIC is a generic transit assume tank, not one centered on decarbonization?

Effectively, no. That’s a direct quote from the touchdown web page for CUTRIC, the very first thing they are saying about themselves. “Zero emission” and “decarbonized” are each current. So what are fossil gasoline corporations doing as members and as a Board member? The Enbridge consultant to the Board is presupposed to be the renewable pure fuel lead, however as I documented just lately, after 13 years of creating and bragging about its renewable pure fuel, Enbridge has managed to edge as much as 1% of its utility fuel and 0.02% of the whole transmitted fuel in North American being renewable pure fuel. That’s greenwashing scale, not decarbonization scale.

The rest that’s considerably odd? Sure, main North American bus producer New Flyer can also be a high dues-paying member and has a seat on the Board. Usually a transit tools producer being there wouldn’t be too odd, besides that New Flyer is the one producer of hydrogen buses in Canada and will get more cash for every hydrogen bus than it does for its diesel or battery-electric buses. If a Canadian metropolis buys hydrogen buses, it has to sole supply them from New Flyer. Producers love sole sourcing agreements and they’re closely discouraged in governmental procurement as a result of they’ve traditionally been rife with padding and extra by the distributors.

{That a} sole supply, non-compete vendor who will get extra per bus for hydrogen buses than battery-electric buses is on the Board of the assume tank recommending hydrogen buses must be disqualifying and grounds for investigation.

Within the open letter to the Board, I advised that they’ve a full and frank dialogue about this, as at minimal the optics have been horrendous, that they take away Enbridge and Ballard from the Board, and ring fence members with clear agendas to stop them from paying greater than primary dues to keep away from them from successfully turning CUTRIC right into a advertising and gross sales group for his or her efforts. Clearly the advice ought to have included New Flyer as effectively given its deep conflicts.

As one other notice on New Flyer, they virtually went bankrupt a few years in the past, and $200 million of governmental loans and credit from a few ranges of presidency have been used to bail them out. Their inclusion of hydrogen of their combine is a strategic blunder, as each hydrogen bus they promote implies that they possible lose three battery-electric bus gross sales to rivals like BYD. That’s as a result of their battery-electric buses are inferior as a result of lack of focus, and costlier as a result of company expenditures on a number of drives. They’re delivering costly, inferior merchandise, creating buyer ailing will and shedding market share. The mixture of monetary desperation and unhealthy technique results in good folks and companies doing unhealthy issues, so no matter their unique motivations and repute, they must be thought of a threat.

New Flyer is placing itself within the place of Quantron in Europe. It was promoting inferior battery-electric vehicles as a result of it was additionally promoting hydrogen gasoline cell vehicles. Its battery-electric vans price a 3rd greater than Daimler’s equal battery-electric van and had 40% much less vary. Transit businesses in Canada are placing themselves within the place of IKEA of Austria, which had bought the inferior Quantron battery-electric vehicles, discovered that they didn’t obtain the required vary for all deliveries, and so purchased Quantron gasoline cell vehicles. Now Quantron has, inevitably, gone out of enterprise, leaving IKEA Austria with no guarantee or components for its battery-electric or gasoline cell vehicles.

CUTRIC’s governance has struck me as odd since I first checked out its Board and membership a month or so in the past, however extra has emerged that makes all the scenario stink like takeout forgotten within the fridge for a month.

Let’s pull on the funding thread. As I famous in an earlier evaluation, Canada’s Infrastructure Fund has a sub-fund, the Zero Emissions Transit Fund (ZETF). The ZETF can pay for as much as 50% of the capital prices of a transit bus system with zero emission buses. Of their definition, “ZEBs are autos which have the potential to provide no tailpipe emissions resembling battery-electric and hydrogen gasoline cell powered autos.”

That’s clearly the results of lobbying by gamers like Enbridge, as a result of grey hydrogen created from pure fuel is zero emissions from tank to wheels (aka zero tailpipe emissions), however removed from zero emissions from effectively to wheel. The truth is, with pure fuel and hydrogen leakage alongside the worth chain, a gasoline cell bus powered by grey hydrogen is more likely to have roughly equal greenhouse fuel emissions to a diesel bus. I documented that actuality primarily based on international hydrogen leakage and international warming potential research which have emerged previously couple of years.

Inexperienced hydrogen is best, however the base assumption must be that it’s made with the identical electrical energy as will get put in battery-electric buses, and as making, storing, pumping, and utilizing hydrogen is a 3rd as environment friendly as simply placing the electrical energy into batteries, the greenhouse fuel emissions are 3 times as excessive as battery-electric. It’s probably not a win if there’s an choice of utilizing battery-electric buses as an alternative.

In different phrases, empirical proof would have led to a effectively to wheel low-carbon requirement for the ZETF, however a tank to wheel requirement was created as an alternative, and the one purpose that could possibly be there may be to assist grey hydrogen. Lobbying, not an evidence-based coverage, brought about that.

As a notice, Enbridge is the biggest quantity fuel utility in North America, an enormous pipeline agency that operates pipelines throughout Canada and could be very effectively positioned and funded as a lobbying group. As Enbridge says itself:

Lobbying

Enbridge actively participates within the political course of to assist inform the event of public insurance policies essential to our enterprise targets, our workers, our business, and different key stakeholders. Enbridge employs and engages registered lobbyists in Canada and the USA to assist its legislative and regulatory actions. These lobbyists are rigorously chosen, anticipated to behave with the best integrity and engaged solely with the approval of our senior enterprise unit authorities affairs officer or Enbridge’s senior chief accountable for Exterior Affairs in Canada and/or the USA.

I’d beforehand famous its odd and apparently energetic presence as a stakeholder in Ontario’s remarkably unhealthy hydrogen technique. It’s unlikely that both its function within the hydrogen technique or Board member in CUTRIC is taken into account lobbying, however the outcomes are the identical.

Was Enbridge instantly concerned in forming the ZETF coverage relating to tank to wheel? Maybe, maybe not. However Canada’s fossil gasoline industries relationships and revolving door with Canadian forms is well-documented. There are a lot of inside the federal government who look out for the business realizing that in lots of circumstances the business will look out for them later.

Why would a pure fuel distributor care a few hydrogen carve out within the ZETF coverage?

Enbridge is positioning itself as a key provider and enabler of hydrogen infrastructure in Canada via a number of rising initiatives. Its actions at present rely closely on grey hydrogen, which dominates the worldwide hydrogen market and is produced from pure fuel with out carbon seize. In 2021, the corporate launched a hydrogen mixing pilot challenge in Markham, Ontario, involving as much as 2% hydrogen combined with pure fuel for residential and business heating — a stepping stone towards integrating hydrogen into the nationwide vitality system.

Enbridge can also be creating electrolyzers to provide inexperienced hydrogen utilizing renewable electrical energy, working certainly one of North America’s first utility-scale power-to-gas amenities in Ontario. Moreover, it’s exploring the usage of its present pure fuel pipelines for transporting hydrogen blends or pure hydrogen in devoted strains. Whereas not but a serious hydrogen producer or distributor, Enbridge’s investments sign its intent to play a big function in Canada’s rising hydrogen financial system, whilst grey hydrogen’s emissions-intensive nature stays a degree of criticism.

Contacts inform me, for instance, that Enbridge is bidding on supplying hydrogen for Ontario hydrogen bus trials, hasn’t been formally awarded it but, however CUTRIC individuals are already saying it’s gained the contract. As a result of Enbridge is the most important fuel utility in Ontario and therefore a serious provider to municipalities, it has very shut relationships with cities.

As soon as once more, at minimal the looks of a battle of curiosity given CUTRIC is supporting Mississauga’s bus trial together with engaged on the grant software for the capital prices for the hydrogen bus trial, and did the deeply flawed Brampton examine whereas having three Board members whose companies would generate vital income from the inclusion of hydrogen within the fleet.

Up to now we’ve got a 50% capital subsidy for costlier hydrogen buses. New Flyer makes extra per bus. Ballard doesn’t make any cash except hydrogen buses are a part of the combo. Enbridge doesn’t make any cash except hydrogen is the gasoline. Three Board members of CUTRIC characterize organizations with a robust vested curiosity in pushing hydrogen into options.

As a notice, CUTRIC has 13 employees members and a Board of 15 administrators. That’s very lopsided governance. The idea that almost all don’t do a lot, leaving numerous latitude to the conflicted administrators to closely affect what goes on could be very straightforward to make, therefore the horrible optics.

However wait, there’s extra.

The ZETF recommends that transit businesses interact impartial steerage when contemplating their decarbonization pathways for his or her fleets. That’s not fairly appropriate really. It particularly entered right into a five-year relationship with CUTRIC to offer that impartial steerage and funds 80% of the price of research into transit fleet decarbonization. The one group that’s governmentally accredited is CUTRIC. Different organizations which might give — undoubtedly higher — steerage must be paid in full solely by the transit group.

the Authorities is investing $10 million via the Zero Emission Transit Fund over 5 years to permit CUTRIC to work with transit bus operators to finish planning work, and bolster readiness to transition to zero emission transit bus fleets

The federal government was lobbied to make sure fossil grey hydrogen could be thought of low-carbon for transit fleets. The federal government made CUTRIC the only real provider of research and steerage for transit businesses. Enbridge, Ballard, and New Flyer have taken over CUTRIC to push hydrogen into bus fleets.

As a reminder, the most important examine that CUTRIC has carried out to-date, with 80% of its price funded by the Canadian authorities, discovered a blended hydrogen/electrical fleet that can solely profit New Flyer, Ballard, and Enbridge was most cost-effective by $10 million, and had $1.5 billion in errors to create that end in its $9 billion price mannequin.

Governance is definitely fairly well known as an issue for the group. It’s been identified to them over and over, per contacts who shared with me over the previous 4 weeks that they’ve instructed CUTRIC this explicitly. But they don’t think about it an issue.

You do must admire the technique of whoever designed this. Nonetheless, they forgot to create the looks of lack of battle of curiosity or any cut-outs. Now it simply appears like graft, a robust disservice to transit businesses in Canada and an enormous slowdown in precise decarbonization with battery-electric buses. As soon as once more, I like to recommend to members and Board members who will not be okay with this to contemplate their choices rigorously. It will blow again on you and the organizations you characterize.