Hydrogen vs. Electric: The Battle Between Canadian Rail Companies

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Few companies get to the level of rivalry between competitors as that of Canada’s top railway companies, Canadian Pacific, and Canadian National Rail. The rivalry between these two giant companies dates back many years. Recently, the companies offered to develop zero-emission plans for locomotives. One company chose hydrogen fuel cells, while the latter came up with battery-electric.

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Image by CP Rail - Twitter

Early last year, Canadian Pacific Rail released a prototype, of the H2 OEL (Hydrogen Zero Emission Locomotive). The locomotive is believed to be a better replacement for the traditional diesel-powered engine trains.

The locomotive has been undergoing testing since the summer, a spokesperson said. CP Rail expects it will be available for revenue use by the end of 2023.

CN Rail followed suit with its battery-electric prototype. While it isn’t expected to hit the rails until mid-2024 at the earliest—with further tests required before full deployment can begin—CN Rail this electric train should provide greater performance while reducing greenhouse gas emissions.

Both companies say their products will reduce emissions compared to traditional diesel or even natural gas-powered equivalents. But it’s the potential market impact CN and CP hope to achieve from launching the new locomotives that make this standoff all the more interesting.

This past August, at the Railway 2030 Conference, a meeting held annually in Ottawa, both companies said they intended to invest $400 million each over the next three years to develop their respective alternative technologies. By the time they enter commercial use, these projects could cost hundreds of millions of dollars apiece.

CP, which operates across Canada, including some lines in western Canada, is also planning to add another 15 hydrogen-powered locomotives to replace older units along the length of its network.

While CP hasn’t yet specified where it intends to deploy the first H2 OEL, many speculate it might become part of the West Coast Express, its main intermodal train running between British Columbia’s industrial port areas and Alberta Saskatchewan’s oil centers.

Meanwhile, CN boasts a fleet of more than 3,000 locomotives, spread out among several railroads throughout Canada. Most locomotives operate on routes through Quebec and Ontario, particularly in eastern Canada.

With about 85 percent of its fleet located outside Quebec, the province provides the bulk of CN’s volume. In fact, according to figures provided by the provincial government, nearly half of CN’s total freight volumes are moved through Quebec’s network. That represents roughly 9 billion tonnes per year; if the two railways combined operations, the combined fleet would account for well over 30% of Quebec’s entire annual transit capacity.

If CN did indeed bring a significant portion of its fleet onto Québec’s tracks, it would represent a major shift in how freight moves around the province. Most notably, it would dramatically expand the scope of services offered by CP in Western Canada. The two companies currently compete for freight customers throughout the country, but most of their business takes place within the territories covered by one railroad versus the other.

But that dynamic couldn’t change overnight. As much as infrastructure costs (and the additional investment needed to build it) had shrunk since the 1990s when CN was the dominant player in passenger and freight service on railways in North America, it still costs billions of dollars to purchase a single railway car. And the cost of operating such vehicles quickly adds up.

CN has already made big investments to improve its freight capabilities during its recent ownership transition. Among them is an ongoing modernization program covering thousands of locomotives and wagons. But with CP having no plans to introduce its new rolling stock until at least 2024, this remains the only way CN will be able to keep competing with its larger counterpart.

That means the biggest game-changer will come from the railroads themselves. They need to commit to purchasing a certain amount of trains every year and stick to it, even as technology changes.

In 2016, more than 26 million railway cars were used across Canada. At the end of 2017, that number had grown to more than 28 million — representing the highest activity level in decades. “The railways must continue to invest in new technologies and equipment to meet growing demand,” said Marc Laviolette, president of Railway Association of Canada. “We can expect railways to increase purchases of locomotive power and new electric vehicle fleets, including freight-hauling locomotives.”

So far, the major players appear to be following the same path. Both CP and CN have recently introduced battery-electric locomotives in pilot programs, while Ottawa’s Via Rail tests a hydrogen generator train. Meanwhile, Bombardier Transportation is developing a plan to convert its existing diesel fleet to electricity and working on battery-powered coaches.

Yet as these efforts gain momentum, the real question is whether any of them will prove successful enough to alter the landscape fundamentally. If so, how long before the next generation?

Cost and competing for zero-emission technologies

The cost of producing an EV remains the biggest hurdle facing hydrogen fuel cell technology. Fuel cells require specialized materials like platinum catalysts, which account for about 10 percent of the total manufacturing cost per unit. In addition, producing large quantities of hydrogen requires expensive and complicated technology. All told, the cost associated with making hydrogen could rise 25-30 percent once producers scale up their operations.
However, the two Canadian giant train companies are not giving up as they electrify Canada’s railway grid.
According to John Grayling, vice president of strategy and planning at Union Pacific, the company is currently buying about 500 horsepower of electric locomotives yearly. He says his company expects its annual energy use to double over the next five years and reach almost 1 billion kilowatt-hours by 2023. In addition to switching to electric, UP is looking into other forms of propulsion, such as solar and hybrid batteries. These are all ways to reduce operational costs and ensure all those freight trains get where they need to go.
Meanwhile, the CNR hopes that its partnership with Hydrogenics Inc., a company specializing in the chemical processing of natural gas into hydrogen, will lead to better prices for hydrogen fuel cell-powered vehicles.

Hydrogen vs. Electric: The Battle Between Canadian Rail Companies

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