September 22, 2003

REYKJAVIK--Manitoba's leadership in transportation and hydrogen production will be enhanced as Energy, Science and Technology Minister Tim Sale and Iceland Minister of Industry and Commerce Valgerður Sverrisdóttir sign a memorandum of understanding (MOU) on hydrogen development today.

"Manitoba and Iceland share many cultural and business ties as well as a common interest in renewable energy and hydrogen," said Sale. "Iceland has taken a leadership role and gained considerable profile globally in the area of hydrogen development. Today's agreement will promote greater partnerships in this area between our two jurisdictions and will enable Manitoba to build on our recently unveiled initiatives including a preliminary report on hydrogen development and a unique hybrid fuel cell bus demonstration project."

The MOU states that Manitoba and Iceland will pursue the potential for joint initiatives on hydrogen development. The two jurisdictions will also investigate the benefits of the exchange of people and information, and joint research and training initiatives, in relation to hydrogen development activities. The agreement could lead to an important mutual bridge between North American and European markets

"Manitoba and Iceland have strong cultural ties all the way back to the 1870s and share a similar focus in many fields like energy," said Valgerður. "One element of our policy is to create here in Iceland a favourable Platform for International Hydrogen Research. We in Iceland and Canada have possibilities to realize our plans for hydrogen development by using our vision, technology, opportunities, co-operation and knowledge. We have long way to go--but nothing happens without a dream, and we must have a dream for a better world."

The Government of Iceland has made public its plans for enhancing development towards a future hydrogen economy including the production of hydrogen, the use of fuel cells for transportation purposes, and the development of hydrogen related expertise and technology. Iceland has made strides to establish itself as an international leader in adoption of hydrogen including important international partnerships with companies such as Shell, Norsk Hydro and Daimler-Chrysler.

The Government of Manitoba is committed to examining and pursuing opportunities for hydrogen development through the Manitoba Hydrogen Steering Committee. In addition to today's MOU signing with Iceland, Manitoba will continue to pursue a hydrogen fuel cell transit bus project, investigate the establishment of a Hydrogen Research Centre of Expertise, investigate a stationary fuel cell demonstration project and implement a commercial electrolysis unit at the Manitoba Hydro Dorsey converter station. These initiatives and the Preliminary Hydrogen Opportunities Report will be discussed at meetings coinciding with the signing ceremonies.

The trip will connect with meetings arranged by Powering the Plains, a public-private, regional and bi-national initiative dedicated to developing energy and agricultural policies that add value to their region's economy and reduce the risk of climate change and other environmental concerns. Top government officials, industry and agriculture executives, and renewable energy and sustainable agriculture advocates from Iowa, Minnesota, North and South Dakota and Manitoba are meeting in four leading energy countries, the Netherlands, Germany, Denmark and Iceland. They are seeking energy solutions that will position their jurisdictions to prosper over the next several decades and beyond.

The delegation is focusing on the broad themes of climate change mitigation, renewable energy development and transition steps toward a hydrogen economy, meeting with key policy and business leaders in each host country. In addition, the members of the delegation hope to build relationships and lay a foundation for potential partnerships between their governments and private institutions and their counterparts abroad, and apply the lessons learned from their visit to their region.

- 30 -

BACKGROUND INFORMATION.

• Hydrogen is the simplest and most abundant element in the universe.
• Hydrogen is, however, not readily present in our environment as a pure gas (H₂).
• Hydrogen gas must be manufactured using some other hydrogen-containing material, such as for example water or hydrocarbons, a process that requires the input of energy.
• Hydrogen gas, once produced, can be stored and can used as a fuel.

• Manitoba is committed to the Kyoto Protocol to reduce greenhouse gas emissions, requiring new efficient transportation technologies and new fuels like hydrogen.
• Hydrogen represents an energy carrier that is clean, its only end product being water, and often characterized as the "ultimate fuel of the future."
• Using hydrogen could eliminate emissions of greenhouse gases and other harmful pollutants.
• Hydrogen can be produced without foreign energy imports, increasing energy security. Manitoba now imports nearly all its liquid fuels and all its natural gas.
• Hydrogen and new technologies represent economic development opportunities for Manitoba.

• Most of the excitement surrounding hydrogen for the future is due to advancements in fuel cell technologies.
• The biggest future hydrogen application is fuel cells for transportation. Initially these would power our transit buses, later on passenger cars, and eventually ships and even airplanes.
• Hydrogen can be applied to various stationary and portable power applications, as well as other non-fuel uses.
• Hydrogen can, like conventional fuel, also be still used in internal combustion engines, although with significantly lower efficiency compared to fuel cells.

• Fuel cells are electrochemical devices that convert the chemical energy of a fuel directly into electricity, without combustion.
• Fuel cells offer the potential of efficiencies that are roughly twice those of conventional internal combustion engines.

• Lack of infrastructure for delivery of hydrogen as a fuel (classic chicken and egg dilemma).
• High costs and some technical difficulties with fuel cells still need to be worked out.
• Low energy density of hydrogen storage.
• Public acceptance of hydrogen, particularly addressing safety myths.

• Manitoba’s vision is to: "Become over the next twenty years a leader in the provision of products, services and technologies that will contribute to a cleaner energy economy, particularly one based on renewable hydrogen."
• In April 2003, Manitoba released its "Preliminary Hydrogen Opportunities Report," which sets future directions on hydrogen for the province. This report reflects a series of broad-based preliminary assessments completed in 2002 to identify hydrogen-related opportunities that make sense for Manitoba, given our capabilities and advantages.
• Five Working Groups, under the auspices of the Manitoba Hydrogen Steering Committee, completed the preliminary assessments for the following five specific opportunity areas:
• Hydrogen production and movement;
• Transportation: vehicles and refuelling;
• Stationary and portable fuel cell applications;
• Research/scientific centre of excellence; and
• Non-fuel and other applications.

• The Manitoba Hydrogen Steering Committee is a broad-based group of stakeholders with direct interest or involvement in hydrogen development.
• The group includes representatives from different departments, all three levels of government, as well as utility, academic and industry representatives.

• Low-cost, renewable hydroelectricity that could ultimately be used to produce clean hydrogen.
• Bus manufacturing capabilities, with Winnipeg being the "Bus Capital" of North America.
• Refuelling system technologies as manufactured by Kraus Global.
• Research capabilities, including AECL Pinawa, universities and colleges.
• Other related manufacturing, including composite materials and electronic systems.

• Manitoba is seeking opportunities that make sense economically, offering significant probability of commercial success, and environmentally, contributing to sustainability.
• Manufacture of value-added products for hydrogen, such as fuel cell buses, hydrogen storage and fuel dispensing systems.
• Value-added knowledge about hydrogen that can be potentially sold as services.
• High-value, high-tech jobs.
• Export potential for products and services.
• Production of hydrogen that could meet our own fuel requirements.
• Electricity to produce hydrogen for external markets when they develop and are economically attractive.

• Manitoba is positioning for a future hydrogen economy, but there are significant uncertainties and competing technologies.
• Hydrogen projects that are planned and being implemented in Manitoba are staged, starting smaller and gradually building on success before any large commitments are made.

1. Hydrogen and buses. A major project announcement was made in Winnipeg on December 6, 2002, regarding the Fuel Cell Powered Hybrid Bus Initiative. The Government of Manitoba and New Flyer Industries are partners in this project, which is being led by Hydrogenics, the Mississauga-based fuel cell manufacturer, and will lead to the development of the world’s most advanced and efficient fuel cell bus. The overall budget for the project is $8 million, with non-revenue operation of the prototype bus in Winnipeg, occurring sometime around the summer of 2005. Additional bus-related opportunities are also currently under investigation.
2. Stationary fuel cell demonstration. Followup is continuing on this project involving a stationary fuel cell powered by unused byproduct hydrogen from industrial production processes.
3. Hydrogen Centre of Expertise. A detailed followup assessment is currently under way for the development of a Hydrogen Research Centre of Expertise in Manitoba, based as a starting point on the existing hydrogen research at the AECL Whiteshell Laboratories in Pinawa, as well as growing interest and capabilities at Manitoba universities and colleges.
4. Dorsey hydrogen generator. The implementation of a commercial electrolysis unit to produce hydrogen on an as-needed basis is already underway by Manitoba Hydro at its Dorsey Converter Station.
5. MOU with Iceland. Manitoba and Iceland share many cultural and business ties as well as a common interest in renewable energy and hydrogen. Iceland has already been making strides to establish itself as an international leader in adoption of hydrogen, including important international partnerships with companies such as Shell and Daimler-Chrysler. Manitoba has signed a broad Memorandum of Understanding (MOU) with the Government of Iceland on hydrogen development.

• Total potential costs depend on the specific opportunities, some of which are still being reassessed.
• Cost sharing will be important, including Manitoba, industry and particularly, the federal government.
• Given recent directions on Kyoto, the federal government has indicated significant funding will be made available for climate change activities, particularly new hydrogen-related technologies.
• The government will be working to ensure that Manitoba obtains its fair share.