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May 3 2022

Alberta's hydrogen potential

There is no place better suited for a hydrogen economy than Canada. We have the reserves and preliminary infrastructure in place. We are strategically located for export markets. We have a strong environmental track record and exemplary humanitarian rights standards. We have the ingenuity and talent to be a global leader for decades to come. But we need to get moving, and fast.

This was made clear at last week’s inaugural Canadian Hydrogen Convention, where hundreds of entrepreneurs, business leaders, and academics – representing over 20 countries – came together to discuss the future of Canadian hydrogen. The event was lined with expert panellists, and filled with announcements of new funding, emerging projects, and exciting partnerships.

It was obvious to all in attendance that the enthusiasm around hydrogen is reverberating across the province. But why all the excitement?

Hydrogen 101

Hydrogen can then be used in fuel cells to generate electricity, power, and heat – and has countless industrial applications to lower emissions. It offers the ability to fuel transportation and power generation systems, heat industrial and residential buildings, and can be used as feedstock for heavy industry such as steel and cement making; ultimately, displacing higher emitting fuels like diesel and natural gas.

In short, Alberta’s geology, energy expertise, and favourable regulatory environment presents a multi-billion-dollar opportunity for hydrogen to lower greenhouse gas emissions across the economy, while ensuring Alberta remains an energy powerhouse.

How it works

Hydrogen can be produced using several methods – the most common being electrolysis and natural gas reforming. In Alberta, the abundance of natural gas, combined with the potential for Carbon Capture and Storage (CCS), makes natural gas reforming an easy fit within our existing energy systems.

Put simply, natural gas reforming entails applying high-temperature steam, combined with a catalyst such as nickel, to natural gas. The result? Carbon monoxide, small amounts of carbon dioxide and hydrogen. Paired with CCS – the process of capturing, transporting and injecting carbon dioxide into a secure underground geological formation – natural gas reforming creates a versatile low-emissions energy carrier.

The opportunity

Hydrogen presents a unique opportunity for Alberta’s energy economy as it promotes decarbonatization across a variety of industries – not just the energy sector. The broad applicability of hydrogen creates the potential to abate up to 190 megatonnes of carbon dioxide equivalent (Mt CO2e) annually by 2050 across sectors, while adding 350,000 jobs and generating over $50 billion in GDP for Canada. For context, Canada’s total national greenhouse gas emissions in 2019 were 730 Mt CO2e, meaning hydrogen alone has the potential to reduce emissions by 26 per cent, helping us achieve our 2030 emissions reduction targets in the near-term.

The recent Convention featured a broad spectrum of organizations across the transportation, construction, manufacturing, and aviation industries, all working collaboratively to lower their carbon footprint across the value chain.

Panellists enthusiastically discussed the opportunities ahead, such as the Calgary Airport – Banff Rail project, which plans to use hydrogen to fuel its locomotives, helping Banff to reach its goal of Net-Zero by 2035. TC Energy and Nikola Motors announced a new Hydrogen Production Hub just north of Calgary, where hydrogen-fueled trucks will become part of the daily transport mix, navigating goods across North America with zero emissions. ATCO detailed its hydrogen blending distribution system, which reduces the carbon intensity of home heating, and showcases the technology as not just an alternative of the future, but as a technology that’s available now.

Together, these projects demonstrate industry commitment and set us on a strong path to decarbonize our footprint safely, timely and economically. The need for alternative fuels has become even more imperative given the ongoing atrocities being committed in Ukraine by the Russian government. Europe is now fervently searching for new sources of reliable, secure, and responsibly produced energy, and it was argued by several delegates that Canada not only has the ability to provide this energy, but also the moral obligation to do so.

Challenges ahead

The Hydrogen Strategy for Canada and the Alberta Hydrogen Roadmap have created a strong foundation upon which to build. The federal government's newly announced 30 per cent investment tax credit and the provincial government's commitment of $50 million for a Hydrogen Centre of Excellence further showcase a desire to generate development. While these investments are critical, several challenges remain:

To mitigate these challenges, Canada must act now, or risk being left behind. This was made clear at the Convention by the international delegates from Japan, France, Norway, Austria, and UAE, among other nations in attendance, that are racing to develop their hydrogen economies to be ‘the’ global leader in a rapidly emerging sector.

What next? 

“If we build it, they will come” – a phrase commonly heard throughout the Convention, referencing the need to encourage increased domestic demand to promote scalability. So, we need to get building. We must stop talking about hydrogen and its potential and start putting plans into action.

To do so, we need the private sector and all levels of government -- across the country -- to work together to incent demand, both domestically and internationally, to advance projects forward. This must involve:

Working with the private sector to create clarity and policy certainty related to hydrogen, including Clean Fuel Regulations, carbon pricing, GHG Offset Systems, medium-and heavy-duty regulations, and others outlined in the 2030 Emissions Reduction Plan.

Stimulating demand through stackable investment tax credits at provincial and federal levels.

Promoting collaboration along the value chain by incenting industry to work together to share technologies that encourage hydrogen adoption.

Incenting the immediate construction of large-scale CCS projects.

Implementing cross-border offset certifications and credits.

Investing in talent attraction and re-skilling in the hydrogen space at post-secondaries.

Thoughtful policy, coupled with the right incentives, will accelerate hydrogen production and consumption, and help realize the potential for Alberta’s hydrogen economy. While these recommendations will require careful attention as governments continue to pursue their ambitious climate goals, they are necessary to ensure hydrogen is part of Canada’s energy future and helps us meet our net-zero goals.