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Hydrogen strategy falls flat
Government offers mere C$1.5 billion to stimulate investment in hydrogen lands; critic says Canada lags behind 20 rival countries
Gary Park for Petroleum News
The goals are high flying: A gain of 350,000 jobs over 30 year, a lowering of Canada’s carbon emissions by 45 million metric tons a year by 2030 and a combination of public and private investment of C$5 billion to C$7 billion over the next five years.
Those are three visions laid out in a 104-page Hydrogen Strategy for Canada unveiled by the federal government on Dec. 16, which one observer said could have been covered in four pages.
But it’s unclear whether the government believes as strongly in its claims as it does in its argument that hydrogen could underpin a domestic market of C$50 billion a year and produce a clean-burning fuel that Natural Resources Minister Seamus O’Regan estimates could meet 30% of Canada’s energy needs by 2050.
For many observers the long-touted plan amounted to someone pouring water on a fireworks display - lots of fizzing and spluttering, but not enough details to represent a commitment.
Regional hubs Among its vague ideas, the government proposes to establish several regional hubs across Canada in areas where expertise in hydrogen already exists - in other words a potential vote-catching move beyond the core natural gas supplies that would underpin the industry.
The hubs would be located in British Columbia, Ontario, Quebec and the Atlantic region which have ports that could become export outlets for hydrogen, and at the high-traffic corridor on the Windsor, Ontario-Detroit border crossing - the busiest between Canada and the U.S. - where hydrogen could meet fuel demands for heavy equipment and transport.
Despite all O’Regan’s grand declarations that “hydrogen’s moment has come” and that Canada is ready to harness the global momentum powering demand for hydrogen - which one study quoted in the strategy estimated hydrogen energy could become a C$12 trillion industry by 2050 - the government offer to stimulate spending amounted to a mere C$1.5 billion from its Low Carbon and Zero Emissions Fund, fueled by carbon taxes.
“Spread across all technologies, that’s not a large investment compared with other jurisdictions,” said Simon Dyer, deputy executive director at the Alberta-based think-tank Pembina Institute.
However, he expected intense competition for the money, which would ensure that only the best projects were funded.
The government said that “while the sector must ultimately be self-sustaining, temporary support is needed in the next five to 10 years to attract and de-risk industry investment.”
That includes spending on infrastructure, such as gas pipelines and subsidies to persuade industrial and transport sectors to pivot to hydrogen, while rail, aviation, mining, oil refining and ammonia and steel production are all identified as industries that could use the gas to help lower carbon output.
“Ultimately, the market will decide where best to deploy hydrogen once greater supply becomes available in Canada,” said the strategy. “The two big drivers will be cost competitiveness compared to alternative energy sources that can serve each end-use, and decarbonization potential which will ultimately be linked to the economics as carbon pollution pricing reflects the true price of emissions.”
The Alberta government offered only a subdued response, with Energy Minister Sonya Savage suggesting the strategy will rely heavily on “our natural resource production and emissions reduction technology.”
Canada’s Environment and Climate Change Minister Jonathan Wilkinson, seen as an equal partner with O’Regan in crafting the strategy, said that as countries around the world strive for net-zero greenhouse gas emissions by 2050, Canada is “well positioned to be among the global leaders on hydrogen production (which could) put Canada on a path to exceeding our 2030 Paris (climate change) Agreement target.”
On the environment front, the document notes that the European Commission is already creating a measurement system that takes into account the total GHG emissions associated with hydrogen so that clean produces can be granted a certification.
The next goal for Canada in its so-called “call for action” is to work on developing and adopting national definitions and standards for “clean” hydrogen based on carbon intensity thresholds.
It starts down the road far behind 20 countries around the world that have developed their own hydrogen strategies, many of which have spent or earmarked billions of dollars to accelerate hydrogen technologies within their borders.
British Columbia success story So far, one of the few success stories in Canada is British Columbia’s hydrogen fuel cell manufacturer Ballard Power Systems, which has accumulated more than 1,400 patents and patent applications, with annual revenue of more than US$100 million from sales of its fuel cell stacks that are used in thousands of buses, trucks and warehouse forklifts around the world.
The strategy has pinpointed several transport, power generation and industrial sites that could become regional project hubs over the next five years, including Alberta’s Industrial Heartland near Edmonton, which already has access to plentiful supplies of natural gas and carbon capture and storage facilities.
One issue the strategy seems destined to stir up is the emerging debate led by environmental groups who argue that promoting “blue” hydrogen, derived from natural gas, with resulting carbon emissions trapped carbon capture and storage technologies, would amount to subsidies for the oil and gas sector. A group of environmental and non-profit groups recently urged the federal government instead to focus on greener options.
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