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A Closer Look at Canada’s Hydrogen Future

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What is Canada’s hydrogen strategy?

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In December 2020, Prime Minister Justin Trudeau announced a carbon tax increase of $170/tonne by 2030 to fast-track the country’s Climate Action Plan and commitment to international climate agreements. This is just one of many measures Canada has taken to cut its emissions, which include the recent governmental investments of $1.5B towards a low-carbon and zero-emissions fuels fund. The project incentivizes the domestic production of low-carbon fuels, including hydrogen biofuels. 

As the government keeps on marching towards its climate goals, hydrogen is pointed out as a promising substitute for fossil fuels. But all these investments may leave many wondering how reliable a hydrogen-fueled future would be, as well as how far Canada currently is from its ambitious hydrogen goals. 

If that’s your case, you’re in the right place. This article reviews the potential of hydrogen to meet Canada’s increasing energy demand, how it could contribute to the energy transition, as well as its pros and cons.  

What is hydrogen?

The lightest gas on earth, highly flammable, and the fuel of the sun, hydrogen has many predicates, and it is now seen as an alternate fuel to conventional fossil fuels. It has three times more energy than natural gas when consumed in pure form, and it’s also a clean energy source — its burning doesn’t produce greenhouse gasses, only water.

Commercially, it can be produced through a thermal or electrolytic process. The thermal method involves treating fossil fuels with steam at high temperatures, whereas the electrolytic process involves generating hydrogen from water using electric currents. 

As the interest grows, researchers and corporations are starting to develop new ways of generating hydrogen. One of them is the solar-driven process, which is the production of hydrogen under natural sunlight. Some micro-organisms produce hydrogen in the presence or in the absence of sunlight, which has tremendous energy potential.

How hydrogen power could be used in Canada 

In late 2020, the Government of Canada released an official hydrogen strategy covering provincial developments across the country, detailing goals and explaining how hydrogen could benefit Canada’s future green economy.  

The strategy aims to achieve emission reductions by adopting hydrogen in various polluting sectors and creating domestic and international economic opportunities. The plan also targets 30% of Canada’s total energy demand through hydrogen by 2050, reducing up to 190 Mt CO2 equivalent per year.

Hydrogen is an energy-rich yet unutilized fuel in all major polluting sectors – transportation, power production, space heating, industrial production, etc. –, so there’s clearly growth potential. 

Many provinces have already laid the foundation to create opportunities in the market. British Columbia released its 2019 hydrogen study that focuses on hydrogen for transportation. 

Alberta also published a study called “Natural Gas Vision and Strategy in 2020“, which focuses on hydrogen production using natural gas and carbon capture, utilization and storage technology, and hydrogen exports. Ontario also published the Ontario Low-Carbon Hydrogen Strategy – Discussion Paper in November 2020, which covers hydrogen use for electricity storage and for blending it with natural gas. Hydro-Quebec published its Strategic Plan 2020-2024 in December 2019. The plan emphasizes R&D in hydrogen and promoting hydrogen production through hydroelectricity.

With the amount of energy generated through hydrogen, it’s possible to fuel many energy-intensive activities such as heating, transportation, manufacturing. Hydrogen can be used directly in fuel cell electric vehicles (FCEVs), which have two times the efficiency of combustion engines and zero emissions at the tailpipe. 

As hydrogen-based fuel cells are picking up across the globe, there is still limited adoption of the technology in Canada. As part of the CleanBC goal, British Columbia is working and discussing the technical and economical feasibility of introducing hydrogen as an eligible renewable gas to achieve 15% RNG in the natural gas distribution system by 2030. Hybrid heavy vehicles are also being developed to introduce hydrogen-diesel vehicles. This can cover buses, trucks, heavy equipment movement at ports.

Hydrogen as a renewable resource also finds application in the mining industry. Canada’s mining sector consumes approximately 2 billion litres of diesel on an annual basis. Rail, marine and aviation transport and energy-intensive industries can also go clean through the adoption of hydrogen fuel. 

Hydrogen for power generation is another promising sector to go clean. Existing natural gas turbines could likely operate with a blended hydrogen/natural gas fuel supply of up to 10% to 15% hydrogen by volume. While Canada’s electricity grid is considered low carbon due to hydro and nuclear power, some regions are above average and rely significantly on the combustion of fossil fuels to produce power. Alberta is one such region where hydrogen and natural gas/ petroleum blending could reduce the province’s carbon emissions.

Hydrogen can be a great substitute for fossils for industrial requirements. As a heat and energy provider, it can make industrial operations cleaner. This would especially be a great option for industries obligated under federal and provincial carbon offset regulations such as chemical industries, iron and steel production.

How the hydrogen economy could benefit Canada 

With rising awareness and the need to address the market requirements to live up to the Paris Agreement, the hydrogen economy holds untapped revenue generation both within and outside Canada. Right from power generation, to meeting the energy needs of energy-intensive industries, hydrogen can meet this ever-increasing demand much efficiently.  

Another good thing about hydrogen is the ease with which it can be shipped and stored over extended periods and can be harnessed and when required, therefore balancing demand and supply solution.

According to Natural Resources Canada (NRCan), implementing the hydrogen strategy can spark early economic recovery, lead to a $50 billion domestic hydrogen sector, and generate more than 350,000 high-paying jobs from coast to coast. Europe, Asia and the United States are the potential markets for Canada.

The main challenges for Canada’s hydrogen strategy 

While the work has started in Canada to diversify its energy sector with hydrogen, there is still a long way to go before the pilot projects can be scaled up. Largely, it is the limited investment that is holding back its uptake.

Because this is still a new fuel, its upscale is still limited by the investment and finances available. For example, NRCan says that hydrogen fuel is five times more expensive than natural gas. To make hydrogen competitive, large capital investment is required. This includes scaling up the product and marketing and improving the existing natural gas and related infrastructure.

Hydrogen can be best used as fuel cells and are at a level of commercial readiness. However, further R&D is required to make it more tailorable for different end-use applications. Advancement in technology can also lead to wider market access and subsequently, cost reductions. This also includes the right size technology, managing storage and volumes. Some testings have shown hydrogen embrittles steel and the welds used to produce natural gas pipelines.

Policy and regulations play a big role in the advancement of technology and its market creation. While many provinces in Canada have already taken a step towards creating a roadmap for hydrogen adoption, Canada is still far from policies that could ensure the active adoption of this fuel.

There are many early-stage experiments and pilot projects in Canada, but there are also gaps in existing codes and standards. Clearer guidelines, codes and standards would be the first main step of this implementation.

Another major challenge with this uptake of hydrogen is the lack of awareness. Increased awareness among the industries and investors can give the technology a favourable market chance and pace up the existing chase to become carbon neutral.

Will hydrogen become a major energy source in Canada?

With an abundance of raw material that naturally occurs in the country, Canada stands in a strong position for becoming the frontrunner of a hydrogen-based economy. Federal and provincial roadmaps and strategies have already laid the foundation for building the economy and moving towards being carbon-neutral and using fossil fuels more efficiently. 

Canada’s main hydrogen power projects

Some key pilot projects in Canada are:

Alberta Zero Emissions Truck Electrification Collaboration (AZETEC Project) – One of the first pilot projects in Canada, the project will feature two long-range fuel cell trucks for operation between Edmonton and Calgary. The fueling infrastructure for the project will be leveraging existing Oil & Gas hydrogen infrastructure. This project will test how effective hydrogen can be fueling Alberta’s busy transportation sector and is seen as a first step in exploring a potential made-in-Alberta hydrogen economy. 

Evolugen, the Canadian operating business of Brookfield Renewable, and Gazifère, have joined hands for launching a joint project of hydrogen injection in the natural gas distribution network in Quebec. The project will remove approximately 15,000 metric tons in GHG emissions per year. An estimated capacity of approximately 425,000 GJ of green hydrogen will be produced for injection into Gazifère’s natural gas distribution network, making this the first project of its kind in Canada.

Renewable Hydrogen Canada (RH2C), a British Columbia-based renewable energy company, is working towards developing its first electrolysis-based hydrogen production project. It is a joint venture among FortisBC, RH2C, and Macquarie Green Investment Group (GIG) and will feature a world-scale RH2 plant. Work is underway at national and subnational levels around the world to determine safe hydrogen injection concentrations for natural gas transmission and distribution networks. 

The Ontario Energy Board (OEB) recently gave Enbridge a nod to move forward with their project of blending natural gas and hydrogen. It is currently in the development and testing stages.

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