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Ottawa and Alberta collaborating to accelerate development of Canada's hydrogen economy

Mark Lowey
June 24, 2020

Momentum is growing among governments, industry, researchers and innovators to build a transformative and clean hydrogen economy in Canada.

The federal government along with the provincial and municipal governments in Alberta are all participating in an initiative to produce, distribute and use zero-emission hydrogen fuel, starting with heavy-duty freight transportation in Alberta’s Industrial Heartland in the Greater Edmonton area.

Proponents hope to persuade the Liberal government to make a significant investment in hydrogen infrastructure, to spur Canada’s post-COVID economic recovery.

“We certainly are anticipating that the federal government will see this as a significant national opportunity to invest in,” Bruce Lourie, president of the Ivey Foundation and chair of the Transition Accelerator, told Research Money. The Transition Accelerator is an independent, pan-Canadian organization working with stakeholders to implement “transition pathways” to a sustainable future, including a hydrogen-based economy.

“To make this [transition to hydrogen] successful, it needs to be thought of as a national strategy pulling together the best kind of thinking, from manufacturing to technology to electricity supply to infrastructure skills, that we have across this country,” Lourie said.

Natural Resources Canada (NRCan) is collaborating with The Transition Accelerator, along with other federal departments, governments at all levels, the private sector, and academia to inform the development of a hydrogen strategy for Canada.

This is about an infrastructure investment that would put us on a track to win environmentally, by decarbonizing domestically and also internationally, by providing zero-emission fuel to the rest of the world. And through that we would win economically.” - Dan Wicklum, CEO, The Transition Accelerator

NRCan’s 2019 report, Hydrogen Pathways: Enabling a Clean Growth Future for Canadians, recommended investing in demonstration and pilot projects and encouraging the coordinated buildout of hydrogen refuelling infrastructure.

“Leading countries around the world are proactively investing in research, development, and demonstration, as well as hydrogen and fuel cell deployments, so as to gain environmental benefits, diversify energy use, enhance energy security, and position their domestic manufacturers for maximum economic advantage,” said the report.

NRCan has since commissioned a comprehensive national strategy on hydrogen, expected by the end of this summer. The department also is leading a report to identify critical R&D gaps in the hydrogen innovation value chain.

“This report is now being leveraged to develop high-level research plans at various federal labs,” Austin Beaton, communications advisor for NRCan, said in an email to Research Money “We are seeking to identify opportunities to leverage Canada’s world-leading industry for clean hydrogen production and optimal end-use across the economy, in the short, medium, and longer term, while also identifying export market growth potential for Canadian clean hydrogen, as well as hydrogen and fuel cell technologies and services.”

Beaton noted that the federal government has committed $96.4 million over six years to the Electric Vehicle and Alternative Fuel Infrastructure Deployment Initiative, including for eight hydrogen refuelling stations in major cities. Funding for hydrogen infrastructure also is available through the $130-million Zero Emission Vehicle Infrastructure Program.

But Canada is falling behind other countries’ hydrogen investments, Lourie said. “We need to create a policy environment, and then put money into the infrastructure, as in storage infrastructure, pipeline infrastructure.” He is a member of the Task Force for a Resilient Recovery, a group of 14 high-profile finance, policy and sustainability leaders who’ll be making recommendations to Ottawa by summer’s end on building a low-carbon and resilient economy.

Alberta seen as “lynchpin” of a hydrogen economy

The Alberta government also is working on a hydrogen strategy as part of a larger “vision” — to be released in July — to diversify the province’s natural gas industry.

“Alberta has the opportunity to push for major economic growth through the development of a hydrogen economy,” Dale Nally, Alberta’s associate minister of natural gas and electricity, said in an interview. “There’s no doubt this is going to create jobs for Albertans, as well as increase the world’s options for low-carbon, low-emission energy.”

Building a hydrogen economy presents a rare opportunity for the federal Liberals and Alberta’s UCP government to work together on a shared initiative, proponents told Research Money. It also would help the federal government toward its climate goal of reaching net-zero greenhouse gas emissions by 2050.

“The hydrogen Alberta produces could just move to a whole new market of fuels and displace fossil fuels like diesel fuel, perhaps even displace natural gas in space heating and displace coal in steel production.” - David Layzell, The University of Calgary

In May, the Transition Accelerator launched the Industrial Heartland Hydrogen Task Force, which includes three federal and three provincial departments represented at the senior level, as advisors. Task force leaders, supported by an analytical team and advisors, are the mayors of Edmonton and Fort Saskatchewan and the greater municipal region’s leaders. The group will produce a report in July detailing the approach and steps needed to advance a zero-emission hydrogen economy in the Industrial Heartland region.

Alberta also has the $15-million Alberta Zero Emissions Truck Electrification Collaboration (AZETEC) pilot project, led by the Alberta Motor Transport Association. Two hydrogen fuel cell-electric heavy-duty trucks are being built to haul freight between Edmonton and Calgary. AZETEC received $7.5 million from Emissions Reduction Alberta with matching funds from industry and other partners.

Over the last decade, the economic opportunity for hydrogen fuel cell vehicles has shifted to heavy-duty trucks, buses and trains, which consume much more hydrogen fuel than smaller vehicles, said David Layzell, professor and director of the Canadian Energy Systems Analysis Research initiative at the University of Calgary and a research director at the Transition Accelerator.

Alberta has several competitive advantages that make it the “lynchpin” for Canada’s hydrogen economy, Layzell said. The province’s natural gas is upgraded to make about 3,300 tonnes per day of hydrogen, now used to make synthetic crude oil and as a chemicals feedstock, he said.

In addition, the Transition Accelerator’s research shows Alberta can economically achieve the infrastructure scale needed by making “blue hydrogen,” which involves capturing and storing the carbon underground. Alberta, already among the world’s lowest-cost hydrogen producers, can make blue hydrogen for about one-half the cost of “green hydrogen” made from hydroelectricity and other renewable energy sources, Layzell said.

Alberta is one of North America’s biggest suppliers of transportation fuels, Layzell noted. “The hydrogen Alberta produces could just move to a whole new market of fuels and displace fossil fuels like diesel fuel, perhaps even displace natural gas in space heating and displace coal in steel production.”

John Zhou, vice-president, clean resources at Alberta Innovates, said Alberta also is a global leader in deploying carbon capture and storage technology. The province has the world’s largest carbon dioxide pipeline, which starts at the Industrial Heartland and can transport CO2 to central Alberta for geological sequestration or use in enhanced oil recovery, Zhou said.

“We have a lot of the pieces to have some success around the Industrial Heartland with hydrogen,” agreed Jackie Forrest, vice-president of energy research at ARC Financial Corp. However, a major challenge will be achieving a large-enough scale, she said. “You need a lot of vehicles that consume hydrogen, but you don’t get them if you don’t have the infrastructure.” To ensure a reliable supply of hydrogen fuel, significant infrastructure investment will be needed.

Even with that challenge, there’s also an opportunity for the Industrial Heartland’s concentration of oil refineries and petrochemical plants to use more zero-emission hydrogen instead of natural gas to produce the heat required by their chemical processes, Forrest said.

Speaking in a webinar presented by Calgary-based ARC Energy Research Institute, Natural Resources Minister Seamus O’Regan discussed The Transition Accelerator. “That’s making headway in ramping up our ability to embrace hydrogen as a fuel source. We’re going to have a hydrogen strategy that we’re going to be introducing this summer.”

He also mentioned how hard former Alberta Premier Peter Lougheed and others in Alberta worked to create the oilsands industry, when “tonnes of people” were skeptical about it as a technology. “Hydrogen I think is going to feature prominently in clean energy, I don’t think there’s any question about it, in areas like freight transportation [and] high-heat industrial processes."

B.C. and Quebec ramping up hydrogen initiatives

British Columbia, home to fuel cell technology pioneer Ballard Power Inc., already has a well-developed hydrogen fuel cell sector, said Jeff Grant, principal at Zen and the Art of Clean Energy Solutions. The Vancouver-based consulting firm led a 2019 hydrogen study, sponsored by B.C. Ministry of Energy, Mines and Petroleum Resources, FortisBC and the BC Bioenergy Network. The study recommended the B.C. government invest $176 million over the next five years, leveraged with matching federal and industry funding, to fund critical infrastructure and support pilot projects and dedicated R&D.

Like Alberta, B.C. has ample natural gas and the right geology to produce blue hydrogen, Grant said. B.C. also has abundant hydroelectricity for making green hydrogen via electrolysis of water. With low-carbon fuel regulation credits that support new hydrogen infrastructure, the province has seven hydrogen refueling stations operating or under construction – the most in Canada.

The technological problems of producing, distributing and using hydrogen fuel have all been solved over the last three decades, Grant noted. “Now it’s more about the finances and reducing the financial risk. Someone has to take the first step, some risk. And that’s where government can get involved and help decrease some of that risk.”

Quebec produces surplus hydroelectricity that could be used to make green hydrogen, said Jacques Roy, professor of logistics and operations management at HEC Montréal and co-author (with Marie Demers) of a study on hydrogen, done for the Hydrogène Québec coalition.

Quebec has one hydrogen refuelling station in Quebec City and a second station being built in the Montreal-Quebec City corridor. In addition, Greenfield Global Inc. and Hy2Gen Canada plan to build an industrial-scale green hydrogen production facility in Varennes, Quebec.

However, Roy said his study found that building a hydrogen economy in other places, such as California, China, Japan and Germany, depended on initial federal and regional government investment in infrastructure and R&D. “Another feature I’ve seen in all of those countries that are successful is there’s always a coalition that has been set up to promote the use of hydrogen,” Roy said.

The Transition Accelerator is building this “coalition of the willing,” CEO Dan Wicklum told Research Money. “This is about an infrastructure investment that would put us on a track to win environmentally, by decarbonizing domestically and also internationally, by providing zero-emission fuel to the rest of the world. And through that we would win economically.”

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