Canada Must Act Urgently On Hydrogen Plan
Editor’s Note: This is Part II of our series “A Roadmap To Our Emerging Hydrogen Economy.” Part I of the series is available by clicking this link.
The world is moving quickly towards a low carbon future that has the power to transform Canada’s energy economy, but the country needs to act quickly if it is going to benefit from this shift.
In 2019, a historic shipment arrived in Japan from Brunei’s port of Dar es Salaam. It may have been just a small high-pressure vessel, but the world’s first international transport of pure liquid hydrogen fuel was a sign that when it comes to clean energy, the future had arrived.
Going forward, hydrogen shipments at scale between Japan and producers like Brunei and Australia will use Kawasaki’s immense Suiso Frontier, a carrier capable of holding 1,250 cubic metres of hyper-cooled liquid hydrogen. One of the first countries to have built out a comprehensive roadmap to national hydrogen adoption, it’s not surprising that Japan is leading the world in developing the infrastructure for an international commercial market.
“Given growing momentum in actions taken by many countries toward wider use of hydrogen, we have come to share a common understanding that hydrogen is an essential element for decarbonisation,” said Japan’s Industry Minister Hiroshi Kajiyama, as he announced his country’s 2030 target for a robust hydrogen fuel supply chain.
In just 10 years, Japan intends to be an annual importer of 300,000 tonnes of hydrogen for fuel — and at a cost that competes with traditional hydrocarbon energy sources like LNG. Since this import target was first announced in 2017, other regions around the world have followed suit with their own ambitious goals for a hydrogen transition, and funding to back them up.
Over the next decade, the EU’s European Green Deal has earmarked EUR $1 trillion in funding to create the infrastructure and production systems for moving to a hydrogen powered economy. Across Asia-Pacific, massive amounts of capital are moving into hydrogen fuel at all levels of the value chain — including consumer adoption. According to the International Energy Agency (IEA), manufacturers in countries like China, Japan and Korea are rapidly accelerating a global shift towards the adoption of hydrogen fuel cell vehicles.
In our world’s movement towards clean energy, this end consumer is the key — 70 per cent of global oil production goes towards fueling transportation vehicles. In Alberta, this number is closer to 76 per cent of every bbl of oil produced. We may look at our streets in Canada as a sea of internal combustion engines, but this will change faster than we can imagine, and it’s a transition where we can’t afford to be left behind.
Where does Canada stand now? Nationally, we’re still in the development phase of a hydrogen strategy, a plan that was just announced in 2019 as part of our push to meet net-zero carbon emissions by 2050. In 2020, Alberta announced its first target towards hydrogen production as part of its Natural Gas Vision and Strategy — to become a global exporter of clean hydrogen by 2040.
“The potential for hydrogen is huge,” said Premier Jason Kenney. “Putting Alberta on the global hydrogen map now, as this energy source is beginning to gain prominence, will be crucial for us to be at the forefront of future changes in energy.”
It’s a positive sign that Canada, especially our petroleum-producing West, is demonstrating a commitment to emissions-free hydrogen, and showing the world that we’re taking an active role in the global energy transition. However, Alberta’s 2040 target for exports isn’t ambitious enough for us to maintain relevance — not when the rest of the world is operating on a 2030 timeline, and the first international clean hydrogen shipment has already happened.
There is no reason for Alberta — and Canada — to be a decade or more behind the rest of the world’s hydrogen transition and miss out on a global market for liquid hydrogen predicted to reach more than $50 billion by 2027. It will take a strategic vision, public and private sector commitment, and significant funding, but Canada has unique advantages that, if used properly, will allow us to leapfrog ahead into this prosperous, sustainable new energy economy.
We already produce each colour in the hydrogen spectrum — green, grey and blue, each variant coded to represent its source and impact — and in each case, our production methods are already some of the lowest-cost in the world.
At just one per cent of the total hydrogen produced, green hydrogen is comparatively rare, and produced from water electrolysis powered by renewable electricity sources like geothermal, solar and wind. Green hydrogen production is clustered towards the centre of Canada, with major projects in Manitoba, Ontario and Quebec using some of the lowest-cost green hydrogen production methods in the world.
So far, the most common form of hydrogen production is grey — about 95 per cent of the world’s total. Found in Canada’s hydrocarbon-rich West, 80 per cent of our produced grey hydrogen is used for refining and upgrading crude oil. The hidden, high-emissions environmental cost behind most current hydrogen-powered vehicles, grey hydrogen can be regarded as a temporary, transitional solution as we move towards greater sustainability.
Blue hydrogen holds the most promise for Canada — and for the economic survival of our beleaguered oil and gas sector — as we evolve towards a large-scale hydrogen energy economy. Created from the same steam methane reformation process as grey hydrogen, it has a key difference — rather than releasing CO2 into the air, the emissions are captured and safely injected two kilometres or more underground, where they will remain permanently.
One of our key advantages, the depleted natural gas basins and porous rock formations found all across Canada, from the Western Sedimentary Basin to Hudson’s Bay and the coast of Labrador, mean we can sequester massive amounts of CO2, enough to make a significant impact on global emissions. This technology has already been advanced by our conventional oil and gas industry, our premier example being the Shell Quest Project taking one million tonnes of CO2/year from Canadian Natural Resources Limited and Royal Dutch Shell plc operations.
This happy confluence of factors — an abundance of natural gas resources, existing large-scale grey hydrogen production, and the ability to sequester mass amounts of CO2 — all mean that Canada’s existing blue hydrogen production is some of the lowest-cost in the world, ranking above only Russia. Importantly, we also have an essential resource in our skilled, underemployed oil and gas talent, which, through investment in hydrogen upskilling, will give Canada one of the world’s largest labour forces in hydrogen production.
Globally, oil and gas industry majors are already seeing the opportunity to leverage existing infrastructure and natural gas production towards blue hydrogen. In August 2020, Norwegian energy giant Equinor announced plans to explore the development of the world’s largest blue hydrogen generation plant, to be located in Hull, England. Scheduled for final approvals in 2023, the Hydrogen to Humber Saltend project would pipe its hydrogen’s CO2 by-product into an offshore depleted natural gas reservoir deep beneath the North Sea.
Canada’s energy sector has the potential to be more than just a large-scale blue hydrogen producer. It also has the expertise to become a pioneer in using technology to meet the highest global emissions standards. Through the use of emerging emissions monitoring and tracking technologies, including advanced IoT sensors and automated, immutable blockchain applications, Western Canada can build a national brand around offering hydrogen with a verified emissions status.
From Asia-Pacific and Europe to our own national energy market, Canada’s roadmap to a hydrogen-powered energy economy has many destinations. With our national talent, energy resources and geological advantages, it doesn’t have to take us until 2040 to reach them.
However, we need top-down commitment, incentives and capital to support our industry transition, and most importantly, a strong sense of urgency — because these markets already exist, and the world won’t wait another 20 years for us to catch up.
A Roadmap to Our Emerging Hydrogen Economy: Part III will discuss how Canada can create a transitional energy infrastructure for hydrogen transport, distribution and exports.