A Blueprint For Canada’s Future Hydrogen Infrastructure
Often, we don’t see the infrastructure that powers our world — the vast and hidden network of pipelines, wires, supply chains and remote industrial sites that process and transport our energy are easy to overlook.
However, as Canada’s movement towards a sustainable low carbon economy gathers steam, the systems we need to support this transition, including for hydrogen, must become a greater part of the public dialogue.
It is exciting and cause for great optimism that Canada now has an opportunity to pivot its oil and gas sector into world-leading production of clean blue hydrogen. Developing a national system to support widespread hydrogen usage is an immense undertaking — one with the potential to create high-quality jobs, will stimulate our economy and attract international capital to our energy sector.
Our country is currently home to more than 840,000 kilometres of pipelines built for our traditional energy sector, along with 17 refineries and myriad other facilities that help bring our oil and gas fuels, and other petrochemical products to consumers. It took many decades to evolve and grow this infrastructure, but with high investor demand for hydrogen projects, our shift to greener power can happen on a much faster timeline.
To fully realize our ambitious national vision for a hydrogen-powered economy, Canada needs to adapt and augment our existing infrastructure to serve consumers with reliable, safe, and cost competitive low carbon energy choices by 2050, rapidly expanding our capabilities between now and then. Echoing the challenges facing conventional oil and gas, hydrogen fuel needs the creation of industrial nodes and freight distribution systems, and the capacity to reach international markets and corporate consumers.
This future hydrogen network — spanning production, transport, export and retail fueling — must become fully integrated into our economy and comparable in both ease and expense to filling up our tanks with gasoline/diesel. At this early stage in hydrogen fuel development, meeting the low cost of petroleum-based fuels appears to be a distant goal.
However, innovative ways of building hydrogen infrastructure are showing the way to a far more affordable and scalable hydrogen economy.
As discussed in Part I and Part II of this series, Canada has both natural and industrial advantages for large scale hydrogen production. Targeted as a major part of Alberta’s economic future, the provincial government has set a goal of a blue hydrogen export economy by 2040, with high volume consumer markets already developing in Asia and Europe.
This target has become embedded within Alberta’s energy policy — blue hydrogen was mentioned 44 times in the newly announced Natural Gas Vision and Strategy. Alberta’s electrical grid that will make this transition possible needs to be equally expanded and integrated with hydrogen. For both national consumption and global exports, we need a supportive infrastructure that will leverage the tremendous investment that has already gone into our oil and gas processing and distribution network and make the shift a rapid energy evolution, rather than a disruptive revolution.
One solution is that Canada’s energy future can be built into, and evolve from, our present. With several projects approved to expand our natural gas export capacity, such as the Coastal GasLink and NOVA gas pipeline system, there is an opportunity to twin these pipelines with hydrogen-capable infrastructure required to become a global exporter within 20 years. The addition of pipelines that enable the transportation of hydrogen in various forms to these existing projects would leapfrog Alberta ahead in our export potential.
With strategic modifications, our existing natural gas pipeline infrastructure might also shape part of the hydrogen grid of the future. In Germany, a project is under development by several pipeline operators, and Siemens Energy is planning to convert thousands of kilometres of existing natural gas pipelines to hydrogen transport through specialized coatings and additional compressors, with projections that the repurposed network would set the standard for low-cost hydrogen infrastructure.
“A shift toward a hydrogen-based energy system could be achieved fairly rapidly with only modest adaptations to existing transport infrastructures and hardware,” described Siemens in the report. Christoph von dem Bussche, CEO of participating natural gas company Gascade, said that the project demonstrated a relatively inexpensive and fast method for nationally transitioning to hydrogen.
For Canada’s emerging hydrogen projects, location is everything. The Transition Accelerator has identified Alberta’s Industrial Heartland, northeast of Edmonton, as the leading site in all of Canada to kick off a network of Hydrogen Nodes across the country. With ready access to low-cost natural gas and technical expertise in blue hydrogen production, the Heartland is also close to the kind of porous, deep rock formations for carbon sequestration, and salt cavern potential for hydrogen storage.
The Heartland is also proximal to both local hydrogen consumption markets and existing production, with 2250 tonnes of hydrogen per day created for fertilizer production, bitumen upgrading and oil refining. Approximately 42 per cent of the CO2 associated with producing that hydrogen is already sequestered at Shell Quest. As the push for hydrogen exports moves forward, the Heartland is ideally located for a northern pipeline route to the Pacific and a southern hydrogen pipeline route along the TMX egressing from Vancouver.
In addition to its large pipeline networks and numerous processing facilities, Alberta has another leading advantage that can be repurposed to support Canada’s hydrogen transition — our talented workforce. Home to many top global engineering and technical schools, Alberta has an abundance of highly educated and trained oil and gas workers that could, with hydrogen upskilling, help stimulate our economy with well-paid jobs in hydrogen production and transport.
While building viable and at-scale hydrogen production industry and hydrogen transmission trunkline, Canada should simultaneously focus on building domestic and export markets, including national retail infrastructure supported by its own sovereign, West-East Energy Corridor. This infrastructure will link into other projects across the country, like Quebec and Ontario’s green hydrogen produced from renewables and nuclear, and act as a massive economic stimulus and lure for international investment.
Obtaining sufficient funding is the key challenge that will determine the success of Canada’s hydrogen economy. A critical priority is to find ways of de-risking private sector investment with public support in this emerging and still-forming market.
Demand-side support — potentially in the form of long-term offtake agreements with robust consumer markets, whether internationally like Germany, or more locally with corporate buyers like domestic fertilizer plants or Amazon — would help provide the needed assurance to justify these major infrastructure investments and build out Canada’s hydrogen supply chain network.
That task is beyond the scope of any one organization or company and requires a collaborative business coalition similar to the multi-interest Hydrogen Council in Europe. Inclusive of the entire hydrogen value chain, it needs to be comprised of heads of current or potential blue hydrogen companies, including producers, distributors, pipelines and CCS (carbon capture and sequestration) companies.
This coalition also needs to include the biggest users of hydrogen like refineries, upgraders, petrochemicals, ammonia and fertilizer industry companies, along with other stakeholders like freight trucking and rail companies. Public sector engagement should include key personnel from all levels of government and Indigenous communities.
Additional focus needs to be on the digital infrastructure of the hydrogen economy, with the inclusion of advanced technologies, like blockchain and IoT, that will enable a new level of ESG performance and innovative, lower cost trading markets for carbon credits and hydrogen as a commodity.
With the new cycle of rising oil prices, oil and gas companies currently have some breathing space and revenue to fully participate in the building of the hydrogen economy, matched by federal and provincial incentives and project participation. Considering the doubling time of electric and hydrogen transportation worldwide, this may be one of the last cycles of high oil prices, so this boom cycle should be fully leveraged to support our hydrogen transition.
It is a very strategic time for oil companies to add new business units supported by these increasing oil revenues. One such business unit would be for blue hydrogen fuel production. Another necessary business unit is for carbon capture, utilization and sequestration (CCUS) which would be remarkably profitable if the $170/tCO2 carbon price by 2030 is made law. Critically, oil companies also require technology divisions to fully digitize this transition from the ground up. Sustainable business units set up for renewable power and nuclear are also conceivable.
This is an incredibly exciting time for Canada. We have an unprecedented opportunity to transform our oil and gas industry into clean energy producers, taking advantage of an energy source that will be both profitable and sustainable in the decades to come. With creative thinking and support for our strong innovation sector, our country will thrive in the pivot to a global hydrogen economy. As Charles Darwin once wrote, “It is not the strongest of the species that survives, nor the most intelligent that survives. It is the one that is most adaptable to change.”
- New Energy