Good morning!
Hydrogen is the new shiny penny in the energy space. The fuel source can be harnessed from either fossil fuels or renewable energy, and the latter is being touted as the ideal way to combat climate change — hence the excitement.
But not every hydrogen molecule is created equal. Grey, black, and brown hydrogen is produced from fossil fuels, while blue hydrogen is produced from fossil fuels but with carbon capture and storage. The gold standard is green hydrogen produced from renewable energy, using a process called electrolysis.
A new report by Clean Energy Canada notes that the hydrogen energy economy could be a lifeline for Western Canada’s struggling oilpatch as they leverage their carbon capture technologies and abundance of natural gas to get ahead of their global peers. It can also be a leader in the green hydrogen space.
“According to researchers at Harvard, Canada is among a small group of countries with the highest potential for exporting clean hydrogen, thanks to a clean power system (82 per cent of Canada’s electricity grid is already non-emitting) and plenty of access to water (required for electrolysis),” wrote Merran Smith, executive director, Clean Energy Canada, in the report published this morning.
But Canada will have to move fast as some of the world’s largest economies, making up 75 per cent of global GDP, are developing and rolling out hydrogen strategies and even projects.
The European Union recently released its hydrogen strategy, which calls for 40 GW of hydrogen electrolyser capacity by 2030, apart from the construction of an import supply chain with an additional 40 GW of electrolyser capacity from outside Europe, including Ukraine and North Africa. Spain, Germany and France have also launched their own strategies, Clean Energy said.
Canada has been slow to get going, but the federal government is drafting a hydrogen strategy plan, while Alberta announced earlier this week that it aims to leverage its ample natural gas resources to develop (blue) hydrogen fuel.
“Alberta is already a leader in hydrogen production and has strong carbon capture and storage infrastructure in place. Combined with a number of projects being built across the province, Alberta has the potential to be a strong global competitor through the creation of a hydrogen economy,” according to the provincial government.
British Columbia, Ontario and Quebec have also expressed an interest in exploring hydrogen-based energy.
“As of 2017, hydrogen technology and services companies in Canada had revenues of at least $207 million and employed over 1,600 people in the country,” Clean Energy said. “It’s on this technology side of hydrogen, particularly in fuel cells, where Canada has been a global leader and exporter.”
Energy research firm Rystad Energy notes that globally 11 electrolyser projects have been proposed with a capacity of 1 gigawatt or more. But producing hydrogen energy remains a costly process, and may not secure adequate funding given that most countries remain fiscally burdened with COVID-19 costs.
“Despite the growing pipeline, we forecast less than half of this capacity (30 GW) will be operational by 2035, as developers will need to lower production costs. Government support will be required to advance projects more quickly, particularly for those developments that will be powered by costlier offshore wind,“ said Gero Farruggio, Rystad Energy’s head of renewables.
But the promise is too immense to ignore.
“Hydrogen, the first, lightest and most abundant element in the universe, could supply our energy needs, fuel our cars, heat our homes, and help to fight climate change,” Haim Israel, equity strategist at Bank of America, wrote in a recent report, estimating that it could generate US$2.5 trillion in revenues for companies and US$11 trillion of indirect infrastructure potential by 2050. “We believe we are reaching the point of harnessing the element that comprises 90 per cent of the universe, effectively and economically.”
