Sowing the Oats for a Hydrogen Economy in Canada

June 15, 2020

CHFCA Blog | Mark Kirby

Mr. W.A.C. Bennet was a controversial figure.  A populist Social Credit premier in British Columbia, Canada in the ‘50s and ‘60s, he polarized the left and the right.  But you have to give him credit for one thing: he laid the groundwork for BC’s low-cost power grid, building massive hydro projects and transmission lines. This has benefited BC industry and consumers for decades.

Which leads me to a question for today’s politicians: who will be the W.A.C. Bennett of the hydrogen grid?

It’s a pretty appealing platform: “I commit to making $2/kg hydrogen available to every household in this great land!”  It’s achievable and frankly, it would help the average Canadian a lot more than promising a buck a beer.   Because of two things:

  1. Canadians are serious about achieving net neutral CO2 by 2050;
  2. Achieving net neutral CO2 requires hydrogen – lots of hydrogen.

How much hydrogen? Chris Reid of Ekona Power dug into some statistics[1].  Canada uses about 12,000 petajoules of energy every year and that number is growing. For a sense of scale, it’s about equivalent to 400 hydroelectric dams the size of BC’s new Site C dam (1000 MW) running flat out day and night.

And although Canada has one of the cleanest grids in the world thanks to our hydro and nuclear power, three quarters of that energy is from fossil fuels. Yikes.  We need to convert that huge and growing amount to clean alternatives: clean power, biofuels and hydrogen.  The first two can’t do it alone.  We need hydrogen to back up the clean power, to decarbonize our process industries, our gaseous heating grid and our transportation – especially the heavy applications such as buses, trains and trucks.  So how much from hydrogen?  The Hydrogen Council estimates about 20% of the total globally[2], Chris looked at available biofuel and clean dispatchable power resources in Canada, and he figures a lot more.

We can quibble about the percentage but that misses the point.

Any way you slice it, it’s a massive amount of hydrogen. And it’s essential because hydrogen is the only form of energy even remotely able to fill the chemical fuel demand after clean power and biofuels.

Will we get there?  Yes. The business case for hydrogen energy is only getting stronger and there are many companies out there eying the prize.  Investment will come.

But right now the big concerns are timeline and Canada’s leadership.  We have only 10 years to limit GHG emissions sufficiently to hold global temperature rise to 1.5 degrees. That means we better start laying the groundwork for the hydrogen grid today.  Other countries need to do it too: Korea is looking for hydrogen partners and Germany just announced 8 billion Euro in hydrogen funding. Canada has an opportunity to lead the world and benefit from the jobs, technology and investment this will generate.

We can be confident the visionary politician would have the backing of government bureaucrats.  Canada is one of the leaders of the hydrogen initiative under the international Clean Energy Ministerial[3].  Natural Resources Canada prepared the 2019 Hydrogen Pathways[4], which is a wealth of information about hydrogen and recently confirmed they are developing a national hydrogen strategy[5].

Yet, when I speak with friends and associates about the need for a hydrogen grid, they look at me like…well, imagine John D, Rockefeller lecturing Kansas farmers in the 1800’s about drilling platforms and oil refineries and pipelines.  He was probably met with something along the lines of, “But…I just want oats for my horse!”

This is where we need that visionary politician! And here’s what we need them to say and do:

  1. State loudly and clearly that hydrogen is essential and that they will ensure that Canadians enjoy the lowest-cost, low-carbon intensity in the world.
  2. Find a way to help industry put up the capital to build the hydrogen plants, pipelines, liquefiers and fueling stations needed to deliver on that promise – maybe demand guarantees, tax relief or loan guarantees.
  3. Build the demand. Government has the tools: policy, incentives, education and demonstrations. And oh yes, don’t forget export markets because every other country in the world faces the same challenge.

So, is $2/kg hydrogen achievable?   Well, we can already do that using existing SMR plus CCS technology in Alberta.  I, for one, would like to see us try to make it even cheaper. Australia just set $2-3/kg as their national target[6].  It would be very interesting to see what Canada’s energy producers and our pipeline companies could commit to…given demand.

Building demand will be easy and the products and applications are coming.  Need a zero-emission way to heat your home or your business? Or run your power boiler/kiln/combustion process?  Switch from natural gas to hydrogen. With our $2/kg hydrogen, it’s not a lot more expensive.  You can make the business decision whether it’s worth investing in electrification or energy efficiency to further lower your costs.  Either way, you’re net zero.

Maybe you’re running a trucking company. You want the reliability, torque and quiet operation of an electric vehicle, but you cannot tolerate the range and productivity concerns of battery-only vehicles. So add a fuel cell and hydrogen tank.  Now your operating costs are cheaper than diesel and you can’t afford NOT to switch to hydrogen.  Zero emission is a bonus!  Switch over your pickup too. Or your heavy equipment, or marine vessel, or, or. You see where I’m going with this. As I said earlier, it’s a winning platform.

There’re no losers here.  Oil workers can switch to producing clean hydrogen from our fossil fuel reserves and leave the carbon behind in the ground.  Clean power projects can move forward with secure demand, backup and path to market for their off-peak power as hydrogen.  Everyone can buy in from oil workers and environmentalists, to auto makers and truck drivers. As we like to say, the hydrogen economy is inclusive.

So look beyond oil and oats to who, a la Wacky Bennett, will deliver us this legacy asset that will benefit Canadians for decades.

 

[1] https://www.nrcan.gc.ca/sites/www.nrcan.gc.ca/files/energy/pdf/Energy%20Fact%20Book_2019_2020_web-resolution.pdf

[2] https://hydrogencouncil.com/wp-content/uploads/2017/11/Hydrogen-scaling-up-Hydrogen-Council.pdf

[3] http://www.cleanenergyministerial.org/initiative-clean-energy-ministerial/hydrogen-initiative

[4] https://www.nrcan.gc.ca/energy-efficiency/energy-efficiency-transportation/resource-library/2019-hydrogen-pathways-enabling-clean-growth-future-canadians/21961

[5] https://www.spglobal.com/platts/en/market-insights/latest-news/metals/060820-canada-confirms-it-is-developing-national-hydrogen-strategy

[6] https://www.csiro.au/en/Do-business/Futures/Reports/Energy-and-Resources/Hydrogen-Roadmap