On November 5, 2021, the Government of Alberta released its awaited Alberta Hydrogen Roadmap (the "Roadmap") which sets out the plan for Alberta to become a leader in the emerging hydrogen economy. The plan comes on the heels of the Federal Hydrogen Strategy and B.C. Hydrogen Strategy, which were released in December 2020 and July 2021, respectively, and Alberta's Natural Gas Vision and Strategy which was released on October 6, 2020.
Emphasis on the hydrogen economy is growing globally as economies attempt to accelerate the transition to clean energy in furtherance of global emission mandates. The Roadmap affirms Alberta's strong position to participate in a global clean energy transition and retain the long term competitive advantage of its natural resources.
For in-depth explanation of the different types of hydrogen production, targeted industries and an overview of the Canadian hydrogen economy, see earlier McCarthy Tétrault blog posts here, here, here, and here.
The Roadmap has been developed based on advice and input from municipalities, industry, academia, indigenous organizations, and non-governmental organizations to outline seven key policy pillars to achieve its plans:
- Build new market demand;
- Enable Carbon Capture, Utilization and Storage (CCUS);
- De-risk investment and improve access to capital;
- Activate technology and innovation;
- Ensure regulatory efficiency, codes, and standards to drive safety;
- Lead the way and build alliances; and,
- Pursue hydrogen exports.
The first phase of implementing the Roadmap focuses on establishing policy, investing in technology to reduce the carbon intensity of hydrogen production and accelerating commercialization across the supply chain. The second phase will focus on growth and achieving scale through improved technologies and commercialization.
The Roadmap outlines several short and long term actions in furtherance of each of the seven key policy pillars. These include:
- Supporting hydrogen blending in the utility market by amending the Gas Utilities Act and Gas Distribution Act;
- Advancing CCUS hubs and improving the economics of CCUS;
- Supporting clean hydrogen production through the Alberta Petrochemicals Incentive Program;
- Support hydrogen technology and innovation throughout the value chain by establishing a Clean Hydrogen Centre of Excellence and hydrogen feasibility studies;
- Support the development of national and provincial codes and standards;
- Coordinate the development of hydrogen hubs and partnerships across the province; and
- Pursue international market access by establishing a clean energy corridor with connection through British Columbia and other jurisdictions.
Based on the Roadmap it is clear that Alberta is committed to moving forward - and rather quickly - in order to capture a significant amount of the hydrogen economy in Canada.
Why Alberta has a Competitive Advantage
Alberta has significant competitive advantages that will help support the growth of Canada's hydrogen economy and thereby support the global transition to clean energy. Alberta already produces the most hydrogen of any province in Canada, approximately 2.4 million tonnes per year that are primarily used in various industrial applications. This experience will enable Alberta to scale hydrogen production quickly and efficiently.
Currently, hydrogen is predominantly produced from fossil fuels such as natural gas, which is in abundant supply in Canada, and particularly in Alberta. With more than 60% of Canada's natural gas production, Alberta has the potential to be one of the world's lowest cost producers of hydrogen. This provides Alberta with the opportunity to leverage existing infrastructure, natural gas reserves, and expertise to lead Canada into the global hydrogen economy.
CCUS is an integral piece of the development of clean hydrogen. Due to its geology and focus on emissions reduction in the oil and gas industry, Alberta also has a robust and established regulatory and risk management framework in place for large-scale CCUS which has already supported the development of two world-scale commercial CCUS projects for large industrial emitters in the Province.
As the home to Canada's energy industry, Alberta is poised to be a major player in the hydrogen economy by leveraging its existing history of expertise and its infrastructure. The Roadmap also makes it clear that the Government of Alberta is committed to providing investment certainty and flexibility for investors in order to make Alberta as the "most attractive and welcoming investment destination in North America". In an effort to attract investment to Alberta, the Government of Alberta has implemented the following in the past few years:
- Job Creation Tax Cut - reduction of the general corporate income tax rate on July 1, 2020;
- Alberta Petrochemicals Incentive Program -financial incentives for investment in hydrogen facilities using CCUS;
- Alberta Indigenous Opportunities Corporation - provides indigenous communities with access to up to $1 billion in financial support and loan guarantees for participation in equity ownership of natural resource projects;
- Creation of Invest Alberta; and
- Technology Innovation and Emissions Reduction (TIER) Fund - a commitment of up to $750 million over 3 years through the for innovative projects that reduce emissions.
In addition to the Roadmap's key policy pillars, it also identifies five major markets for hydrogen which represent opportunities for Alberta:
- Heating (residential and commercial);
- Power generation and storage;
- Industrial processes; and
- International export.
Each of these markets represent significant opportunity, and several of them have already begun transitioning to zero-carbon fuel.
There exists an opportunity within the heating markets by blending hydrogen in the natural gas distribution grid in order to decarbonize it and slowly transition to higher blends. The early introduction of hydrogen blending into the natural gas grid in Alberta is key as it can be done without substantial upgrades to infrastructure, thus reducing investment risk.
The power generation and storage sector presents opportunities for both clean production and use of hydrogen via flexible energy storage and production by renewable energy sources. Hydrogen has already made significant strides in the transportation sector as fuel cell electric vehicles (FCEV) continue to be an emerging market. As the production efforts for hydrogen continue, the cost competitiveness of FCEV's will continue to improve, which will drive even more demand for the fuel. The industrial sector presents an opportunity to convert high carbon intensity sources of hydrogen to clean hydrogen sources.
Finally, as noted in a previous blog post here, the global demand for hydrogen is expected to boom in the future and demand is expected to be 22 to 40 million tonnes per year by 2050 in the United States alone. With Alberta's capacity for clean hydrogen production projected to be approximately 45 million tonnes per year, and Canadian domestic demand up to 20 million tonnes per year by 2050, there exists significant opportunity for export both nationally and internationally for hydrogen produced in Alberta.
Hydrogen is positioned to play a significant role in the de-carbonization of the global economy and Alberta has significant opportunity to play a major role both nationally and internationally. With the implementation of the Roadmap, the Government of Alberta is committed to closely monitoring the global hydrogen economy as well as revisiting the Roadmap in 2025 in order to refocus actions for the 2030-2050 timeline.
To view the original article click here
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.