Quebec and Alberta are jostling for supremacy in the race to become Canada’s hydrogen centre following the unveiling of a national hydrogen strategy, with each province having plans at an advanced stage that may start to be implemented this year.

The Canadian government released its national hydrogen strategy in mid-December, outlining plans to rely primarily on blue hydrogen over the short-to-medium term but increasingly green hydrogen as it becomes progressively more economic over the long term. Alberta is well placed to lead blue hydrogen production for domestic and export markets, while Quebec is widely seen as the country’s likely dominant producer of green hydrogen.

“Our immediate focus is on developing a roadmap which will enable the province to retain its already strong position as one of the largest hydrogen producers in the world,” says Dale Nally, Alberta’s associate minister of natural gas and electricity, to Hydrogen Economist. “This roadmap will lay out how we can continue to strengthen our position as a jurisdiction capable of meeting domestic and global demand for hydrogen in the years and decades to come.

Alberta has numerous advantages over other potential producers of blue hydrogen in Canada—let alone potential producers of high-cost green hydrogen—including its massive low-cost natural gas resource base. It produces more than two-thirds of the gas output of Canada, which is the sixth-largest producer in the world. Likewise, the province produces two-thirds of the country’s hydrogen supply. It also has an extensive network of fuel and CO₂ pipelines, and established regulations and technical expertise.

“Alberta has yet to commit to net-zero emissions by 2050, or any emissions reduction targets, and has not identified what role hydrogen will play in reducing emissions” Dyer, Pembina Institute

 These advantages have already allowed Alberta to become a global leader in decarbonised blue hydrogen production. The emissions from 40pc of the hydrogen produced in the province’s Industrial Heartland area near Edmonton, where the majority of its hydrogen is produced, are captured and stored underground.

If any province is to surpass Alberta’s hydrogen production, even in the semi-distant future, it is likely Quebec. Quebec is blessed with massive low-cost hydropower resources and provincially owned electricity utility Hydro-Quebec (HQ) is one of the largest hydropower producers in the world. The utility operates 60 hydropower-generating stations in the province. In 2018, Quebec produced a third of all electricity generated in Canada, with a significant amount of it exported to the US. HQ produces 99pc of its electricity from renewables, with the vast majority of this being hydropower.

HQ is set to lead the hydrogen charge, according to spokesperson Jonathan Cote, despite the company starting from zero hydrogen production. On 8 December, it announced plans to invest C$200mn (US$158mn) in its first project to produce green hydrogen, in the Varennes off-island suburb of Montreal. The facility is to have one of the most powerful electrolysers in the world, with capacity of 88MW.

Passing the baton

In provinces such as Quebec, with abundant low-cost renewable energy resources, green hydrogen should achieve cost parity with blue hydrogen by 2030, based on several recent studies. According to research organisation Bloomberg NEF, the key driver for this rapid decline in the cost of electrolysis will be massive investment by the EU. The EU Hydrogen Strategy has a construction target of 40GW of internal electrolyser capacity by 2030 and 40GW in neighbouring Ukraine and North Africa.

88MW – Announced capacity of Quebec’s first electrolyser

But this may not be enough to pass the new hydrogen growth baton from Alberta to Quebec, according to Simon Dyer, deputy executive director of the Pembina Institute, a Calgary-based  environmental NGO.

“[M]any factors will influence the economics of a given hydrogen project, such as the regulatory environment, including carbon pricing and low-carbon fuel standards, cost of electricity, abundance of renewable electricity, infrastructure and proximity to hydrogen demand,” Dyer tells Hydrogen Economist. “Alberta has yet to commit to net-zero emissions by 2050, or any emissions reduction targets, and has not identified what role hydrogen will play in reducing emissions.”

As a result, the cost of producing green hydrogen in Quebec may have to fall significantly below the cost of blue hydrogen production in Alberta to encourage investors to favour new projects in the former over the latter, pushing the timeline of the investment shift well past 2030.

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Author: Vincent Lauerman