Canada must take four key actions if it is to develop a competitive hydrogen economy, according to a report from consultancy EY, released in conjunction with NGO Canadian Energy and Climate Nexus, titled Canada’s hydrogen future – risks and rewards.

Canada’s clean hydrogen strategy estimates the industry could be worth C$100bn ($80bn) in 2050, with exports accounting for just over half of that amount, at C$53bn, creating up to 350,000 jobs. Low-carbon supplies could make up 27pc of Canada’s primary energy demand by mid-century, abating 190mn t of CO₂e, or 30pc of the country’s net-zero total.

Blue hydrogen is set to dominate production between 2025 and 2030, after which point green hydrogen will become the dominant source. The strategy does not include specific electrolyser or production targets.

Actions

The EY report identifies four key actions to implementing the strategy. First, hydrogen must be integrated into energy strategies at all levels of government, environmental regulations and fuel standards to level the playing field with fossil fuels. Second, the government must help establish small regional ecosystems where the entire value chain can be economically deployed at scale. These hubs can help prove the viability of hydrogen as an alternative fuel source without ongoing public investment and subsidies.

“The time to support the development of the hydrogen ecosystem is now” Mortlock, EY

Third, the government should provide investment incentives, funding programmes, subsidies and long-term policies to encourage the private sector to develop the required downstream market applications. And fourth, international partnerships should continue to be developed to help grow the potential export market and encourage upstream investment.

“Canada has an opportunity to integrate existing energy infrastructure into the evolving hydrogen value chain to become a global leader in hydrogen production, distribution and market use,” says Lance Mortlock, managing partner of energy at EY Canada.

“Leaders across the public and private sectors must assess the size of the opportunity and how their respective organisations can help enable the hydrogen future. The time to support the development of the hydrogen ecosystem is now.”

Barriers

Speaking to Hydrogen Economist, Mortlock suggests Canada has failed to take advantage of its LNG export potential over the past decade compared with major competitors such as Australia and the US.

“Lots of countries are off to the races when it comes to LNG exports, whereas Canada is not yet out of the starting blocks,” he says.

Roadblocks to development must be identified early to ensure the same mistake is not repeated with hydrogen, Mortlock notes.

C$100bn – Potential size of Canada’s hydrogen sector

“There are several major uncertainties that must be addressed as Canada builds its clean hydrogen value chain,” he says. “The country is still heavily reliant on carbon-based fuels and, in terms of the upstream, must rapidly ramp up clean hydrogen production, which will require significant amounts of innovation to scale [carbon capture, utilisation and storage] and green hydrogen technologies.”

In terms of the midstream, both the storage and transportation of clean hydrogen from production site to final market will require a substantial amount of infrastructure and investment.

“It is not easy, because it is extremely expensive to truck hydrogen,” Mortlock adds. “Current natural gas pipelines will require retrofits to ship high proportions of hydrogen, while new builds will be needed as well, especially to access export markets.”

Meanwhile, significant investment in the downstream is required to develop domestic applications for clean hydrogen, while also seeking out international markets.

“These added steps to create a net-zero fuel make it difficult to be cost competitive with carbon-based alternatives at the retail level, barring extremely high carbon pricing,” Mortlock says.

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Author: Vincent Lauerman