The government of Quebec has released a green hydrogen and bioenergy strategy to accelerate the production, distribution and use of these two energy types as it chases aggressive 2030 greenhouse gas (GHG) reduction targets.

Quebec is targeting GHG cuts of 37.5pc below its 1990 level by 2030, compared with the Canadian government’s target of 40pc below the 2005 level for the country as a whole.

Hydrogen Economist discussed the new strategy with Pierre-Olivier Pineau, professor and chair of energy sector management at Canadian business school HEC Montreal.

The Quebec government released a green hydrogen and bioenergy strategy for the province in late May. What are the key elements?

Pineau: The bottom line of the strategy is the announcement of some financial support, both for producers and buyers of biofuels, to provide more financial certainty and stability in the biofuel market. On the production side, it is a tax credit incentive. On the buyer side, it is some form of financial support to offset the cost difference with fossil fuels. However, no specific details have been provided on this latter support.

Do you see Quebec having a comparative advantage in the production of green hydrogen and bioenergy compared with other jurisdictions, and if so, why?

Pineau: Yes, definitely. For green hydrogen, Quebec has access to cheaper clean energy sources and has the potential to grow its green power generation capacity at a competitive cost compared with other places—especially with its large-scale hydro-storage capacity, allowing to better balance supply with demand.

Producing hydrogen with wind and solar is nice, but wind and solar have capacity factors of 20-40pc. It is going to be extremely hard for electrolysers to be profitable at such low utilisation rates. These assets have to be used 80-90pc of the time to be productive, and there is therefore a need to balance (store) wind or solar energy to ensure continuous power supply. This can be done more cheaply with the existing hydropower infrastructure in Quebec.

For bioenergy, the large amount of available forest biomass is a competitive advantage for both hydrogen production and cellulosic biofuels (second-generation biofuels). Cellulosic biofuels will not compete with agriculture, and therefore have a larger growth potential.

1bn l/yr – Quebec’s 2030 target to reduce petroleum product demand

The province is targeting green hydrogen and bioenergy to reduce its annual petroleum product consumption by nearly 1bn l by 2030. Is that a reasonable target, and if so why?

Pineau: Quebec consumes c.20bn l/yr of petroleum products; 1bn l of biofuels in 2030 would be 5pc [of that], which seems reasonable, especially since the current minimum level of ethanol in gasoline is 5pc.

However, the challenge is to grow production: from about 200mn l to 1bn l, the Quebec capacity will have to grow by a factor of five. This would be a very significant change. It is possible, but it will require strong leadership from the government and private players to build in eight years what could not be built in more than 20 years.

Has the government broken down the contribution of green hydrogen versus bioenergy to achieve its 2030 target?

Pineau: No, there is no breakdown. Such a breakdown would be complex since hydrogen will enter the biofuel production chain to increase the energy content of biofuels. By 2030, there will not be an important production of green hydrogen to be sold as hydrogen. It will mostly be used as a feedstock in biofuel production.

In that case, can you at least estimate the amount of green hydrogen to be consumed by end-markets in Quebec by 2030?

Pineau: As there is only a very small market for hydrogen right now, it is reasonable to not aim at a specific hydrogen production level. Production of green energy should be focused on existing markets, where substitution is directly feasible. Of course, energy efficiency and energy consumption reduction would preferably happen simultaneously with substitution, so that GHG emission reductions are achieved more quickly.

If a pure hydrogen market develops, then Quebec should be able to compete with other producing regions. But this market will take a long time and there are more immediate actions to undertake: energy efficiency, demand reduction and fuel-switching to drop-in fuels—without having to invest in expensive hydrogen storage and distribution infrastructure.

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Author: Vincent Lauerman