Insights and Analysis

Prairie Insights: Government of Alberta Releases Hydrogen Roadmap

This morning, Premier Kenney and Associate Minister of Natural Gas and Electricity Dale Nally revealed Alberta’s Hydrogen Roadmap at a news conference, following on the province’s Recovery Plan and Natural Gas Vision and Strategy (both of which articulated an ambition to incorporate hydrogen into Alberta’s energy portfolio) and the federal government’s “Hydrogen Strategy for Canada”, all released in 2020.

The Vision

The Hydrogen Roadmap is a 50-page document, self-described as “the path forward for Alberta to remain competitive in the global clean energy economy by leveraging our existing strengths and expertise.” The document underlines the potential scale of the economic opportunity, Alberta’s competitive positioning as a future global supplier of clean hydrogen and points to two key impetuses for grasping the opportunity:

  1. Unlocking economic value for the province and capturing a growing export opportunity, including:
    1. Attracting over $30 billion in new capital investment in clean hydrogen production and development,
    2. creating 0.7 bcf of new natural gas demand in Alberta through hydrogen production by 2030,
    3. targeting 10 million tonnes of clean hydrogen export by 2050, and
    4. creating tens of thousands of jobs during project construction phases, with thousands for operations.
  2. Advancing critical environmental outcomes, particularly by integrating hydrogen into
    Alberta’s existing energy system and using hydrogen to displace carbon-based fuels in:

    1. industrial processes,
    2. commercial and residential heating,
    3. transportation, and
    4. power generation.

Plans for Action

To reach a 2030 ambition for integrating hydrogen into these processes and to establish Alberta as “the global supplier-of-choice in clean hydrogen exports”, the province has laid out seven policy pillars:

Policy Pillar

Approach

Notable policy actions (full lists
available in pages 15-17 of the
Executive Summary)

1.
Build New Market Demand

Build out supply and commercialization pathways, like hydrogen blending in
utilities

  • Changing utility legislation to allow hydrogen blending into gas distribution systems
  • Build demand in the utility heat market, including cost recovery options

2.
Enable Carbon Capture, Utilization and Storage (CCUS)

Ensure the infrastructure is widely available for large-scale clean hydrogen production

  • Advancing CCUS hubs and partnerships
  • Leveraging federal subsidies for CCUS infrastructure

3.
De-risk Investment

Long-term investment certainty and funding, to overcome hydrogen’s challenging economics

  • Supporting clean hydrogen through the Alberta Petrochemicals Incentive Program
  • Increasing access to capital for hydrogen projects

4.
Activate Technology and Innovation

Demonstration
projects, research, and innovation to prove and scale up emerging clean
hydrogen technologies

  • Establishing a Clean Hydrogen Centre of Excellence
  • Supporting pilots and early demonstration projects
  • Conducting feasibility studies for market development and exports

5.
Ensure Regulatory Efficiency, Codes, and Standards to Drive Safety

Bring the full hydrogen value chain into the regulatory regime for safety codes and standards

  • Improving natural gas infrastructure to support tie-ins for hydrogen.

6.
Lead the Way and Build Alliances

Public-private
partnerships and government-to-government relationships

  • Coordinating development of clean hydrogen hubs and partnerships
  • Supporting establishment of global carbon intensity thresholds for clean hydrogen
  • Improving public literacy on clean hydrogen

7.
Pursue Hydrogen Exports

Establishing
market access and closing gaps in supply chain logistics

  • Establishing a clean energy corridor with connections through British Columbia and other jurisdictions

Production Pathways: Blue, green, or all of the above?

The Roadmap is officially agnostic on the production pathway for hydrogen. As Minister Nally said in the press conference, the government is “agnostic over the colour of the hydrogen, as long as it is clean and industry will decide what type of production it will be.” In fact, the roadmap does not use the shorthand terms “blue” (typically used to refer to blue hydrogen produced from oil and gas by steam methane reformation (SMR), with carbon capture and sequestration) or “green” (produced by electrolyzing water with renewable electricity) at all, but consistently refers to Alberta’s production of “clean hydrogen”.

The Roadmap pays some attention to renewable-based production of hydrogen by electrolysis and notes that “wind-powered hydrogen production via electrolysis” produces the hydrogen with the lowest lifecycle GHG emissions. Minister Nally was clear that Alberta intends to “encourage all forms of clean energy production, including hydrogen made from renewable energy and water.” Indeed, it points to the opportunity to use hydrogen as storage for intermittent renewables, pointing particularly to Alberta’s wind energy resource.

However, the Roadmap places substantial emphasis on SMR and autothermal reforming (ATR) and focuses on applying CCUS to these natural-gas-based processes for clean hydrogen production. It notes that hydrogen from renewable energy is a medium- to long-term opportunity, as the technology is not currently cost competitive. It also points to analysis the department commissioned from the University of Alberta to conclude that SMR and ATR production (with or without CCS) is cost-competitive with global competitors, whereas wind-based electrolysis is more expensive in Alberta than elsewhere. In other words, the Roadmap concludes that Alberta has a competitive advantage with blue hydrogen specifically. While no policy pillar pushes hydrogen from renewable energy specifically, there is a clear policy pillar to support blue hydrogen with CCUS infrastructure.

Furthermore, the Roadmap points to Canada’s Hydrogen Strategy for the proposition that electrolytic hydrogen based on Alberta’s existing grid would be higher than lifecycle emissions from SMR with CCUS. Unfortunately, this assertion does not take account of the rapid decarbonization underway in Alberta’s electricity grid, nor the opportunity to link electrolysis specifically to renewable electricity, though this opportunity is acknowledged elsewhere in the Roadmap.

Climate action and carbon standards for clean hydrogen

The Roadmap estimates that large-scale integration of hydrogen into Alberta’s energy systems could reduce GHG emissions by 14 million tonnes (Mt) per year in 2030 – approximately 5% of Alberta’s current emissions. It notes that GHG reduction will accelerate from there out to 2050.

The Roadmap openly acknowledges the carbon intensity thresholds being developed
by potential export markets, such as Europe’s CertifHy project. With a 4.37 kg CO2 / kg H2 standard, the Roadmap acknowledges that SMR with 85% CCUS capture rate does not achieve this standard. The province commits to collaborating with other governments and international partners to support “the development of science-based carbon intensity thresholds for hydrogen production.” 

 

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jeff@prairieskystrategy.ca

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