Alberta Releases Roadmap to a Hydrogen Economy

Bennett Jones LLP

Bennett Jones LLP

[co-author: Niall Fink - Articling Student]

On November 5, 2021, the Government of Alberta released its Hydrogen Roadmap (the H2 Roadmap), which presents the government's policy framework for encouraging a domestic market for clean hydrogen and capitalizing on an anticipated multi-billion dollar global hydrogen economy. As discussed in our prior posts on the New Energy Economy, Alberta's move follows similar strategies released earlier by the governments of British Columbia and Canada, as well as strategies released in Germany and the EU, Japan and South Korea and Australia.

The H2 Roadmap aims to secure over $30-billion in capital investments and establish Alberta as a global supplier-of-choice in clean hydrogen exports by 2030. If successful, it would also result in widespread deployment of clean hydrogen into provincial utilities, transportation and industrial processes in that same time period, reducing GHG emissions by an estimated 14 megatonnes per year.

For a primer into the hydrogen economy and supply chains, see our prior post Hydrogen 101: Basics of Hydrogen Supply Chains.

Immediate Policy Actions

The H2 Roadmap extends to 2030, with the majority of policies addressing near term goals achievable by 2023. The seven policy pillars are:

  1. Build new market demand in the Province. Near term actions will focus on facilitating hydrogen blending projects, such as ATCO's Fort Saskatchewan pilot project, by removing regulatory hurdles and assessing mechanisms to build demand in the utility heat market.
  2. Facilitate carbon capture, utilization and storage (CCUS) for cost-effective, large-scale hydrogen production. Near term actions will focus on enhancing the regulatory framework for CCUS, promoting hydrogen nodes or "hubs" and leveraging federal funding and incentives to fund new infrastructure for carbon capture.
  3. De-risk investments in hydrogen infrastructure. The H2 Roadmap highlights existing funding mechanisms such as the Alberta Petrochemicals Incentive Program, low corporate tax rates and loan guarantees provided by the Alberta Indigenous Opportunities Corporation.
  4. Encourage innovation to prove and scale up emerging clean hydrogen technologies, as well as training to support a labour force capable of working in a hydrogen economy. Near term actions would establish a Clean Hydrogen Centre of Excellence, and provide support for pilots and early demonstration projects.
  5. Develop efficient regulation, codes and standards. Near term actions include harmonizing and clarifying regulations applicable to hydrogen, and supporting the development of national and provincial codes and standards to ensure safety.
  6. Build relationships including with other jurisdictions and the private sector. The H2 Roadmap specifically identifies the need to engage with Canadian and global authorities in establishing carbon intensity thresholds for clean hydrogen and developing clean hydrogen hubs across Alberta.
  7. Proactively establish a global export chain and infrastructure. Near term actions include establishing corridors for access to export markets through British Columbia and other jurisdictions, and pursuing hydrogen export memoranda of understanding, such as Canada's recent agreement with the Government of the Netherlands.

Focus on Blue Hydrogen

The H2 Roadmap stands out among comparable strategies for its strong focus on producing "blue" hydrogen using Alberta's plentiful and affordable natural gas feedstock coupled with CCUS. Alberta announced plans to develop the H2 Roadmap during October of last year in the context of its Natural Gas Vision and Strategy, a strategy directed specifically at advancing and expanding value chains for the gas sector. The H2 Roadmap leverages the Alberta Petrochemicals Incentive Program, which provides funding for eligible petrochemical projects over the next decade. Near term actions are focused on expanding hydrogen production and using Alberta's competitive advantage and existing natural gas infrastructure to secure a foothold in the global hydrogen market.

The H2 Roadmap suggests that Alberta may be the world's most cost-effective jurisdiction for blue hydrogen production, and projects that, if hydrogen is adopted globally at a transformative rate, hydrogen could account for 0.7 billion cubic feet of new natural gas demand in Alberta annually by 2030. Coupled with the recent increase in natural gas prices, the emerging hydrogen market may increase demand for natural gas, representing a significant opportunity for natural gas producers in the province.

The H2 Roadmap also recognizes medium- and long-term potential for emerging technologies and "green" hydrogen production using electrolysis powered by renewables, and takes a wait-and-see approach with regard to their ultimate place in Alberta's overall hydrogen strategy. The recent growth in wind and solar power generation in Alberta may play a key role in Alberta's ability to take advantage of green hydrogen opportunities in the long term.

Emphasis on Clean Production

To compete globally, Alberta will need to convince the world that its hydrogen is "clean" and results in real environmental benefits. The H2 Roadmap notes that "[a]n emerging narrative against natural gas-based hydrogen production can disrupt Alberta’s efforts to build a clean hydrogen economy," and proposes that Alberta implement policies that "[i]mprove public literacy on clean hydrogen."

Canada and other jurisdictions are currently developing carbon intensity thresholds that would define what hydrogen qualifies as a low- or zero-emissions fuel. One example, noted in the H2 Roadmap, is Europe's CertifHy system, which establishes a Guarantee of Origin that could become a requirement for hydrogen imported into that continent. Engagement with Canada and other jurisdictions developing carbon intensity thresholds is one of the policy actions identified in the H2 Roadmap.

The H2 Roadmap acknowledges that many sources of blue hydrogen may not meet future thresholds. For example, the most common method for blue hydrogen production currently used in Alberta, steam methane reforming or "SMR", exceeds the proposed CertifHy threshold for carbon intensity even when combined with CCUS, although increased CCUS developments and technology improvements may impact this analysis. The H2 Roadmap suggests that autothermal reforming, an alternative proven method which creates a high-purity stream of carbon dioxide allowing for higher rates of carbon capture, may become the preferred process for low carbon hydrogen by the mid-2020s. Alberta's continued investment in and development of CCUS and other carbon capture and reduction technologies will be key to ensuring access to a global market.

Plotting a Course For a Hydrogen Economy

The H2 Roadmap models two possible futures: one where clean hydrogen adoption moves incrementally, and another where favourable conditions foster a large-scale hydrogen economy by 2030 in both domestic and export markets. In the latter model, the H2 Roadmap provides a tangible forecast of hydrogen's place in several key sectors of the Alberta economy:

  • Industrial sector: those operating petroleum upgrading and refining sites, as well as ammonia and methanol facilities, would add CCUS to their hydrogen production to lead the way in clean hydrogen production.
  • Residential and commercial heating: hydrogen-blended natural gas networks would become common, with some demonstrated hydrogen exclusive networks. This would place Alberta alongside other leading jurisdictions like the United Kingdom (see the H21 Program aiming to implement a hydrogen only gas network by 2023) and the Netherlands (see the Green Deal agreement between the Dutch Government and Gasunie Transport Services).
  • Power generation: use of blended hydrogen and natural gas to power hydrogen-capable turbines.
  • Transportation: fuel cell-equipped vehicles will continue to replace more energy intensive vehicles used in heavy-duty trucking.
  • Exports: Alberta would export a significant volume of hydrogen to global markets, continuing Alberta's long tradition as a leading global energy supplier.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Bennett Jones LLP | Attorney Advertising

Written by:

Bennett Jones LLP

Bennett Jones LLP on:

Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
- hide
- hide

This website uses cookies to improve user experience, track anonymous site usage, store authorization tokens and permit sharing on social media networks. By continuing to browse this website you accept the use of cookies. Click here to read more about how we use cookies.