Dedicated pipelines essential to creating a hydrogen economy in Canada, says new report

Elsie Ross
July 27, 2022

Dedicated pure hydrogen pipelines should be integrated into planning the transition to a sustainable hydrogen economy in Alberta and Canada, the Transition Accelerator has recommended in a new report.

That’s because pipelines are the only delivery option for hydrogen that would enable market opportunities in multiple sectors such as transport, heat and power, and realize a cost and scale of supply that justifies the necessary infrastructure investments, according to the report.

“Hydrogen not only offers a great opportunity to advance towards a clean future but it also is an economic driver that opens up diverse opportunities,” it says. But  the report’s authors caution that there are substantial challenges, because hydrogen (H2) fuel value chains are complex and investors face significant risks.

“As a chemical-based energy carrier, H2 is easier (with lower cost and less loss) to store than electricity so it is preferred for heavy-duty mobile applications or where there are large seasonal swings in energy demand (such as for space heating in cold climates),” says the report.

Hydrogen also has the potential to provide zero-emission industrial heat and electricity in cases where the location, demand frequency or scale makes post-combustion carbon capture and storage unfeasible if hydrogen is being produced from natural gas.

In most urban areas, low-pressure natural gas distribution pipelines could be converted to hydrogen for a relatively low cost, report co-author Dr. David Layzell, PhD, energy systems architect at the Transition Accelerator, told Research Money in an email. Higher- pressure pipelines may need to be modified or replaced so they can be used with pure hydrogen, he said.

“Initially maybe hydrogen is diluted into the natural gas until you can get the infrastructure in place [to deliver pure hydrogen],” Layzell said in an earlier interview.

However, “transitioning to a net-zero energy system where H2 is an end-use fuel will require the creation of new value chains that make H2 available at a reasonable cost at widely-distributed locations across Canada,” according to the report.

In the near term, the report noted that the heavy-duty transportation market holds the greatest promise for early adoption because Canadians pay five to 10 times more per unit of energy for transportation fuels than for heating fuels.

The report focuses on building new value chains around the centralized production of hydrogen, with a particular emphasis on its delivery to fuelling stations supporting heavy duty vehicles, including trucks, buses and trains.

The Transition Accelerator is a pan-Canadian charity that works with groups across the country to build viable transition pathways to a net-zero future.

Hydrogen hubs and corridors required

Canada currently produces more than 8,000 tonnes of hydrogen per day. It is used mainly as an industrial feedstock to upgrade bitumen, refine oil or make ammonia and other chemicals.

Most hydrogen is produced by reforming natural gas, with the carbon dioxide released to the atmosphere as a greenhouse gas. However, to achieve Canada’s net-zero target by 2050, hydrogen must be made with minimal or no GHG emissions.

Provinces such as British Columbia, Ontario and Quebec with sources of low-carbon electricity such as hydropower could produce “green” hydrogen through water electrolysis. In Alberta and Saskatchewan which have large fossil fuel supplies and porous rocks, “blue” hydrogen can be produced from natural gas coupled with carbon capture and storage, with more than 90 per cent of the carbon dioxide captured and permanently stored underground.

In its recommendations to accelerate adoption of hydrogen as a clean fuel, the report emphasizes the need for strategic planning to fully utilize the potential of hydrogen and unlock significant economic value for Alberta and Canada. A key part of the planning would be to analyze the interdependencies among different demand sectors and plan infrastructure development, policies and incentive programs accordingly.

The creation of regional hydrogen hubs and economic corridors would be key to connecting supply to demand and bringing together various stakeholders from the government, industry and demand sectors to work together to reduce barriers.

Policies and financial incentives needed to remove market barriers

The report cites the need for investment risk mitigation to offset the high capital cost of a hydrogen buildout until there is increased demand. Support also is needed in creating a demand for hydrogen as well as pilot projects that would identify bottlenecks to address.

“Policy makers and financial institutions need to employ various policies and financial tools to remove market barriers, ease regulatory burdens and mitigate investment risk which will attract private investment,” says the report. “Technical assistance grants and interest free loans can play a critical role early in the project.”

The report analyzed new value chains for delivering hydrogen from centralized production sites to fuelling stations for heavy-duty vehicles. It found that the costs of compressing and transporting hydrogen are as important, or more important, than hydrogen production costs.

Although the model was based on the Edmonton Region Hydrogen HUB, the report’s findings should be relevant to any other region of Canada considering centralized hydrogen production, said the authors.

The results revealed that while several factors affect the refuelling cost of hydrogen, in a mature hydrogen economy employing economies of scale, the total estimated cost should be competitive with diesel for heavy-duty transport – at $5 to $8 per kilogram of hydrogen, or $35 to $56 per gigajoule.

The report stresses the importance of scale and demand working together, through creating hydrogen hubs and corridors. Scale is critical because of the capital cost of many value chain components such as liquefaction units, compressors and pipelines.

“I like to frame it as ‘Go big or go home,’” Layzell said.

To achieve economic viability without ongoing public investment, each fuelling station needs to deliver at least two tonnes of hydrogen per day to 30 to 40 hydrogen fuel cell electric tractor trailer trucks, he said. Since these trucks tend to be moving freight between cities, at least two fuelling stations servicing 60 to 80 trucks are needed on transportation corridors, he added.

Along with developing a network of large fuelling stations, incentive programs will be needed to enable the purchase of heavy-duty fuel cell electric vehicles, said the report’s authors.

They found that significant demand for heavy-duty transport would not materialize without a range of available vehicles at acceptable prices, together with predictable and affordable hydrogen fuel prices.


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