Regional hydrogen nodes could accelerate Canada’s energy transition

Lindsay Borthwick
November 25, 2020

The Greater Edmonton Region has the right ingredients to become Canada’s first hydrogen node and tap into a wholesale market potential of up to $100 billion per year, according to a new report from Alberta’s Industrial Heartland Hydrogen Task Force. 

The Industrial Heartland can produce low-GHG hydrogen for about half the wholesale cost of diesel, but the product is currently used as an industrial chemical feedstock rather than as a fuel. The report lays out the steps to implementation of a node — an initiative to accelerate the development of a regional hydrogen economy — to leverage this supply to meet the demands of low-carbon energy needs of heavy transport and heating for residential and commercial buildings. The node could eventually connect to others across the country, encouraging the potential transition to a hydrogen economy. 

"By building a 'hydrogen node' around the Heartland and bringing together companies involved in the supply, transport and demand for the fuel, it should be possible to create an economically-viable, major center for hydrogen fuel demand,” Dr. David Layzell (PhD) told Research Money. Layzell is the director of the Canadian Energy Systems Analysis Research (CESAR) Initiative at the University of Calgary and research director of The Transition Accelerator, which organized the task force. 

The node would attract investment and create jobs, while dramatically reducing greenhouse gas emissions, Layzell said, and could be connected to similar nodes in other parts of the country, operating “as a stepping stone on the journey to a net zero emission energy future.”

It remains to be determined if and where other nodes may be created, but the government of Ontario just announced plans to develop a hydrogen strategy. Last week, the province released a discussion paper that sets out a vision for a new hydrogen economy in the province and launched a 60-day consultation process. The province aims to release its hydrogen strategy in 2021.

The federal government is also expected to release a hydrogen strategy to help Canada meet the goal of net-zero carbon emissions by 2050, joining other countries in viewing the fuel as an essential part of their climate actions. Speaking at a recent virtual event, Natural Resources Minister Seamus O’Regan discussed how Canada can meet its energy needs and grow its economy while lowering greenhouse gas emissions. “Increasingly, I believe that hydrogen has the potential to answer those important questions," he said, adding that "reaching that clean energy future will be the challenge and the opportunity of our post-COVID recovery."

In an email to Reserach Money, Sarah Petrevan, policy director at Clean Energy Canada, which released a report last October exploring Canada's hydrogen opportunity, wrote, "Regional nodes — like the one in Alberta — are needed to advance both the supply and demand, bring them together, and bring down costs. We are hoping to see more regional clusters in other parts of Canada as well to leverage local strengths and opportunities."

She also said the provinces must consider their respective opportunities and challenges to set themselves up for success in the emerging hydrogen market: "We need to develop regional nodes that leverage local expertise and partnerships where hydrogen use is most optimal."

Some public funding may be required to establish a new energy system, according to the Alberta Task Force report, but once established, it should be economically viable and not dependent on ongoing government support.

Layzell said there is no simple suite of policy instruments that will magically create such a system: "Regulations, taxes/tax rebates and public-private investment will be needed, but these must be strategically designed and implemented so that public funding can be discontinued in the not-too-distant future, and still leave an economically-viable system that continues to thrive and grow. "

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