Canada’s national hydrogen strategy could help the country reap trillions of dollars of valuable IP, economic benefits and create new jobs. But, we risk falling behind if we don’t act now.

That’s the gist of the federal government’s national hydrogen strategy released in December 2020, along with the launch of a $1.5 billion Low-carbon and Zero-emissions Fuels Fund to increase production and use of low-carbon fuels, including hydrogen. After three years of research and consultations with Indigenous organizations, the private sector and 1,500 other stakeholders, the strategy profiles Canada’s current hydrogen industry, the use case for public and private sector investment and 32 recommendations on fostering hydrogen activity.

“If we move quickly, we can actually have a massive economic opportunity here with our leadership in hydrogen fuel cell technology, and selling and exporting hydrogen,” says Mark Kirby, president and CEO of the Canadian Hydrogen and Fuel Cell Association (CHFCA). 

With Canada’s existing industry strengths, the country has an advantage in being a global leader in an industry expected to reach $12 trillion by 2050. Research Money talked to industry experts about how to make it happen and how hydrogen can help transition our resource-rich country. 

Why hydrogen? 

Hydrogen energy itself isn’t new, and neither is Canada’s expertise. More than half of fuel cell buses deployed around the world contain Canadian fuel cell powertrain technology. As of 2017, there were over 100 established Canadian hydrogen and fuel cell companies generating revenues of over $200 million. 

“For over 100 years, we've been developing world-leading IP in this space. In fact, the lion's share of IP deployed around the world is Canadian,” says Paula Vieira, executive director of Natural Resources Canada’s Low Carbon Economy Sector. 

Since hydrogen fuel can be produced through energy sources like electricity and natural gas, Canada has a strong foundation. Canada is the world’s sixth-largest global producer of electricity in the world and the world’s third-largest producer of hydroelectricity.

Emission-heavy natural resources can benefit from hydrogen technology, both through production and by using it in manufacturing processes. Much of the country’s hydrogen today is produced by the oil and gas sector through fossil fuels; as the country aims for net-zero emissions in 2050, the sector can shift towards using existing infrastructure, like pipelines, to move hydrogen. 

It’s a valuable diversification strategy for an industry that’s been hit hard by COVID-19, reducing demand for energy. “It’s providing that new-value added commodity in a net-zero future, ensuring that our conventional energy resources remain competitive, in a net-zero future,” says Aaron Hoskin, an NRCan senior manager working on the hydrogen file. 

Canada’s vast natural resources mean there are many paths to scale hydrogen, says Hoskin. “In some instances, we can deliver our clean electricity grid to make large scale hydrogen. In others, we can leverage our world-leading or vast conventional petroleum and natural gas resources, coupled with world-leading carbon abatement technologies, to produce clean, low-carbon hydrogen as well.”

Canada’s agriculture sector can both benefit from and be a producer of hydrogen. Pulp mills, for example, can produce hydrogen from biomass (agricultural) residue, which can be useful in small towns with mill operations, says Kirby. 

According to Kirby, agriculture and forestry depend on efficient, cost-effective logistics and transportation. Rail, trucks, overseas shipping, and harvesting equipment could all be decarbonized with hydrogen. 

While hydrogen is promising, experts told Research Money that hydrogen should be considered in conjunction with other clean energies, as stressed by natural resources minister Seamus O’Regan, who has said that a net-zero future isn’t possible without nuclear energy.  

“I think it's going to be a bit of a hybrid approach in terms of looking at what we already have that we can leverage off in terms of opportunities, and then what new opportunities does the government want to incentivize,” says Paula Olexiuk, partner at Osler law firm specializing in energy and construction law, and co-chair of its construction and infrastructure practice group. 

Stepping up to the challenge

While the strategy is optimistic and ambitious, there are several notable challenges. Since 2012, Canadian funding to hydrogen cleantech and innovation has dropped, to the point where Canadian companies have moved operations to other countries with more support. Countries like Germany,  which is investing €9 billion over 10 years in hydrogen development, have stepped up in the last several years with their own national hydrogen strategies. 

As Canada moves toward net-zero emissions by 2050, investing in hydrogen has taken on renewed importance, and there are still opportunities for Canada to generate and retain valuable intellectual property through research and development.

Fuel cell technology for hydrogen, for example, is still considered too expensive for large-scale use. “There are a lot of advances to be made to ensure that these technologies are perfected, and their price point is brought down in order to ensure that we get mass deployment,” says Viera.

Francois Girard, the technical leader for hydrogen and fuel cells at the National Research Council (NRC), expressed optimism that Canada could keep its technical strength in hydrogen even with this lag over the last decade since research has been ongoing. Girard says, for example, that NRCan has a hydrogen science and technology coordination committee among the federal R&D labs to coordinate between labs, alongside NSERC funding.

“We need substantially more funding than we've ever had over the last 10 years,” says Girard. “Despite the lack of strategy and support from government in a significant way for many years, it's been moving upwards. We need to have that innovation component clearly funded for the future.”

"A number of [provinces] already have their own hydrogen strategies, which may align with the federal government, but of course, takes into account the specific priorities and the different technologies and strengths that each of the provinces have,” says Olexiuk. In Alberta, the heart of Canada’s oil industry, a report from Alberta’s Industrial Heartland Hydrogen Task Force says Edmonton could become Canada’s first “hydrogen node” and tap into a wholesale market potential of up to $100 billion per year.

Following the release of the document, Viera says the next steps include developing a strategic committee and implementation committee, working groups to “start tackling some of the remaining barriers,” and developing regional blueprints for hydrogen production across provinces. 

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