How Ottawa hopes to supercharge Canada's hydrogen fuel sector

For decades, hydrogen has been referred to as the fuel of the future. But that might change this fall if the federal government releases its hydrogen fuel strategy as planned.

Why Ottawa wants to rev up the fledgling hydrogen industry into a major economic force

Hydrogen fuel cell cars could be part of Canadians' transportation mix in the future, but most experts say hydrogen’s true potential is in decarbonizing some industrial sectors, such as providing heat for buildings and becoming a reliable fuel for trains and heavy haul trucks. (Mike Zimmer/CBC)

For years, David Lloyd has been intrigued by hydrogen-powered cars. Living in Burnaby, B.C., he regularly passes by Ballard Power Systems — the hydrogen fuel cell company — and often wonders when the technology would go mainstream.

Then last month, while his RAV4 was getting serviced at a Toyota dealership, he spotted a hydrogen car in the showroom. He couldn't believe it.

Lloyd wasn't in the market for a new vehicle, but he bought it anyway.

He's owned the Toyota Mirai for a few weeks and enjoys the smooth, quiet drive. Filling up at one of the three nearby hydrogen stations is pretty straightforward, he said, and costs about $50 if the tank is empty. The vehicle is emission free.

"I'm surprised that I could get in on this sort of next wave of technology," said the 69-year-old former university instructor.

WATCH | Take a spin in the Toyota Mirai:

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It's a new experience driving a fuel cell vehicle, but David Lloyd is enjoying the ride.

Canada wants in on hydrogen, too, in a big way.

The fuel is having a moment globally, in large part because it's viewed as a critical component in combating climate change, improving air quality and creating economic growth in a carbon-constrained world.

Amid this resurgence of interest in hydrogen, Ottawa has been crafting a long-term strategy aimed at  securing a place for a Canadian sector in what's expected to be a significant, global industry in the decades ahead.

The government anticipates it will release its plan this fall.

'Things are happening quickly'

As momentum around hydrogen builds globally and other countries execute their own strategies, Ottawa is under pressure to act.

"Things are happening quickly," said Natural Resources Minister Seamus O'Regan, who remembers riding on a Ballard hydrogen-powered bus during Expo 86 in Vancouver.

"It looks like trends we saw before the pandemic have accelerated. We want to be ahead of it." 

WATCH | O'Regan on what hydrogen could mean for Canada:

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Natural Resources Minister Seamus O'Regan on hydrogen's potential and what it could mean for Canada.

But hydrogen's hurdles include technology, economics, infrastructure and transportation requirements. Producing large amounts of the fuel in a low-carbon and affordable way has also been challenging. The cleanest way of making hydrogen is to use renewable electricity to split water into oxygen and hydrogen through a process called electrolysis.

Governments around the world have begun investing money to kick-start the sector, a move the federal government and some provinces have signalled they will follow. Alberta and Quebec have already committed funding to hydrogen.

The federal natural resources department has been working with industry and different levels of government for the last three years on the project.

The strategy is expected to lean into the strengths Canada already possesses, including low-carbon intensive electricity, like hydro, and ample fossil fuel reserves, according to background documents provided by the federal government.

Alberta has been working with Ottawa on the national strategy and is developing its own blueprint. 

Hydrogen in Alberta is traditionally made from natural gas, but the province believes it can become a leader in cleaner "blue" hydrogen by introducing carbon-capture-and-storage technology to the process.

"By 2050, [hydrogen] is going to be a $2.5-trillion industry," said Dale Nally, Alberta's associate minister of natural gas, citing global hydrogen industry figures.  "We need to keep advancing this sector."

The 'fuel of the future'

For decades, hydrogen has been referred to as the fuel of the future. A history of complicated challenges has kept it from becoming the fuel of today.

Part of the appeal is hydrogen produces water — not carbon — when used in a fuel cell. 

Enthusiasm has returned with hope that advances in low and zero-carbon production technology could have the potential to provide the hydrogen that governments and industries are looking for to help slash greenhouse gas emissions over coming decades.

Powering cars is one thing, but most experts say hydrogen's true potential is in decarbonizing some industrial sectors like steel-making, providing heat for buildings and being a reliable fuel for trains and heavy-haul trucks. 

Some of the excitement around hydrogen these days is due to hope that advances in technology will ultimately allow for production from renewable energy, like solar. (Kyle Bakx/CBC)

Though not a panacea, some analysts expect hydrogen could meet 24 per cent of world energy demand by 2050. 

Environmental groups, such as the Pembina Institute, say the climate benefit is highly dependent on how the hydrogen is made.

Canada is one of the larger hydrogen producers in the world today, making about three million tonnes a year using steam methane reformation of natural gas — a process that's drawn scrutiny for because it also produces carbon emissions.

But government officials and analysts believe Canada has the building blocks to develop low or zero-carbon hydrogen through a variety of tools, including renewable energy. In the case of natural gas, carbon-capture technology could be used to produce low-carbon hydrogen.

O'Regan points to Ballard's stock price more than tripling in the last year as one sign of the renewed interest in hydrogen technology.

The federal strategy will include government incentives likely aimed at increasing production, building transportation and storage infrastructure, and a distribution network.

Decades from now, hydrogen could have the potential to replace oil as the dominant fuel source, he said.

"Possibly — that's your best and honest answer from the natural resources minister in the middle of a pandemic, when things are changing so quickly," said O'Regan, if costs decrease and technology accelerates.

"We do know though that oil is going to be with us for quite some time. Even the most ambitious Paris accord targets have it occupying a very large space in energy consumption."

'Tremendous' progress made

Industry is already making "tremendous progress" in cutting costs and improving efficiency of hydrogen infrastructure, according to Wayne Leighty, hydrogen business development manager for Royal Dutch Shell in North America.

The newly developed refuelling stations are half the price and twice the performance as the stations which are just finished being built, he said.

"It's a very fast pace of progress and as we achieve that progress, come down the cost curves, then the size of the opportunity grows," said Leighty.

WATCH | Why some traditional oil and gas companies are investing in hydrogen:

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The company is focused on building a refuelling network, says Wayne Leighty, Shell's hydrogen business development manager

With much of hydrogen's future as yet uncharted, there's room for innovation, including on the wind-swept prairie of west-central Saskatchewan.

That's where Proton Technologies is attempting to turn the remains of a bankrupt heavy oil play into a zero-carbon hydrogen development.

The pilot project aims to develop a commercial process where oxygen is injected into oil fields, raising their temperature and creating a reaction that frees the hydrogen.

As the hydrogen is drawn to the surface, the company said other gases, like carbon dioxide and hydrogen sulfide, are filtered out and stay below ground.

The goal of Proton's patented process is a carbon-free hydrogen at a cost well below current green hydrogen technologies.

The site of Proton Technologies' pilot project near Kindersley, Sask. The company is working on a way to produce hydrogen by injecting oxygen into oil fields. (Tony Seskus/CBC)

"I think hydrogen will be widely adopted if people can save money for heating their homes or industrial processes or transportation fuel," said Proton's chairman, Grant Strem.

If all goes as planned — and they can demonstrate the technology can be scaled-up — Proton aims to produce 500 tonnes a day of hydrogen from the site within about two years.

Beginning later this year, Strem said the company plans to sell smaller amounts of hydrogen from the site using above-surface separation and shipping it by truck. 

Still the fuel of the future?

Despite current interest in hydrogen, it remains to be seen exactly how significant a role it will play in the future. 

Challenges and unknowns remain, such as its ability to produce a profit, consumer attitudes or even unexpected leaps by rival technologies. The economics will also have to work  — and the global capital cost of the equipment for low or zero-carbon hydrogen production has been estimated to be hundreds of billions of dollars over the next three decades.

An ongoing commitment to decarbonization by governments is also expected to be key.

"It's so much harder to build something up than it is to tear something down," said Alex Klaessig, director of gas, power, and energy futures at IHS Markit. 

"A lot of things have to go right for it to work, whereas … just a couple of big things could go wrong for it not to."

Still, he believes hydrogen will play a significant role moving forward as part of a mix of energy solutions, including renewable energy.

WATCH | What Proton wants to achieve with its technology:

How to drive down the cost of hydrogen

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Seta Afshordi with Proton Technologies explains the innovation underway and the potential of hydrogen.

Others are wary of government involvement in building out hydrogen infrastructure.

"I'm a free-market guy," said economist Peter Tertzakian, deputy director of the ARC Energy Research Institute in Calgary. "I'm not convinced the government should be involved in picking technologies."

'People say, "Oh, well, when the price of hydrogen comes down, then it will be competitive." Well, it's not just the price of hydrogen that has to come down. Somebody has to pay for all the infrastructure in between to make it work,' says economist Peter Tertzakian. (Monty Kruger/CBC)

As for Lloyd, who bought a hydrogen car last month, he's perfectly happy to drive the car locally in the Vancouver area, and he's excited new filling stations are planned for Victoria and Kelowna, B.C.

For now, regardless how the hydrogen industry evolves over the next few decades, he's enjoying the ride.

"When you ask for a little bit of acceleration, it moves easily without hesitation," he said. "Being clean and quiet is great."

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