The development of hydrogen as a clean energy source is experiencing sustained global momentum and interest and is becoming an integral part of the future economic and climate change strategies for leaders across Canada. Alberta is among those provinces that have published a policy framework for the development of hydrogen, both in terms of creating a domestic market for hydrogen and capitalizing on the anticipated global hydrogen economy.1

Due to its energy resources and its established energy infrastructure, Alberta has certain advantages with respect to advancing the domestic and export hydrogen economies that are contributing to the early movement of large-scale commercial hydrogen projects in the Province. For example:

  • Air Products Canada announced the development of a Hydrogen Production and Liquefaction Facility in Edmonton, Alberta, representing an investment of approximately 1.3 Billion (CAD).2
  • Suncor Energy announced a clean hydrogen project near Fort Saskatchewan, Alberta in partnership with ATCO Ltd., which produce more than 300,000 tonnes per year of clean hydrogen for use in Suncor's Edmonton Refinery and in Alberta's natural gas grid.3
  • Canadian Utilities Ltd, a subsidiary of ATCO, is planning on building a Hydrogen Blending Facility near Fort Saskatchewan, Alberta. Once complete, the project will be Canada's largest hydrogen blending project, injecting up to five per cent hydrogen by volume into a section of Fort Saskatchewan's residential natural gas distribution network.4
  • Petronas Energy Canada and Japan-based Itochu Corp. have teamed to conduct a feasibility study for a $1.3-billion Ammonia Production Facility in Alberta that would export ammonia as a hydrogen carrier to markets in Asia.5
  • TC Energy announced it will collaborate with electric truck manufacturer Nikola Corporation to co-develop and operate large-scale hydrogen production hubs in North America.6

Alberta Advantages

As noted in our previous blog post, Alberta already has the resource potential and geologic characteristics to produce blue hydrogen due to an abundance of natural gas supply and underground reservoirs or storage basins to capture CO2. The regulatory framework for large-scale carbon capture and storage ("CCS") - a necessary component of blue hydrogen production - has been in place for over a decade and has facilitated the development of large-scale CCS Facilities.7

The International Energy Agency has recognized that using existing gas infrastructure to spur new hydrogen supplies is one of the four key opportunities to increase momentum for the hydrogen industry over the next decade.8 Alberta's resource potential and existing gas infrastructure has placed Alberta in a very competitive position globally, with the price to produce blue hydrogen in Canada second only to natural gas and CCS in Russia, according to a 2018 report by the Asia Pacific Energy Research Centre.9

In addition to being well placed as a hydrogen producer, there are already viable domestic markets for commercial-scale hydrogen production in Alberta. There is existing demand for hydrogen as an input for industrial purposes in Alberta, which has spurred the development of Alberta's hydrogen production - currently around 80% of Canada's existing annual hydrogen production. This has resulted in Alberta already having dedicated hydrogen infrastructure in place which includes Air Products' Heartland Hydrogen Pipeline and the Alberta Carbon Trunk Line, that most competing jurisdictions will likely need to develop. Additionally, Alberta has an extensive network of natural gas infrastructure, including gas distribution pipelines and gas-fueled electric plants that will likely support certain amounts of hydrogen with natural gas without retrofits.

There are also major policy drivers that will likely drive Alberta's large industrial emitters to consider investments in hydrogen in Alberta. By way of example, Alberta's deregulated wholesale electricity market and the government incentives provided under the Technology Innovation and Emissions Reduction Regulation ("TIER Regulation")10 have led to increased demand for private power purchase agreements between large electricity users and renewable or low-carbon power producers. Given that Alberta's de-regulated electricity market can accommodate privately funded hydrogen pilot projects, this demand for low-carbon electricity provides early opportunities for hydrogen to play an increasing role in the decarbonization of Alberta's electricity grid. These types of existing incentives to reduce the carbon intensity in Alberta's oil and gas industry across the value-chain could ultimately benefit the hydrogen industry. Examples include: investments in CCS Projects that could also be used in the production of blue hydrogen (now or in the future); increased demand for lower-carbon hydrogen for industrial processes; and demand for lower-carbon fuel for heavy trucking used in the industry.

While the pace of hydrogen adoption remains uncertain and is likely dependent on government incentives and funding opportunities, what remains clear is that Alberta is well-placed for early large-scale hydrogen investment in terms of supply and local demand. While many jurisdictions may face infrastructure challenges to join the global hydrogen economy, Alberta's advantages and its early hydrogen investments undoubtedly provides opportunity for the development of a strong hydrogen export industry in Alberta.

Footnotes

1. Alberta Hydrogen Roadmap, published November 5, 2021, https://www.alberta.ca/hydrogen-roadmap.aspx.

2. https://www.airproducts.com/campaigns/alberta-net-zero-hydrogen-complex

3. https://www.atco.com/en-au/about-us/news/2021/122920-suncor-and-atco-partner-on-a-potential-world-scale-clean-hydroge.html

4. https://gas.atco.com/en-ca/community/projects/fort-saskatchewan-hydrogen-blending-project.html

5. https://majorprojects.alberta.ca/details/ITOCHU-Blue-Ammonia-Production-Facility/4509

6. https://www.tcenergy.com/announcements/2021/2021-10-07-media-advisory--nikola-and-tc-energy-sign-joint-development-agreement-for-co-development-of-large-scale-clean-hydrogen-hubs/

7. Carbon Capture and Storage Statutes Amendment Act, SA 2010, c 14; Carbon Sequestration Tenure Regulation, AR 68/2011; see Shell's Quest CCS Project and the Alberta Carbon Trunk Line Project at https://www.alberta.ca/carbon-capture-utilization-and-storage-funded-projects-and-reports.aspx

8. https://iea.blob.core.windows.net/assets/9e3a3493-b9a6-4b7d-b499-7ca48e357561/The_Future_of_Hydrogen.pdf, PDF 16.

9. https://aperc.or.jp/file/2018/9/12/Perspectives+on+Hydrogen+in+the+APEC+Region.pdf, PDF 59.

10. Technology Innovation and Emissions Reduction Regulation, AR 133/2019.

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