Alberta’s hydrogen strategy must focus on emissions to be competitive, experts say
Lisa Johnson 6 hrs ago
Some experts say the Alberta government’s hydrogen strategy needs to focus on emissions in order to be competitive amid the global transition to sustainable energy.https://www.dianomi.com/smartads.epl?id=3533
Alberta is aiming to export blue hydrogen globally by 2040, but international markets are looking more to green hydrogen to meet their climate targets by 2030, when its price could be competitive with its blue counterpart.
While hydrogen is poised to have energy applications across industries that are otherwise difficult to get off carbon — from transportation to heating — not all hydrogen is produced the same way. Cheaper-to-produce blue hydrogen is made from natural gas using carbon capture and storage, which has some carbon emissions, whereas green hydrogen is made from water using renewable power and creates zero emissions.
The European Union Commission, Australia, Japan, South Korea, and the UK have green hydrogen plans, and have dedicated billions in post-pandemic recovery funds to roll out infrastructure and spur production. Germany has announced nine billion euros, or just under $14 billion.
Tim Nash, founder of Good Investing , a financial planning company that focuses on sustainable investment, said capital markets are moving towards a low-carbon economy with clean-fuel standards and vehicle electrification.
“If the reason why people are switching to hydrogen is to lower the carbon footprint and to lower greenhouse gas emissions, there’s definitely going to be a market preference for green hydrogen,” said Nash.
With federal reserve banks increasing their carbon price projections, Nash said blue hydrogen likely won’t be as competitive.
“If the government of Alberta is making decisions looking at the economy over the next 10, 20, 30 years, they need to have climate risk and carbon pricing front and centre in those plans,” said Nash.
The province announced Alberta’s natural gas strategy, with hydrogen as one of its five initiatives, last month, and is expected to release the details of the hydrogen strategy in the spring. Environment and Parks Minister Jason Nixon told reporters in the legislature Nov. 19 that Alberta would “strongly” be against emissions targets set by the federal government.
“We’re going to continue to do it Alberta’s way, which is focused on technology innovation, (and) making sure there’s a future for hydrocarbons,” said Nixon.
The federal government is also set to launch its own hydrogen strategy this fall as part of its plan to meet its goal of net-zero emissions by 2050.
Alberta has competitive advantages. Its blue hydrogen production is ranked the second cheapest after Russia, has ample carbon storage capacity, the ability to piggy-back on existing petroleum infrastructure and the potential to ship hydrogen directly to Asia.
But as the cost of renewables like wind and solar drops, green hydrogen could become cost-competitive with natural-gas-derived hydrogen as early as 2023 in some places, according to forecasts from investment bank Morgan Stanley, or by 2030, according to BloombergNEF.
Simon Dyer, deputy executive director of the Pembina Institute, said he’s supportive of Alberta’s hydrogen strategy, but the province should consider incentivizing both if it’s going to get serious about climate goals.
“Neither Canada, nor Alberta, should put all its eggs in the blue hydrogen basket,” said Dyer.
Dyer said the jury is still out on whether blue hydrogen will be price-competitive long term.
In an early November interview, Alberta’s associate minister of natural gas Dale Nally said the development of a hydrogen economy is going to happen slowly and incrementally, and the market will decide whether blue hydrogen remains competitive.
“Our position is that it would be it would be a mistake to not advance that when we have such strong competitive advantages,” said Nally.
Nally said encouraging blue hydrogen production is about reducing emissions and exploiting renewable markets — but ultimately about jobs and the economy.
“We are not going to apologize for our oil and gas industry, and oil and gas is what’s going to get us out of recovery.”
According to think tank Clean Energy Canada , the industry could be a lifeline for the oil and gas sector, but policy director Sarah Petrevan said hydrogen strategies need to be focused on reducing emissions — however it’s produced — to be competitive.
Without that focus, she said, Alberta might be out of step with what the jurisdictions it hopes to export to.
“With the global drive towards decreasing emissions, and for many jurisdictions (achieving) net zero by 2050, those jurisdictions are going to want zero emissions or the cleanest hydrogen they can possibly get,” said Petrevan.
Walter Mérida, professor of mechanical engineering specializing in hydrogen and sustainable technologies at the University of British Columbia, said the measure of whether Alberta’s plan is just a greenwashing for the oil and gas sector depends on whether it produces real emissions reductions.
But Mérida said technological advancements could bring down emissions for blue hydrogen and help a transition towards a low-carbon and more knowledge-based economy.
“Innovation could create a new market because then you could fully utilize the natural gas resources without emissions,” he said.