The sun is setting on the fossil-fuel industry as we know it, not just in Canada, but globally. It may never go completely dark, but its direction and much-diminished role is certain in an increasingly climate-constrained world.
Another certainty is that the most costly fossil-fuel projects with the highest carbon intensities will be the first ones stranded as markets transition.
Accepting the above statements doesn’t mean the oil sands must be shut down overnight. It shouldn’t be interpreted as a betrayal of the West, nor does it erase the critical role our country’s oil and gas sector has historically played in the growth and prosperity enjoyed by all Canadians, past and present.
What acceptance does do is allow all stakeholders to have a rational discussion about the best path forward, one that, as much as possible, would repurpose existing pipeline and refinery assets, leverage innovative processes already used in oil and gas production, and benefit from the skills, experience and entrepreneurial spirit of our brothers and sisters in the West.
Over the past year, hydrogen has re-emerged as one of the most promising answers. Mostly because it’s such a versatile fuel, but also because the cost of producing “green” hydrogen using renewable electricity or other low-carbon processes is rapidly falling.
Our cars, buses and delivery vans may be going battery-electric, and batteries may be a big part of the answer to energy storage on the electrical grid. But green hydrogen, according to the International Energy Agency, offers what batteries can’t – a flexible way to decarbonize ships, trains, and big airplanes, displace the use of natural gas for heating, and replace fossil fuels used by heavy industry.
From this perspective, the world is going to need a lot of emission-free hydrogen if there’s any hope of meeting our Paris climate targets. This presents an enormous opportunity for Canada that has potential to touch every part of the economy.
What if we committed to becoming a global hub for the low-cost production and distribution of green hydrogen?
We already have world-class innovation to build from. One particularly exciting development comes from Calgary-based Proton Technologies Inc. Working with researchers at the University of Calgary, it has developed an in situ process for heating up hydrocarbon reservoirs to a point where clean hydrogen gas is released and collected through wells, conveniently leaving the carbon permanently underground.
In B.C., a company called Renewable Hydrogen Canada Corp. wants to use low-cost wind and hydro power to produce industrial-scale quantities of hydrogen from water using devices called electrolyzers. Those electrolyzers could come from Hydrogenics Corp., a leading global manufacturer based in Ontario. Hydrogenics has become so strategic in the hydrogen market that it was taken over last year for US$290-million by Cummins Inc., one of the world’s leading makers of diesel and natural gas engines.
We know the cost of producing green hydrogen will continue to fall – by as much as 50 per cent over the next decade, according to Bloomberg New Energy Finance. By 2050, the research firm predicts green hydrogen costs will dip below conventional production from fossil fuels, significantly driving market demand and spurring production.
The trick will be figuring out where the biggest clusters of domestic and international demand will emerge over the coming years and decades, and to plan accordingly.
One can imagine, for example, needing industrial quantities of hydrogen for running fuel-cell-powered commuter trains in the Greater Toronto Area, or steel manufacturing plants in Hamilton and Quebec City using hydrogen to displace the use of coal. Instead of using fossil fuels, refineries in Sarnia, Ont., and Edmonton could start using hydrogen and carbon dioxide captured from the air to make synthetic jet fuel and green chemicals.
To build up initial demand, there’s nothing stopping us from producing large volumes of green hydrogen for injection into existing natural gas pipelines, gradually lowering the carbon content of the gas that currently warms our homes and drives our industries.
We could also liquefy and ship our hydrogen to Asia. Japan’s Kawasaki Heavy Industries Ltd. recently christened the first tanker ship designed to carry liquefied hydrogen, part of a demonstration project to establish an international hydrogen supply chain.
So what’s Canada’s plan? What does the country need – in the form of hydrogen-ready pipelines, upgraded storage and shipping capability – to produce massive volumes of green hydrogen and get it to emerging markets?
To start, we could conduct a national inventory of existing assets that could be repurposed to produce, carry and consume hydrogen. We could lower barriers to investment in hydrogen projects and begin work on new standards around hydrogen safety and storage that align with international efforts.
Across Canada, different industries could start thinking about the role hydrogen is likely to play in their own efforts to reduce greenhouse gas emissions and what a transition to hydrogen across their supply chains would look like under different cost scenarios and timelines.
The federal and provincial governments could also back big demonstration projects designed to kickstart initial clusters of hydrogen demand – for example, hydrogen-fuelled Go Transit trains in Toronto, a proposal actually under consideration.
As the sun sets on fossil fuels, let’s be ready for a hydrogen sunrise. Let’s build on what we have, leverage what we know and secure what we need to become the world’s hydrogen hub.
THE GLOBE AND MAIL, January 17, 2020