The Role of Hydrogen in Canada's Transition to Net-Zero Emissions

Abstract

Electrifying as many end-uses as technically and economically feasible is a key strategy for achieving net-zero greenhouse gas (GHG) emissions. However, “electrifying everything” is not currently a practical or economical option for everything. In many of these hard-to-decarbonize sectors, hydrogen has a role to play. Hydrogen and hydrogen derivatives can play a key role in certain emission- intensive sectors that are important to Canada’s economy, including steel, chemical and clean fuel production, and possibly heavy freight, long distance rail, and other off-grid end-uses that currently depend on diesel motors. In a companion piece, we discuss the role for hydrogen in electricity systems. Unlike oil and gas, whose resources are isolated to only some parts of the country, hydrogen has the potential for broad participation across Canada due to the ability to produce it from hydrocarbons and clean electricity. The former is likely to dominate in the near term, whereas declining costs for hydrogen from electricity should tilt the economics in that direction in the longer run. In all cases, however, regulators and policy makers should be focused on life-cycle emissions from the production process rather than arbitrary colour classification schemes. Canada’s natural advantages in producing clean hydrogen also puts it in a position to capitalize on new export opportunities from hydrogen-derived products. It already has one of the cleanest steel-production facilities in the world in Québec, a technology that can be adapted to operate on 100% hydrogen. Opportunities exist for Canada to become a green iron or steel exporter, from Québec or even possibly Alberta with its unused iron ore deposits and abundance of hydrogen potential. For hydrogen to reach its potential, there are some key areas where government policy and support will be needed. From helping to establish clean hydrogen industrial clusters, where firms share production and storage infrastructure, to ensuring hydrogen refueling networks for transport are established with sufficient breadth needed for heavy freight transport, government has a role to play in setting up the landscape for innovators to thrive. Ultimately, hydrogen will not solve every decarbonization challenge Canada faces, but it will have a critical role to play as a complement to a variety of strategies aimed at reaching net-zero emissions. Hydrogen has had many “hype cycles” before, and while it is no panacea for decarbonization, it is now genuinely poised to help Canada achieve its net-zero goals.