Alberta poised to be world class low-cost hydrogen producer

By Bruce Lantz

Long ranked the largest producer of hydrogen in Canada and known for being one of the most productive sources of oil and gas in the country, the province of Alberta has the potential to become one of the lowest-cost hydrogen producers in the world.

Hydrogen is the most abundant element in the universe, a clean fuel that when combusted produces only water and heat — and no greenhouse gas emissions. Alberta has produced more than 2.5 million tonnes of it per year for various industrial applications including oil upgrading and refining as well as chemical manufacturing and has the potential to become one of the lowest-cost producers of clean hydrogen in the world. With more than 50 years of experience producing hydrogen, it has the experienced workforce, the energy resources, carbon capture, utilization and storage capacity, innovative leadership, environmental commitment and a competitive business environment.

And the money. Alberta is forecasting a $13.2 billion budget surplus in the current fiscal year, well over the $511 million originally predicted, due to high oil and gas prices and higher royalty payments — $20.1 billion forecast instead of $9.7 billion.

Alberta is investing heavily in hydrogen development, leveraging its plentiful natural gas and advanced carbon capture expertise as well as its excellent renewable resources to do this. The province’s traditional resource industry has considerable hydrogen handling expertise. Alberta’s Hydrogen Roadmap has set goals of reducing emissions in the province by 14 million tonnes by 2030 from integrating clean hydrogen into industrial processes. The expectation is that between 2030 and 2050 hydrogen could contribute to even greater greenhouse gas emissions as its use gains momentum across the province. The province’s industry is working to reduce flaring, the controlled burning of fuel or waste gas during natural gas production and processing. Natural gas flaring was reduced 80% from 1996 to 2010, reducing greenhouse gas emissions by more than eight million tonnes. But a 2020 government report indicates total reported flaring increased 21.5%. The flaring volume increase was expected because of the fuel, flare and vent definition changes. This increase may also reflect companies meeting new venting limits by flaring, incinerating or combusting, the report said.

“Alberta is completely agnostic when it comes to the method of hydrogen production,” Taylor Hides, press secretary for Alberta associate minister of natural gas and electricity Dale Nally, told Resource World Magazine. Hides said the province supports any type of hydrogen production, including electrolytic green hydrogen, as long as what’s produced is low carbon intensity, is supported by the open and competitive market, and meets the province’s economic and environmental goals. “Our focus is on the carbon intensity of those production methods, and we support any competitive production that leads to clean hydrogen, whether that’s green, blue or another method.”

Alberta’s Technology Innovation and Emissions Reduction (TIER) Regulation allows for electrolytic hydrogen production facilities to be eligible for emissions reduction compliance credits. Electrolytic hydrogen is eligible if it is under the hydrogen high performance benchmark under TIER or opts in under the regulation. Hides said electrolyzers have potential in intermittent grid balancing as excess power is converted to chemical storage in the form of hydrogen, a process known as power-to-gas. This can provide opportunities for sector coupling as power-to-gas can connect electric and natural gas grids by converting surplus renewable power into hydrogen and then blending it into natural gas systems, or stored hydrogen can be converted back to electricity on demand.

“Hydrogen is a wise investment for government and industry, because it’s a way of using the province’s oil and gas expertise to produce a very clean fuel,” Matthew Klippenstein, executive director of the Canadian Hydrogen and Fuel Cell Association, told Resource World. “One day, or decade, the market for oil will shrink. But the market for clean hydrogen will continue to grow.”

At present there are five hydrogen markets in Alberta: industrial processes where hydrogen is used for oil refining and bitumen upgrading, ammonia and fertilizers, chemicals, and liquid synthetic fuels; heating where it’s either blended with natural gas or buried directly for use in residential and commercial heating; power generation and storage where hydrogen turbines and fuel cell generators produce electricity, or hydrogen is produced by renewable-based electrolysis and used for energy; transportation where hydrogen is used for fuel-cell electric vehicles and hydrogen co-combustion engines, primarily for heavy duty applications; and, exports to meet the growing international demand for clean hydrogen in North American, Asia-Pacific and European markets. All will bring widespread direct and indirect economic benefits to the province, and new job opportunities for professionals, scientists and tradespeople.

Klippenstein said that while hydrogen now is mainly used as a feedstock to make ammonia for fertilizer and to help upgrade oil into a finished product. It can also be used as a fuel, but carbon wasn’t really priced until recently, so people used natural gas instead, and it also contains hydrogen.

“Looking to a low-emissions world, our energy will eventually come from clean electricity and clean hydrogen,” he said. “Clean electricity will do most of the lifting, with hydrogen doing the harder things: powering Class 8 semi-trucks or replacing coal for steel processing. One way to think of it is like a lobster claw. The big part of the claw is like electricity’s contribution, and the small part of the claw is clean hydrogen’s contribution.”

Of course, all developing technologies face challenges, Hides said, and some are better suited to certain locations based on available resources. In the case of green hydrogen, common issues faced by many jurisdictions include the upfront capital cost of electrolyzers, grid expansion to support electrolytic hydrogen production, and electricity transmission costs. In Alberta, access to a large enough, long-term water supply is significant, as this is a landlocked province, and there are also challenges related to the cost of transportation to hydrogen offtakers and the cost of building out the hydrogen value chain.

She said that Alberta is currently encouraging a number of hydrogen hub initiatives around the province to scale up the hydrogen value chain and to improve efficiencies, bring down costs and allow for shared hydrogen infrastructure.

“The sky is the limit when it comes to hydrogen,” Hides said. “Alberta is home to abundant natural resources, a business-friendly market, and a highly skilled workforce with experience in various energy industries. Alberta is already the largest hydrogen producer in Canada, and we are ready to emerge as a leader in the clean hydrogen market on a global scale.”