By Bruce Lantz
Canada, and especially its western province of Alberta, is poised to become a world leader in the development of hydrogen power.
Alberta launched the Hydrogen Roadmap in 2021, identifying five leading markets for the province’s clean hydrogen in these sectors: Heating, where hydrogen is blended with natural gas or burned directly and used for residential and commercial heating; Power Generation and Storage, which includes generating electricity using hydrogen turbines and fuel cell generators and producing hydrogen via electrolysis from intermittent renewables for energy storage; Export Markets, which considers Alberta’s future energy competitiveness while meeting growing international demands for clean hydrogen; Transportation, which include hydrogen fuel cell vehicles, trains and aviation equipment, and co-combustion engines for heavy duty applications; and Industrial Processes, which includes fossil fuel refining and bitumen upgrading, ammonia and fertilizers.
The provincial government has invested more than $1.8 billion into CCUS-related projects and programs. And through the Alberta Petrochemical Incentive Program it committed $161 million to support the Air Products $1.6 billion net zero hydrogen complex, which will capture 95% of the carbon which will then be transported and safely stored underground.
“Our government is embracing a low-carbon future while ensuring that both hydrogen and carbon capture and sequestration are deployed safely, responsibly and strategically in the best interest of Albertans,” said Gabrielle Symbalisty, ministerial assistant to Energy Minister Pete Guthrie.
“Alberta is a global leader in responsible energy development with a proven track record in employing carbon capture on a commercial scale and a rapidly-growing hydrogen economy,” she said. “With these two strengths, we can continue diversifying our energy sector to support well-paying jobs and economic growth in Alberta for decades, while also reducing emissions.”
But a myriad of mind-boggling regulatory delays could well provide an almost unsurmountable hurdle that could send potential investors seeking safer opportunities.
Certainly, carbon capture and storage (CCS) project developers are expressing concern about regulatory restraints which are so cumbersome it can take more than five years to get approval for a project. In a recent webcast, TC Energy Corporation (TRP:NYSE) president and CEO Francois Poirier called hydrogen “a very interesting asset class for us over the course of the next decade”. But he called for accelerated regulatory processes to get projects sanctioned more quickly and said regulatory constraints present an unwelcome challenge. He said they would work with all levels of government to accelerate the regulatory process.
Regulatory constraints and the need for clarity on a path forward from a regulatory perspective are time consuming for projects. Project developers dealing with the provincial government need clarity on what’s required in terms of environmental assessment requirements, for example, along with a clear understanding of indigenous and stakeholder consultation requirements.
“In addition, the safety and regulatory standards that are required in this sort of expanded hydrogen economy are still under development,” said Jodi Anhorn, president and CEO at GLJ Ltd. (GLJ:DE) “Obviously safety and regulatory standards exist for today’s hydrogen economy and the relatively limited industrial uses that we have for hydrogen today. But if we’re going to start piping pure hydrogen across the province or cross-country and if we’re going to start using hydrogen at a refueling station, there’s a whole new set of safety and regulatory requirements that need to come out.
“Development of the safety and regulatory standards that need to be associated with expanded hydrogen economy is a big task.”
With many jurisdictions — and the corporations that operate in them — around the world seeking to develop hydrogen, especially ‘green’ hydrogen, as an energy source, experts say the way forward must be streamlined to ensure a speedy transition from project design to operational status. CCS projects are advancing in Norway where Equinor ASA (EQNR:NYSE) and RWE AG (RWE:HA) partnering on blue and green hydrogen production and transportation to Germany, Abu Dhabi National Oil Co. (ADNOC:AE) has earmarked $15 billion for lower-carbon efforts in that country which include hydrogen production and CCS, and Denbury Inc. (DEN:NYSE) is expending its CCS network along the United States Gulf Coast, along with many more projects worldwide.
In Alberta, the provincial government has entered into a carbon sequestration evaluation agreement with the Pathways Alliance, which represents Canada’s largest oil sands producers. The testing will help shape field development plans to support the final application for a storage agreement and further regulatory approvals for a storage hub in the Cold Lake, Alberta area and a 400-kilometre pipeline that would gather captured carbon dioxide from an anticipated 14 oil sands sites. While Alberta has a well-developed regulatory environment for oil and gas, getting the pore space for CCS is currently a challenge.
“Alberta’s government is committed to reducing red tape while keeping effective regulatory processes in place to protect environmental safety and the long-term interests of Alberta,” Symbalisty said. She said there are currently 25 proposals that are exploring the development of carbon storage hubs and are moving along the process to assess the suitability and safety of their locations.
“We are moving quickly to see these projects progress while still ensuring high safety and environmental protection standards.”
Symbalisty said that Alberta’s government is looking for ways to reduce red tape and unnecessary process on industry while maintaining high safety standards. To that end, this year they established a Designated Industrial Zone Pilot Program in the province’s industrial heartland — where most of the key petrochemical investments in the province are planned — to streamline regulatory approvals and improve competitiveness. Additionally, since 2019 the Alberta Energy and Alberta Affordability and Utilities ministries have cut more than 23,000 pieces of red tape on the advice of industry and have made more than 7,600 reductions to regulations across the energy sector, she said.
Equally important is making headway with cumbersome federal regulations, said Symbalisty.
“Regulatory certainty from all levels of government is key for industry and potential investors,” she said. “Alberta’s government is doing its part to improve regulatory delays, but we need to see a matching effort by the federal government to ensure our industries can compete on an international scale for these projects that will drive job creation and economic growth.”