Building Out a Hydrogen Economy in Canada

Hydrogen

Issue: Despite being one of the world’s lowest-cost hydrogen producers, a key competitive advantage, Canada is currently lagging in the global hydrogen race. To remedy this, the federal government is in the process of finalizing a Hydrogen Strategy for Canada. The strategy envisions creating an Implementation Steering Committee, supported by thematic and sectoral working groups, and working with provinces to develop regional hydrogen blueprints. These strategic initiatives are critical to:

  • Accelerate domestic production and use of hydrogen as a zero emission fuel,
  • Position Canada as a leading hydrogen exporter to meet anticipated exponential growth in international hydrogen demand,
  • Quickly and efficiently realize the environmental, climate and economic potential of hydrogen, and
  • Ensure that the approach taken is tailored to regional strengths and differences.

However, to vault Canada into a leadership position, these initiatives must be embedded in a clear and deliberate implementation plan that is tailored to the unique—and sub-regional—challenges and opportunities that exist across Canada. Informed by approaches taken in other jurisdictions, we recommend an additional component: sub-regional hydrogen HUBs.  

Why? The Case for a HUB Approach

Why are HUBs needed?
Hydrogen-as-fuel markets and the roles that hydrogen could play in storing energy and integrating energy systems are currently unquantified and spread among disparate sectors (e.g. heat, municipal and public transport, power, industrial). Often each sector is advancing their conception of a hydrogen economy independently, with little to no understanding of the needs and opportunities in other sectors, nor the potential synergies. This fragmented approach means that the full hydrogen market potential is unknown, and because of this, an economically self-sustaining hydrogen economy will not be realized quickly, if ever. If markets do establish there will be substantive inefficiencies and lost opportunities.  

What is a hydrogen HUB and what will they do?
Focused on the sub-regional scale, hydrogen HUBs would complement the national and regional implementation efforts, be comprised of local governments (municipalities, counties, Indigenous etc.), companies spanning the value chain, and other relevant stakeholders that collectively want to advance a local hydrogen economy. HUBs would be chosen strategically based on their ability to attain economic self-sufficiency quickly, and a willingness and ability (over time) to effectively link to other sub-regional HUBs to collaborate, share learnings and access additional hydrogen supplies or new markets.

Governance:

  • Sub-regional leadership (municipal, industrial, provincial-federal, academic, Indigenous)
  • Facilitated and supported by an independent entity (hydrogen HUBs secretariat) – providing techno-economic analyses, strategy, and secretarial functions using a consistent national framework
    • A single independent entity supporting HUBs would ensure and facilitate shared learnings (virtual conferences, reports, analytics)
    • A HUBs network on a common strategic and analytical framework will facilitate shared learnings while still allowing for regional and HUB-specific creativity and leadership

Key HUB functions:

  • Convene key players (industry, academic, government, Indigenous, others) to raise general awareness of hydrogen economic and environmental potential;
  • Catalyze critical business and strategy linkages among key players along the full hydrogen value chain;
  • Support and accelerate effective public and private sector decision-making by creating and publicly publishing valuable, standardized aggregate infrastructure and market data including:
    • Identifying, assessing and reporting on market opportunities for various parts of the hydrogen value chain in the HUB jurisdictions;
    • Mapping both existing and potential supply and demand infrastructure, (e.g. current public and private diesel fleets fuelling infrastructure, possible sites for adding hydrogen to natural gas pipelines, etc.) where hydrogen fuelling infrastructure could service demands,
    • Assisting HUB jurisdictions with feasibility analysis and/or evaluation of different sub-regional options and opportunities, and
    • Ensuring information is in the public domain, allowing the private sector to develop solutions and compete to deliver efficient, low-cost production and distribution
  • Developing, focussing and leveraging academic techno-economic analytical capacity
  • Ensure learnings are shared among HUBs in a formal continuous learning framework
  • Potential funding for regional/local organizations to facilitate project development
  • Position hubs to be successful in their requests to government programs for larger commercialization projects

What will be the outcome of hydrogen HUBs?

The accelerated, strategic deployment of public-private partnerships along the value chain that connects low-cost, low/no-carbon hydrogen supply with new reliable markets for hydrogen as a fuel or industrial feedstock, using existing technology, and achieving scale required for economic viability.

Will all hydrogen activity take place in HUBs?
No. HUBs are sub-regions that have a high probability of success and are of strategic significance to advance Canada to a national hydrogen economy.  But hydrogen opportunities outside of HUBs exist, and others will emerge. Competition for public and private hydrogen funding should be transparent and funds should flow to the best opportunities, whether in HUBs or not.  National policies and programs would continue and provide impetus and support for all areas of the country, including areas formally designated as HUBs.

How does it all fit together?

Key considerations:

  • Complexity and market failures: An efficient, effective hydrogen economy will not emerge quickly, if ever, without deliberate effort
    • A hydrogen economy at the scale required for a net-zero economy in 2050 will require the retooling of a hydrogen value chain spanning supply through demand, with different private and public players engaging and contributing. This retooling is too complex to be left to chance or fragmented efforts. 
  • Clear policy signals needed: Other jurisdictions have stronger policy signals (existing or quickly emerging) to incentivize the strategic development of hydrogen value chains (e.g. H2 infrastructure investments, mandates for zero-emission vehicles or natural gas decarbonization, legislated vehicle bans)
    • A more deliberate Canadian implementation approach is needed immediately given weaker domestic policy signals, ensuring we don’t continue to lag
  • Technology research and development are not the issue: All the essential technical elements of a hydrogen economy already exist
    • Implementing a hydrogen economy is an infrastructure, finance and technology deployment play. Research and development should continue to support deployment, reduce costs, and enhance performance, but new technologies are not needed to move forward
  • Scale: Sub-regions (e.g. municipalities, transportation corridors/counties) are the most effective scale for hydrogen implementation
    • Countries ahead of Canada on hydrogen implementation are focussing on sub-regions as the critical implementation scale (e.g. industrial clusters, hydrogen valleys, hydrogen corridors)
  • Fastest way to accelerate progress: Create economically self-sustaining hydrogen economies (hydrogen HUBs) at the sub-regional scale as quickly as possible
    • Focus strategic effort and funding in hubs across Canada that have provided evidence of their ability to produce low cost, low or zero-carbon hydrogen, and connect it to viable, ongoing demand for that hydrogen as a zero-emission fuel and/or industrial feedstock. As these hubs develop, they can be connected, creating larger regional and eventually a pan-Canadian hydrogen economy