Can Atlantic Canada Become a Hydrogen Export Powerhouse, Fueling Energy Security in Europe?
August 23, 2022
Why is Atlantic Canada on the international hydrogen stage?
We have entered a pivotal time in our clean energy transition. Many countries around the world have made pledges to reach net-zero emissions by 2050 with hydrogen being pitched as a significant solution to replace fossil fuels. With deep ports, abundant wind and hydro resources and a skilled workforce, the Atlantic provinces are receiving international attention as potential future producers of clean hydrogen.
The recent historic visit of German Chancellor Olaf Scholz and Prime Minister Justin Trudeau to Stephenville, Newfoundland and Labrador exemplified the reality of the opportunity. Canada and Germany signed a “joint declaration of intent” which calls for both to invest in hydrogen, establish a "transatlantic Canada-Germany supply corridor," and begin exporting hydrogen by 2025. On the same day, they were joined by hundreds of potential German investors and 11 Atlantic Canadian project developers.
To get to net-zero emissions in Canada, in Germany or beyond, there will need to be many solutions other than just greening the electricity grid and using an electric vehicle. One of the ways to reduce emissions, especially in some of the most difficult areas to decarbonize, is clean fuels. Hydrogen can be one of the cleanest fuels in the world.
What is hydrogen?
Although hydrogen is a “clean” fuel with water being the only by product, the process of creating hydrogen may not be. Most hydrogen today is produced from fossil fuels. Without capturing the emissions, it defeats much of the purpose of burning hydrogen as fuel.
Hydrogen (the H2 in H2O) is odourless and colourless, but for purposes as fuel, is divided into several colors based on the energy source used to produce it. Common variations include "Grey" hydrogen, made from natural gas steam reforming, which also produces CO 2 as a by-product. "Blue" hydrogen is generated in the same process but is considered "low carbon" because the carbon by-products are captured and stored or used. "Green" hydrogen is produced using electricity from renewable sources such as wind to split water into hydrogen and oxygen with an electrolyser. Hydrogen can also be made into ammonia, which may be easier to transport in some cases.
How can it be used?
Hydrogen is currently used in some industrial processes, but it is most often grey hydrogen because it is the most cost effective. However, hydrogen has a much broader potential as a clean fuel. One of the areas where it might be most helpful in our decarbonization efforts is with medium- and heavy-duty transportation vehicles and marine ships. It can also be used as a primary source for residential and commercial heating as it can be combined with natural gas to help clean an existing fuel supply.
Green hydrogen is currently cost prohibitive for many uses in large part because we don’t have the infrastructure in place to make or ship it at scale. But it is becoming an increasingly viable option given energy security concerns in Europe and ambitious emission reduction targets in several jurisdictions.
What is the economic potential?
There are exciting green hydrogen projects proposed across the Atlantic provinces including the World Energy GH2 project in Newfoundland and Labrador, the Port of Belledune hydrogen plant and clean energy hub in New Brunswick, and the EverWind Fuels hydrogen production and export project in Point Tupper, Nova Scotia. If these projects move forward, along with others, they could bring multi-billions of dollars of investment and thousands of jobs to the Atlantic provinces, all while providing a clean fuel to help reduce emissions here and abroad.
What are the next steps?
Several significant hurdles remain in the path for these hydrogen projects to become realities. Firstly, the Atlantic provinces do not currently have any regulations in place to make these projects possible. Secondly, Atlantic provincial grids do not yet produce completely clean electricity. Thirdly, current federal incentives are being outdone by those in other jurisdictions, such as the Inflation Reduction Act, whichrecently passed in the United States and highly incentivizes new clean hydrogen projects.
Canadians will also need access to hydrogen to help decarbonize some sectors. Provinces should ensure they have a social license and encourage increased economies of scale by developing opportunities for domestic use as well as for export markets.
Despite the natural advantages the Atlantic provinces enjoy for this emerging industry, we must recognize that we are competing in a global marketplace. Our governments must move swiftly to boost investor confidence to get these projects off the ground.
What is the realistic potential for hydrogen?
Does Atlantic Canada have the potential to become a hydrogen powerhouse for the future?
Yes, but we need more than media hype to make these projects a reality. Governments need to get to work quickly, to ensure regulations, funding opportunities, and partners are ready for investments.