Oil & Gas 101: Hydrogen

hydrogen oil sands

Guest blog from CAPP 

Can Canada become a blue hydrogen hotspot?

As the world moves to address climate change, hydrogen may become more important for reducing carbon emissions. When combusted, hydrogen produces heat or electricity as needed, with no carbon dioxide or other greenhouse gas (GHG) emissions. The only byproduct is water. However, some emissions can be created during production and transportation, depending on the method and how it is used. 

Hydrogen is an energy-dense fuel that could be used in many ways, from industrial applications, to heating homes, producing electricity in large-scale, long-term energy storage (batteries) and in fuel cells that power vehicles. While fuel cell technology is progressing, many of these other applications are farther from commercial deployment. 

While the development of low-emissions passenger vehicles has focused on electric battery technologies, the high-energy density of hydrogen makes it a strong candidate for heavy-duty vehicles like buses and trucks, and for emerging technologies like air taxis.

In the near-term though, hydrogen can be blended into natural gas streams for consumer uses such as electricity generation, residential heating and cooking, thus lowering overall emissions from burning natural gas (which is already a relatively low-emission fuel). For example, Heritage Gas in Nova Scotia is looking into fuel blending. In Alberta, ATCO Ltd. recently announced a project that will blend hydrogen into a section of an existing natural gas network, to be used primarily for building heating.

The biggest challenges: hydrogen is costly to produce and some production methods generate significant emissions. According to the International Energy Agency (IEA), grey hydrogen is currently the cheapest form, driven by the price of natural gas from which it’s derived. The IEA projects an increase in global demand for natural gas, which is expected to drive price increases. That, in turn, could make other forms of hydrogen relatively more economical. In addition, GHG emissions associated with grey hydrogen are often subject to carbon taxes and other costs, which are increasing as governments seek to reduce emissions.

Growing global markets

According to the IEA, a global hydrogen revolution is already underway, underpinned by a desire to address GHG emissions. Many governments in Europe, as well as South Korea, Japan and Australia, are creating policies and incentives that support blue hydrogen production. The Hydrogen Council, a global advisory council of corporate executives, estimates hydrogen production could generate US$2.5 trillion annually by 2050.

For Canada in particular, blue hydrogen could hold a key for future production that leverages many of the country’s existing energy sources, technology, skill sets, and geological advantages for CCS.

Canada’s blue hydrogen advantage

Western Canada is ideally suited to producing blue hydrogen: an abundant supply of inexpensive natural gas; numerous deep rock formations suitable for CCS; and a strong culture of innovation. Few other producing countries in the world have this critical combination, meaning that Canada — and Alberta in particular — could capitalize on these advantages over the coming decades. With the development of large-scale transportation pipeline infrastructure, Canada could become a world leader in high-value hydrogen fuel for emerging international markets.

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Oil & Gas 101: Hydrogen - Context Magazine by CAPP

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