Canada's 2020 hydrogen strategy wasn't based in reality around the cost of green hydrogen and its use cases, so its progress report is bleak.
ChatGPT & DALL-E generated panoramic image of a barrel wrapped in the Canadian flag, labeled"H2" and overflowing with Canadian currency
Canada committed with the rest of the G20 to eliminate fossil fuel subsidies in 2009. At the time, the Conservatives were in power and paid only lip service to the pledge. The Liberals started trying to unravel the subsidies when they took power in 2015, but foundered on the absurd tangled shoals of line items in dozens of ministries and agencies where fossil fuel lobbyists over the years had managed to slip in advantages for the industry.
Canada’s slowly increasing carbon price and rebate is studied globally as a leading and fiscally conservative, market-based approach to sweeping greenhouse gas emissions out of every corner of the economy. It’s working, so, where populist and simple-minded “Axe the tax” slogans with no pretense of a better approach to replace it are gaining ground.
His pithy comment was “look at the resources it is absorbing! 31 action points, must involve many hundreds of people, and then it’s a few tens of millions here, a few tens there, it’s hundreds of millions of dollars beingAggregate demand for hydrogen by segment for Canada from 2020 hydrogen strategy Comparison of Carbon Engineering proposed plug-compatible aviation fuel to alternatives, chart by author, but the same story played out there, with all inland and most short sea shipping simply electrifying, long-haul shipping diminishing rapidly as we won’t be shipping fossil fuels, and biofuels providing the energy required where batteries don’t suffice.
What’s the current cost per gigajoule of natural gas in Canada? In BC, it’s CA$2.23. In Ontario, it’s just under CA$3. This is the price of heating for residential, commercial, industrial, and electrical generation heat being paid today, exclusive of distribution and administrative adders. The best case scenario is 16-21 times the cost of that. It makes the heating oil costs in eastern Canada pale by comparison.
You’ll note that gray crude production is the biggest consumer of hydrogen in both scenarios in 2030. That’s accurate, as Alberta’s crude is both very heavy and high in sulfur, the two characteristics which drive up demand for hydrogen in refineries. The assumption that Canada’s refineries are actually going to increase production of gasoline and diesel based on Alberta’s crude by 2050 flies completely in the face of climate action and economic reality.
The last time Liebreich and I discussed this, over dinner in London last year, his projection for end game hydrogen was higher than mine, but still much lower than the fantasies of a hydrogen economy. His hydrogen ladder includes coding to indicate where hydrogen has to compete with biological pathways, for example methanol, and direct electrification pathways. With every update, and it’s now at 5.0, more and more end use cases fall into the rung of doom, where there is zero economic viability.
The very high cost per gigajoule of hydrogen and the very present alternatives of heat pumps, heat pump hot water heaters, induction stoves, and the like means that there will be no hydrogen gas utility distribution network. The cost of hydrogen delivered would be based on custom built pipelines, not leveraging a massive customer base.
5,700 households served by tiny percentages of gray hydrogen blended with natural gas, something which increases the cost of the gas and diminishes the energy it can provide. There are 15.3 million households in Canada, so this homeopathic trial is less than the concentration of carbon dioxide in the atmosphere and vastly less significant.
Naturally, of the six that under construction, a big one in Edmonton is manufacturing blue hydrogen using autothermal reforming — heating natural gas in the absence of oxygen in a pressurized container to manufacture four tons of carbon for every ton of hydrogen — and still letting a minimum of 10% of the greenhouse gases escape, probably not counting methane leakage.
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