Canada’s Clean Hydrogen Strategy: Companies Driving the Transition

The transition to clean energy has been a global focus, with hydrogen emerging as a key player in this shift. Canada’s clean hydrogen strategy, unveiled in 2020, has seen significant developments, driven by a combination of government support and the ambitious efforts of several companies. Despite the progress, the journey has not been without challenges, highlighting the need for continued innovation and collaboration within the industry.

MAP: Hydrogen developments in Canada since 2020 – Production, end-use, hubs and strategies

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A Glimpse into Canada’s Hydrogen Progress

Canada’s hydrogen strategy is a testament to the country’s commitment to reducing carbon emissions and leading the way in clean energy. Since the strategy was introduced, 80 low-carbon hydrogen projects have been announced, representing a potential investment of over CAN$100 billion. These projects span various stages of development, with some already establishing production facilities. This wave of investment underscores the growing interest in hydrogen as a viable solution for decarbonizing industries.

However, the path has been rocky. The slow rollout of government subsidies and the unclear eligibility criteria have frustrated developers and producers. As Ivette Vera-Perez, President and CEO of the Canadian Hydrogen Association, pointed out, “The fact that we have taken so long to legislate an ITC (investment tax credit), and there's no clear application process, is hard.” This sentiment is echoed across the industry, with stakeholders eager to see more decisive action from the government to support these burgeoning projects.

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Key Players in Canada’s Hydrogen Landscape

Among the companies making strides in Canada’s hydrogen sector, Aurora Hydrogen stands out. Based in Edmonton, Alberta, Aurora is pioneering methane pyrolysis and microwave technology for hydrogen production. This method is touted as being significantly more efficient and economical than traditional methods like electrolysis or steam methane reforming (SMR). According to Andrew Gillis, CEO of Aurora Hydrogen, “There is a lot of emerging technology that we think is going to be really important, but the regulators haven't necessarily caught up to that yet.”

Aurora’s innovative approach has gained traction, with the company receiving CAN$3 million from the Canadian government to scale production, alongside an additional CAN$1 million from the NGIF Accelerator. Despite this support, methane pyrolysis has not yet been included in the Clean Hydrogen Investment Tax Credit (CHITC), raising concerns about the future viability of such cutting-edge technologies within the current regulatory framework.

Navigating Export Challenges

Canada’s hydrogen ambitions extend beyond its borders, with plans to establish a transatlantic hydrogen corridor to Germany. This partnership, originally signed in 2022, aims to begin exporting Canadian hydrogen to Europe by 2025. However, as Ivette Vera-Perez noted, “A functioning export industry by next year was unrealistic for such a nascent industry.” The complexities of hydrogen export, including liquefaction, transportation, and regasification, pose significant challenges that need to be addressed to realize this goal.

Regional Disparities in Hydrogen Development

The development of hydrogen projects in Canada has been uneven, reflecting the diverse energy landscapes across the country. British Columbia (BC) and Quebec have seen some of the greatest advances, leveraging their abundant hydroelectric power to produce low-emission hydrogen. Quebec, in particular, has begun exploring hydrogen production from biomass, capitalizing on its heavily-forested regions.

In contrast, Alberta, known for its oil and gas resources, has focused on hydrogen production through SMR, primarily to support its extensive agricultural sector. This regional approach to hydrogen development highlights the different pathways provinces are taking to integrate hydrogen into their energy mix.

Future Prospects and Industry Collaboration

Looking ahead, collaboration between companies and the government will be crucial in overcoming the challenges that have slowed down Canada’s hydrogen strategy. Source3 X, a company leading the charge in hydrogen production from renewable energy sources, has been active in this space. The company recently signed a Memorandum of Understanding (MoU) to collaborate on the Skeena Clean Hydrogen Hub in BC, which will produce up to 50,000 tons of low-emission hydrogen, ammonia, e-fuels, or sustainable aviation fuels annually.

Ayaz Khokhar, President and CEO of Source3 X, emphasized the importance of adaptability in such a rapidly evolving industry. “While we are focused on hydrogen production from renewable energy sources in Canada, our implementation strategy is to keep pace with market acceptance and uptake. In short to medium term, our focus is on various applications, including derivatives and e-fuels, with the long-term goal of hydrogen use in its own form.”

The development of Canada’s hydrogen industry is a complex and ongoing process, requiring a balance of innovation, regulation, and strategic partnerships. As companies like Aurora Hydrogen and Source3 X continue to push the boundaries of what’s possible, the future of clean hydrogen in Canada looks promising, albeit with a few hurdles still to overcome.

In conclusion, the government initiatives and bold businesses have helped Canada's clean hydrogen strategy make significant progress. However, the industry still faces significant challenges that need to be addressed to fully realize the potential of hydrogen as a cornerstone of Canada’s clean energy future.