Fri.
Apr 16
2021

Image: Frédéric Paulussen via Unsplash

The Canadian government announced its hydrogen strategy calling on investors to engage in development of the new fuel to cut emissions and spur economic growth.

The government claims that the strategy could be worth US$39.2 billion, create 350,000 jobs and help Ottawa achieve net-zero emissions in thirty years. In the process it can help decarbonize sectors ranging from resource extraction, freight, transport, power, manufacturing and steel to cement production.

“Hydrogen might be nature’s smallest molecule, but its potential is enormous,” said Seamus O’Regan, Natural Resources Minister of Canada.

O’Regan argues that Canada will need up to C$7 billion in investments to grow its hydrogen industry over the next five years. But he pledged no new federal funding and instead promised to rely on tax credits, subsidies and international investment.

In the past, a collection of environmental and non-profit groups warned the current Canadian government against using federal funding to bolster the country’s fossil-fuel hydrogen industry by describing it as subsidies for the oil and gas sector.

Hydrogen, as a fuel, burns without any direct emissions of pollutants or greenhouse gases. Yet there are different ways to produce hydrogen. One way uses natural gas to make so called “grey” hydrogen. Canadian environmental groups want “green” hydrogen to be prioritized by the Ottawa government. Green hydrogen production relies on renewable electricity to split water into oxygen and hydrogen via electrolysis.

At the same time, hydrogen production might require other investments, including adjustments of existing infrastructure and transportation requirements. Therefore, producing significant amounts of fuel in a low-carbon and affordable way could be challenging.

Hydrogen’s versatility could make a significant contribution to clean-energy transitions if it’s adopted in sectors where it is almost absent today, according to the International Energy Agency. This list includes transport, buildings and power generation.

During the past years, demand for hydrogen has grown more than threefold since 1975 and continues to rise, with 6 percent of worldwide natural gas and 2 percent of coal going to hydrogen production.

Today, almost 20 countries have developed hydrogen strategies. Germany pledged US$10 billion toward expanding its hydrogen sector over the next decade. Australia established a fund of 300 million Australian dollars for its hydrogen projects, Norway earmarked US$369-million for hydrogen and other green technologies.

Canada’s strategy has been labelled as a “call to action” rather than a specific plan with the allocated funds.

Nonetheless, the announcement comes at the right time for Canada. Canada is the world’s fourth-largest oil producer, and its energy sector has been hammered by plummeting demand due to the coronavirus pandemic.

Its oil-rich Western province Alberta continues to suffer from collapsed revenues and high unemployment rates that fuel its well-known public opposition against the Liberal government.

As a result, the strategy might be a positive step towards revitalizing the province’s troubled economy and bringing more jobs and investments into the medium-term local economy.

Dimitri Frolowsckii

By Dimitri Frolowsckii

Dimitri Frolowsckii is a political analyst and consultant.

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