One of the most significant…

One of the most significant low-carbon and renewable energy distribution and storage options is the utilization of low-carbon hydrogen as an energy carrier and storage medium. Globally, hydrogen is emerging as one of the most significant opportunities to decarbonize energy systems.

Ontario has a competitive advantage in leveraging its abundant renewable and low-carbon energy sources to economically produce hydrogen at scale. The modern natural gas system offers benefits for low-carbon hydrogen adoption in terms of transportation, storage and supply resiliency. The integration of low-carbon and renewable hydrogen, along with renewable natural gas (RNG), offers the natural gas pipeline sector the ability to maintain and extend its technical and economic benefits across the economy.

In addition, blending low-carbon hydrogen into natural gas can be a cost-effective way to decarbonize residential and commercial heating as well as peak demand electricity supply. Approximately 3.6 million households in Ontario (76%) rely on natural gas for home heating and other applications like water heating and cooking. The potential exists for hydrogen or hydrogen-natural gas blends to be delivered to Ontario consumers via the natural gas infrastructure that is already in place. Blending targets for RNG and hydrogen already exist in other jurisdictions, e.g. BC and Quebec. Initial studies and pilot projects in BC have explored blending hydrogen into natural gas pipelines at 5% to 15% by volume as a feasible target without significant changes to existing infrastructure or end-use appliances. Many European countries allow for 10-20% hydrogen by volume.

Natural gas can also be utilized as a key feedstock in the development of a low-carbon hydrogen economy in Ontario, when paired with geological carbon storage to accommodate carbon capture and sequestration (CCS) for low-carbon hydrogen production. The shift towards zero-carbon hydrogen production will be incremental and likely require the utilization of low-carbon hydrogen produced from natural gas with carbon capture to implement industrial scale hydrogen production at an economically viable cost.

As Ontario moves forward with its legislation to permit geological carbon sequestration, the impacts of natural gas as a feedstock for energy production will be alleviated as a result of the potential utilization of carbon capture and storage in conjunction with the development and implementation of geological carbon storage assets. This will help lower the impact of natural gas on the carbon intensity of Ontario’s energy grid, while allowing for the continued use of existing natural gas cogeneration facilities, and the development of new assets as they may be required.

In conclusion, harnessing Ontario’s clean energy to produce fuels would further strengthen Ontario’s position as an energy leader in Canada. The following key policy recommendations will help achieve that:

- Provide funding for infrastructure upgrades and expansion, e.g. through a renewed EPS program, to keep costs down and secure reliable service for residential consumers and small businesses.

- Provide funding to Hydrogen Ontario for hydrogen education and awareness building to make sure consumers understand that low-carbon hydrogen and hydrogen blending are safe and viable options to reduce emissions.

- Support regulatory changes to allow for hydrogen-natural gas blending for heating, power generation and transportation fuel production.

- Amend legislation (e.g., Section 2 of the Ontario Energy Board Act, 1998) to highlight the natural gas system’s continued importance, which can send a strong signal to investors and regulators alike.

- Set hydrogen and RNG blending targets to incentivize the gradual decarbonization of residential and commercial heating as well as peak electricity generation. At the same time, enable cost-recovery of the incremental cost of hydrogen blended into the gas system. Ontario can compete for private sector dollars by ensuring cost recovery mechanisms are in place that provide regulatory certainty for recovery of and fair returns on the capital needed to upgrade natural gas infrastructure to accommodate hydrogen.

- Ensure that there are no delays or high upfront costs that would limit equitable access to the natural gas grid.

- Coordinate energy planning, municipal forecasts and provincial goals should be used to support the necessary investment in energy infrastructure in a timely manner. Hydrogen hubs should be included in the discussions in areas where hydrogen blending and transportation via pipeline are viable.

- Streamline approvals for natural gas expansion and blending projects by modernizing Ontario Energy Board’s (OEB) processes (e.g., limit duplicative interventions and tighten procedural timelines) to expedite community-requested gas expansions. Cutting regulatory red tape will reduce project delays, control costs for ratepayers, and promptly deliver cleaner, affordable energy to households and businesses.

- Invest in carbon capture and hydrogen to gradually decarbonize Ontario’s energy network and establish pathways for CO₂ pipeline approvals which will facilitate an achievable and actionable transition toward net zero without compromising reliability or affordability.

You will find further details in the full submission which is attached as a supporting document.