Topic 1: The vision for…

Topic 1: The vision for Ontario’s hydrogen strategy

The hydrogen economy is coming and there are numerous places in the world that are further ahead in developing a strategies on how to take part in it. The federal government just released a national strategy and both Alberta and Quebec are stating how they should be the hydrogen hub for Canada. Alberta is pushing blue hydrogen because of its dependence on the fossil fuel industry, Quebec is pushing for green hydrogen because of its hydro-based clean electricity grid. Ontario also has a clean electricity grid based on nuclear, hydro and renewables and could also be a hub for green hydrogen, but Ontario also has a strong base in hydrogen technology companies; Cummins and Next Hydrogen have established products in the market. In addition the Canadian Nuclear Association has listed hydrogen from nuclear as a top priority just behind Small Modular Reactors and there is already a region in Ontario, Bruce County, looking to be the Hydrogen Capital of Canada.

The key outcomes of an Ontario based strategy would be that it demonstrates strong political support for a growing industry, one that Ontario is already home to, but with interest and demand growing around the world Ontario needs to show these existing companies and potential new ones that Ontario is the place they should grow their business.

Topic 2: Supporting the Environment Plan by reducing greenhouse gas emissions through low-carbon hydrogen

In the early stages of developing the hydrogen economy in Ontario the focus should be less on whether it is grey, blue or green, but more just to help develop end users. There are numerous companies ready to supply hydrogen, but there are limited end-users. A key part of providing the hydrogen however will be certifying the source of the hydrogen (i.e., whether it is grey, blue or green). This can be done by private industry, and there are already start-ups trying to break into this market, but clear definitions of what Ontario or Canada defines as grey, blue or green (or any other colours) needs to be standardized.

Topic 3: Generating economic development and jobs by building a hydrogen industry involving all regions of Ontario to create jobs and facilitate economic recovery, seek strategic partnerships and support innovation

The great thing about hydrogen is that it can be used in numerous sectors to decarbonize. It is currently a preferred choice for material handling in large distribution centres, but hydrogen will also be the preferred choice for goods movement and public transportation. NRCan estimates that the hydrogen sector can spark an early economic recovery from the COVID pandemic, lead to a $50 billion domestic hydrogen sector and generate more than 350,000 high paying jobs. This is but just a fraction of the $11 trillion global hydrogen energy boom expected to transform the market (CNBC report) and the 30 million jobs and $2.5 trillion in annual revenue predicted by the Hydrogen Council.

Topic 4: Promoting energy resilience by considering the value of domestic hydrogen for Ontario’s energy bills and evolving energy system

Ontario has already invested in a key component necessary for making domestic hydrogen a sought-after commodity. Ontario’s clean electricity grid, comprised of mainly nuclear, hydro and wind, is a perfect mix for generating low or zero carbon hydrogen. Using electrolysers with variable generation such as solar and wind can help to maximize their potential by storing the energy when the electricity grid doesn’t need it. The hydrogen could be used to feed back into the grid when the energy is required although there are several other, and more valuable uses in other sectors such as transportation, to use it for decarbonization.

Using electrolyzers on the grid as controllable loads can also help to reduce the global adjustment thereby making the energy system more affordable for all Ontarians. At scale, hydrogen can be competitive or cheaper than gasoline and diesel without including all the environmental and health benefits. The issue is that low-carbon hydrogen is a developing industry competing against a large, established and well funded fossil fuel industry.

Topic 5: Reducing barriers and enabling action in order to attract investment and create a level playing field between technology options

Initial projects cannot be cost competitive and it is unreasonable to think that they could be. Low-carbon hydrogen accounts for only a small fraction of the hydrogen currently produced in the world. The rest of the hydrogen is coming from fossil fuels and only continues to generate carbon emissions.
Large industrial gas companies are investing in electrolyzer companies in order to move towards reduced emissions, but as long as fossil fuel companies can provide a cheap (dirty) product it is difficult to make an economic case for switching.

The good news is that renewable energy and low-carbon hydrogen can be competitive but, like with most technologies, it requires large-scale to reduce costs. Governments role in attracting investment and creating a level playing field should focus not on creating a level playing field between hydrogen technologies, but with enabling a level playing field between the new and burgeoning low-carbon hydrogen industry and the well-funded and established fossil fuel industry. Once low-carbon hydrogen is more established and into large-scale production it will be able to compete on its own.

Topic 6: Using hydrogen where and when it makes sense, focusing on areas that are most likely to become cost-effective

Material handling applications are already cost-effective and a preferred choice of many large distribution centres. The next most cost-effective area will be with large vehicles (i.e., large trucks for goods movement) and buses. Like other hydrogen technologies these are forecast to have a lower total cost of ownership, but they require a sufficient infrastructure in place before operators will consider transitioning to the new technology. This lack of infrastructure is the biggest risk to the supply chain and its ability to reduce costs and emissions. Hydrogen producers are capable of deploying the infrastructure but without end-users there is not an economic case for deployment. What we are left with is a chicken-and-egg scenario that requires government intervention to reduce the risk on one side of this equation. Luckily there are options such as that recommended by the Ontario Society of Professional Engineers, where off-peak electricity could be sold at wholesale prices for the generation of low-carbon hydrogen. This is within the Government’s capability in the near-term and could provide the necessary “kick-start” to the hydrogen economy in Ontario.