Proposed stakeholder consultations for renewing the Ontario Low-Carbon Hydrogen Strategy

This posting seeks to receive feedback on key priority areas where the government should focus its efforts in a renewed Low-Carbon Hydrogen Strategy. The consultation is intended to:

• Gather ideas for new initiatives and research that not only support low-carbon hydrogen production in Ontario, but also drive innovation in hydrogen utilization across various sectors of the economy by supporting the distribution, storage and demand for hydrogen;
• Identify the economic sectors in Ontario with the highest value and readiness as end-users of hydrogen, while assessing opportunities for hydrogen production within these sectors (e.g., transportation, manufacturing, energy) that can benefit from both hydrogen utilization and production; and
• Assist the government in determining whether, and to what extent, funding should be allocated from energy ratepayers and/or taxpayers for additional support of hydrogen projects.

Background

In November 2020, the government announced the development of Ontario’s first-ever hydrogen strategy, and the Ministry of the Environment, Conservation and Parks (MECP) posted a discussion paper for pre-consultation for guidance in developing the strategy. In addition, throughout 2021, MECP conducted targeted consultations with experts from industry and academia through the Hydrogen Strategy Working Group and conducted engagement with Indigenous communities.

The responsibility for releasing the hydrogen strategy was subsequently transitioned to the Ministry of Energy and Electrification. Ontario’s Low-Carbon Hydrogen Strategy was released in April 2022 with eight immediate actions to advance the production and end-use of low-carbon hydrogen in the province.

Since then, the government has made progress on these actions to incentivize hydrogen projects in Ontario, as well as gather foundational information on the benefits and challenges of a low-carbon hydrogen economy. The most significant progress updates are described below.

Niagara Hydrogen Centre – The Ontario government is supporting Atura Power's proposal for the province's largest low-carbon hydrogen production facility. The facility would be capable of providing grid-balancing services and use low-cost, off-peak electricity to produce low-carbon hydrogen. Ontario is providing support through a regulatory exemption to the Gross Revenue Charge for the years 2024-2033. In January 2023, the Independent Electricity System Operator (IESO) entered a multi-year contract, starting in 2024, for grid regulation services that will support the project. The Niagara Hydrogen Centre is expected to be operational later in 2025.

Hydrogen Innovation Fund (HIF) – Hydrogen producers are well-suited to provide electricity system benefits and have previously worked with the IESO to provide ancillary services such as grid frequency regulation. In February 2023, the IESO launched the HIF with funding of $15 million over three years to kickstart and develop opportunities for hydrogen to be integrated into Ontario’s clean electricity system, including hydrogen storage. In October and November 2023, 15 successful projects were announced, with $13.8 million awarded from the HIF. The largest projects include:

• Atura Power is receiving $4.1 million to blend hydrogen with natural gas to produce electricity at the Halton Hills Generating Station.
• Emerald Energy from Waste Inc. in Brampton is receiving $3.0 million to produce hydrogen from electricity generated at its existing energy-from-waste facility to test its ability to provide electricity grid services and supply hydrogen to heavy duty vehicles.
• Carlsun Energy Solutions is receiving $1.9 million for a new electrolyser to test its ability to provide electricity grid services and supply a hydrogen fueling station in Port Elgin.
• Enbridge Gas in Markham is receiving $1.8 million for North America’s first hydrogen-driven Combined Heat and Power facility that can also blend hydrogen with natural gas to produce energy.

These projects will help to improve the experience and understanding of the potential benefits and limitations of hydrogen in supporting Ontario’s electricity grid.

Ontario’s Legislative and Regulatory Framework for Geologic Carbon Storage– Geologic carbon storage offers the opportunity to produce low-carbon hydrogen from natural gas. In January 2022, the Ministry of Natural Resources (MNR), released a discussion paper as the start of a phased approach to regulating geologic carbon storage. Since then, MNR has:

• Amended the Oil, Gas and Salt Resources Act to remove a prohibition on certain carbon storage activities, and to enable “special projects” to test, assess, pilot or demonstrate new technologies, methods or activities such as carbon storage;
• Implemented a new regulation to allow proponents to seek approval for these special projects, including carbon storage, initially on private land only; and
• Recently launched public consultations on a framework to regulate commercial-scale geologic carbon storage projects on Crown and private land. This included a discussion paper posted in the summer of 2024 which provided a full suite of considerations for the design of a commercial-scale framework.

Supporting On-going Hydrogen Research – Ontario supported two independent hydrogen research projects in partnership with Natural Resources Canada to advance hydrogen development in the province:

• H2GO Canada mapped and evaluated the related opportunities of seasonal storage of hydrogen and permanent sequestration of CO2 within Ontario’s geological prospects from a commercial utility perspective. H2GO’s report, Scoping the Commercial Potential for Carbon Capture, Utilization and Storage in Ontario to 2035, was released in August 2023.
• H2GO Canada also undertook a comprehensive evaluation of Ontario’s low-carbon hydrogen supply opportunities and the principal end-use applications around which sustainable markets can be developed. H2GO’s report, Forecasting Low-Carbon Hydrogen Market Characteristics in Ontario to 2050, was released in October 2023.

In addition to Ontario’s actions to advance the low-carbon hydrogen economy, hydrogen producers in the province are eligible for the federal Clean Hydrogen Investment Tax Credit.

Current Proposal

The Ministry of Energy and Electrification is seeking feedback on the following consultation questions as it considers how to renew Ontario’s Low-Carbon Hydrogen Strategy to prioritize economic security and job creation; energy security; and Ontario’s clean energy advantage in the industrial sector.

General

• What additional financial, policy or regulatory supports can the Government of Ontario pursue, in collaboration with the federal government, to accelerate hydrogen production and end-use, and how can the costs and benefits be balanced effectively?

Economic Security and Job Creation

• How can the expansion of hydrogen production and utilization drive economic growth and create high-quality jobs in Ontario? What strategic initiatives or policies could help ensure these opportunities are maximized? Additionally, which industries could integrate hydrogen technologies that currently do not, and what barriers are preventing wider adoption?
• How could Indigenous communities be included in and benefit from hydrogen development in Ontario?

Energy Security

• How would hydrogen produced from electricity drawn from Ontario’s grid impact the province’s electricity system and how should this demand be prioritized relative to other electrification demands?
• How could low-carbon hydrogen development be included in the government’s future integrated energy planning?

Ontario’s Industrial Clean Energy Advantage

• What are the best market opportunities for low-carbon hydrogen in the short-to-medium term, both for cost-effective production (including the development of hydrogen "hub" communities) and for end-use from an economic and decarbonization perspective? What infrastructure can Ontario leverage in order to make the province a leader in the hydrogen economy? 
• ​​​​​​​What insights can be gained from existing research and market analysis of the hydrogen sector, particularly in understanding key partners and potential demand in Ontario and globally? What areas of new research or further study could best enhance knowledge of the hydrogen market and development of hydrogen technology?

There is no requirement to post this notice on the Environmental Registry of Ontario, but we wanted to hear your thoughts. Thank you for your feedback.