Updated June 2024
What is Hydrogen
Hydrogen is an energy carrier and one of the most abundant elements on Earth. Hydrogen is a colourless, odourless, and flammable gas found almost everywhere on Earth, but only bonded with other elements, such as carbon, nitrogen, and oxygen.
Hydrogen can be produced from a variety of sources using different technologies. Some common sources include natural gas and water. In Alberta, hydrogen production is mainly produced from natural gas. This is typically achieved through steam methane reforming or autothermal reforming methods. These methods introduce high-temperature steam and a catalyst to methane, producing hydrogen, carbon monoxide, and carbon dioxide (CO2). With additional processing, carbon monoxide is converted to CO2.The figure below shows hydrogen production pathways and their by-products.
There is an opportunity for hydrogen to replace fossil fuels as a carbon-free energy source. Hydrogen-powered electric vehicles have zero emissions, whereas gasoline vehicles emit carbon monoxide, CO2, hydrocarbons, and nitrogen oxides—all sources of air pollution.
The refining and industrial sectors drive global hydrogen demand. However, demand for hydrogen is expected to expand to other industry sectors, such as transportation, power generation, and heating. In parallel with the growth in hydrogen demand, uses for CO2 captured from hydrogen production with carbon capture, utilization, and storage (CCUS) continue to develop.
Federal and Provincial Government Hydrogen Plan
The federal government has set a hydrogen strategy for Canada, leading to actions that will establish hydrogen production to achieve Canada's goal of net-zero emissions and be a leader in clean and renewable fuels by 2050. The near-term demand for hydrogen will be influenced by the market readiness of applications and commercial applications (e.g., heavy-duty trucks, power generation, industrial feedstock, and heat for industrial sites).
Alberta developed a hydrogen road map to enable large-scale production of low-cost and low-carbon intensity hydrogen. The Alberta Industrial Heartland region near Edmonton has the advantage of becoming one of the first hydrogen-producing hubs in Canada. It has access to plentiful natural gas sites, potential CCUS sites, and an existing hydrogen pipeline. Leveraging the existing infrastructure will reduce the upfront production costs of new hydrogen projects. Other Alberta advantages include experience and technical capacity in producing, handling, and using hydrogen at the industrial scale, positioning the province as the largest hydrogen producer in Canada today. Alberta has the necessary skilled workforce that pioneered the Canadian energy industry and is poised to support the emerging clean hydrogen economy.
Production in 2023 and Forecast
In 2023, hydrogen production without CCUS was estimated to be 2.1 million tonnes, while hydrogen production with CCUS reached 0.5 million tonnes. The hydrogen production forecast involves weighing the risks based on the likelihood of meeting the project’s operational date and production capacity.
Figure S9.1 shows the forecast for hydrogen production in Alberta.
Current uses of hydrogen in Alberta include industrial applications, such as chemical production, oil refining, bitumen upgrading, and nitrogen-based fertilizer production. ATCO is blending hydrogen with natural gas for residential heating systems. Other potential uses through pilot projects are for transportation, including hydrogen fuel-cell vehicles (cars, buses, trucks) and hydrogen co-combustion engines primarily for heavy-duty applications.
Projects
Several companies have announced hydrogen projects in Alberta:
- Air Products’ first hydrogen liquefaction facility with CCUS in Western Canada is under construction.
- Suncor and ATCO announced jointly building a production facility for clean hydrogen in the Alberta Industrial Heartland region. The project investment decision is expected in 2024.
- ITOCHU Corporation of Japan, in partnership with Petronas Energy Canada, has signed a memorandum of understanding with the Government of Alberta to advance a project to build in Alberta a natural gas-based ammonia facility with CCUS to export ammonia to Asian markets.
- Dow Chemical has announced its intention to construct the world’s premier integrated ethylene cracker with net-zero carbon emissions at its Fort Saskatchewan site.
Several pilot projects across the province are exploring new deployment applications and methods of cost-effective clean hydrogen production:
- Ekona Power received Cdn$79 million equity investment to commercialize its low-cost clean hydrogen production technology.
- The Invest Alberta Corporation, Alberta Transportation, and the Canadian Infrastructure Bank have signed a memorandum of understanding to build a Calgary to Banff hydrogen-powered rail passenger project. The project is currently under design.
- The Alberta Zero Emissions Truck Electrification Collaboration (AZETEC) plans to introduce two hydrogen-electric haul trucks to provincial highways in 2024, moving between Calgary and Edmonton.
- ATCO and Qualico are partnering to build a fully hydrogen-powered community near Edmonton. Construction has started, and the project is expected to be completed by spring 2024.
Limitations or Risks to the Outlook
Future construction costs for hydrogen facilities with CCUS are expected to be lower. Hydrogen production is expected to become competitive as carbon taxes increase in the coming years. The economics of the hydrogen industry depend on climate change policies and government support. These dependencies and current high investment costs would probably affect short-term investment decisions.
As we navigate the evolving landscape, continued attention to regulatory frameworks, and technological advancement will be critical in shaping the trajectory of the hydrogen industry in Alberta.
Learn More
- Methodology
- Data [XLSX]
