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'This is the evolution of energy': Ottawa and Alberta kick in $461 million for clean hydrogen facility


The federal and Alberta governments said they would contribute $300 million and $161 million, respectively, to entice Pennsylvania-based Air Products and Chemicals Inc. to build a $1.6-billion hydrogen facility outside Edmonton, one of the largest steps to date towards decarbonizing the oilsands.

Alberta’s oil and gas sector accounted for 27 per cent of Canada’s greenhouse gas emissions in 2020 — more than any sector. That means Canada’s climate promises are unachievable without curbing the production of oil.

Hydrogen could help. It is primarily an industrial chemical, but politicians and oil executives this year have become increasingly excited about its potential as a clean fuel export. The federal government has proposed that Alberta’s natural gas resources could be used in combination with carbon capture technology to produce liquid hydrogen. When burned as a fuel, liquid hydrogen releases no pollutants or carbon emissions.

“We are changing the nature of the production of energy,” Industry Minister François-Philippe Champagne said at a press conference in Edmonton on Nov. 8. “This is the evolution of energy.”

Air Products has said it hopes to sell a significant portion of its low-carbon hydrogen to Calgary-based Imperial Oil Ltd., which would in turn use it as feedstock in a proposed “renewable diesel” facility in Alberta. Imperial also hopes to use some low-carbon hydrogen to create clean electricity, and for use as a fuel in downstream sectors, creating carbon offsets that the company said would make its proposed facility “net-zero.”

The proposed Air Products facility would use natural gas and auto-thermal reforming, combined with carbon capture technology, to produce hydrogen, which the company estimates would capture 95 per cent of the carbon emissions.

“This project is a significant technological step forward,” Seifi Ghasemi, chief executive of Air Products, said at the news conference. “We are demonstrating with the technology we employ in this facility that it is possible to make net-zero hydrogen from hydrocarbons.”

We are changing the nature of the production of energy

François-Philippe Champagne

Matthew Klippenstein, regional director for the Canadian Hydrogen and Fuel Cell Association in Western Canada, said the facility will make a large difference in reducing the emissions’ profile of Canada’s hydrogen sector.

Although a proponent of hydrogen as a bridge technology for the energy transition, Klippenstein said every kilogram of hydrogen produced — without the carbon capture and other features that Air Products is proposing — leads to about 10 kilograms of greenhouse gases.

Klippenstein said the new Air Products facility would produce about 1,500 tonnes per day of hydrogen, which he estimated represents about 18 per cent of the country’s total production.

“Some people will be tempted to say this is a fossil fuel industry handout,” said Klippenstein. “What this really is, is the Alberta equivalent of the federal government providing huge support to the Ontario steel industry to decarbonize.”

The $300 million from the federal government comes from its multi-billion dollar Strategic Innovation Fund, which is designed to help industry decarbonize. Already, the fund has been used in Ontario to help steel plants reduce their emissions. It has also been used to entice automakers to invest in electric vehicle supply chain manufacturing and assembly facilities across Ontario and Quebec, and to help various other industries across the country decarbonize.

Whether investing in hydrogen will ultimately help Canada reduce its emissions is a topic that remains under debate. Many critics point to an article published this past summer in the scientific journal Nature. The article contends that using fossil fuels such as natural gas to produce hydrogen creates risks of “carbon lock-in and stranded assets” — in other words, a shift to hydrogen only would prolong the use of fossil fuels without creating meaningful reductions in emissions.

“It should not be ignored that the development and expansion of a global hydrogen economy is also associated with climate-damaging emissions,” the papers authors wrote.

Air Products plans to use technology that it says will eliminate the emissions cited in the paper. Still, there are larger questions about whether hydrogen can compete with battery electric vehicles, which are being adopted at a far more rapid pace.

By contrast, adoption of hydrogen fuel cell vehicles remains slow. At the press conference, Ghasemi even marvelled that he was standing in front of “a real hydrogen bus.”

Alberta already produces significant amounts of hydrogen and contributed $161 million from its Petrochemicals Incentive Program to entice Air Products. Ghasemi predicted that hydrogen would take off as a clean energy. “We are doing something that is economically viable, technologically a showcase for the world,” he said.

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