Hydrogen ‘technology gate’ hinders huge potential: expert

Canada and Germany have inked an agreement to work towards exporting hydrogen from the East Coast as Europe’s largest economy pursues alternatives to reliance on Russian natural gas.

The announcement on Tuesday came as German Chancellor Olaf Scholz wrapped up an energy-focused tour of Canada. The federal government also struck an agreement on raw materials for electric vehicle batteries with Mercedes-Benz and Volksawagen. However, it remains unclear how Ottawa will address Scholz’s call for Canadian LNG to play a “major role” in Germany’s energy transition.

Kevin Krausert is CEO and co-founder of Avatar Innovations, a Calgary-based venture capital firm and startup accelerator that pairs entrepreneurs with the biggest companies in Canada’s energy patch. He says hydrogen has huge potential, but a “technology gate” will require investment in order to rapidly commercialize the industry.

For example, Krausert said an electrolyzer technology breakthrough is required to produce so-called “green hydrogen” with saltwater, as some of the East Coast projects propose. Given the energy crisis unfolding in Europe, he warns against waiting for that to happen.

“We’ve got an energy crisis now. Not in 10 years,” he told Yahoo Finance Canada’s Editor’s Edition.

Got a question for Kevin Krausert? Email Jeff.Lagerquist@yahoofinance.com and let him know what interests you in the world of clean energy and technology.

Jeff Lagerquist is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jefflagerquist.

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Video Transcript

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JEFF LAGERQUIST: Hydrogen was another big focus for Trudeau and Scholz on this trip, but experts have warned that it carries a big price tag, and it won't help too much in the near term, given the sort of state of the science and costs and all that. Kevin, how does that fit with your assessment of where we're at on hydrogen today?

KEVIN KRAUSERT: Hydrogen is-- holds huge potential. It's held huge potential for 20 years, but for a variety of reasons, it hasn't gotten off the ground. The challenge with hydrogen is-- and I guess the opportunity as well-- is you can produce it anywhere you basically have water and electricity. You take water, you run an electrolyzer through it, it releases the oxygen and the hydrogen.

Then the challenge then becomes, is, where do you produce it? Currently, right now, that technique is only working with fresh water. So you need a steady source of fresh water, as opposed to saltwater. So you'd need a breakthrough in electrolyzer technologies to make it economic to do it with saltwater, as some of the East Coast projects are proposing.

And/or you produce it from natural gas, which is another highly economic way of doing it by either capturing the carbon that's emitted into the atmosphere or cracking the methane molecule, which is one carbon and four hydrogens, and doing something else with the carbon other than releasing it into the atmosphere.

So then once you have it, it's very tricky to transport. Hydrogen is the smallest element. As a result, it doesn't interact well with steel. It really makes steel brittle. And so you've got to figure out a way to transport it either on some sort of breakthrough technology on the storage or transporting it through ammonia, which is binding that hydrogen with nitrogen. So high level, we need to be investing in these technologies.

The question I have is, we've got an energy crisis right now, not in 10 years. We need to be able to doing both. We can walk and chew gum at the same time. So this is all great, but it's a technology game, which is the work that we're doing at Avatar. But let's just be realistic around the time frame we have to kind of be delivering it.

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