On November 5, 2021, Alberta released its Hydrogen Roadmap (the Roadmap), identifying future policy actions and providing support for the growing low-carbon or “clean” hydrogen sector in the province. The policies envisioned in the Roadmap are set to roll out in the coming months and years, and aim to position Alberta as a global hydrogen supplier of choice by 2030 and capturing a slice of the growing market estimated to become worth more than $2.5 trillion by 2050.

As Alberta, Canada and the international community transition to low-carbon energy systems, clean hydrogen presents a significant opportunity to capitalize on Alberta’s natural resources, oil and gas sector expertise and existing infrastructure. The Roadmap expresses support for industry participants pursuing clean hydrogen projects, but lacks important details around new spending (targeted at $30 billion in capital investment by 2030), regulatory enhancements and standards.

Ambition

The Roadmap sets out Alberta’s ambitions for the hydrogen sector in 2030. These ambitions touch on both integration of hydrogen into Alberta’s energy consumption mix and hydrogen exports. By 2030, the Roadmap envisions that

  1. clean hydrogen will be integrated at-scale into Alberta’s domestic energy system for use in transportation, heat, power generation and renewable energy storage, as well as industrial use
  2. Alberta will have established itself as the global supplier-of-choice in clean hydrogen exports

To illustrate measures of success in meeting this ambition, the Roadmap sets out “incremental” and “transformative” 2030 scenarios. The Roadmap aims to support attainment of its transformative scenario, where clean hydrogen is integrated into provincial energy systems on a larger scale, supported by a policy environment that facilitates demand creation and technological development.

Policy pillars and actions

To meet Alberta’s ambitions, the Roadmap names seven policy pillars with actions and implementation objectives under each. Actions and implementation are described as near term in the years 2021–2023, and long term beyond 2023. Each pillar aims to support clean hydrogen development toward the Roadmap’s 2030 horizon.

Build new market demand

The Roadmap aims to support hydrogen blending into natural gas utilities in the near term. Implementing this objective will include amending the Gas Utilities Act [PDF] and the Gas Distribution Act [PDF] to remove roadblocks to hydrogen blending into natural gas distribution systems, and assessing how to build demand for hydrogen in the utility heat market, including options for cost recovery.

Beyond 2023, the Roadmap aims to advance pure hydrogen communities and networks. This will include piloting pure hydrogen in portions of Alberta’s natural gas network for residential and commercial heating.

The Roadmap identifies multiple markets for hydrogen in heating, power generation and storage, transportation, and industrial processes, as well as export to North American, Asian Pacific and European markets.

Enable carbon capture, utilization and storage (CCUS)

In the near term, the Roadmap envisions advancing CCUS hubs and exploring opportunities to improve CCUS economics. Implementation measures will include enhancing Alberta’s CCUS regulatory framework, advancing CCUS hubs and partnerships, and leveraging federal funds and incentives. While the Roadmap refers to Alberta’s pioneering Carbon Sequestration Tenure Regulation, it does not describe what steps are anticipated to enhance this framework for CCUS. Our previous post described the current CCUS landscape in Alberta, including its ongoing procurement process for CCUS hubs.

De-risk investment

The Roadmap identifies both near- and long-term objectives to de-risk investment in hydrogen. In the near term, the Roadmap envisions support for clean hydrogen production through the existing Alberta Petrochemicals Incentives Program, and increasing access to capital to support deployments and infrastructure. Beyond 2023, implementation measures include incentives for fuel switching in transportation and development of distribution and refueling infrastructure. The Roadmap also states that Alberta will consider the merits of a Hydrogen Trading Hub that would drive price transparency and global trade.

Activate technology and innovation

The Roadmap proposes support for technology and innovation across the hydrogen value chain in the near term. In 2021–2023, the Roadmap envisions establishing a Clean Hydrogen Centre of Excellence, conducting feasibility studies to inform market development and exports, and supporting pilot and early demonstration projects for both domestic and export market development. More detail is required around both the role and composition of the proposed Clean Hydrogen Centre of Excellence, and funding and procurement for pilot and early demonstration projects.

Ensure regulatory efficiency, codes and standards drive safety

Also important for providing certainty to developers, the Roadmap sets out objectives to ensure regulatory efficiency in the near term by including hydrogen in regulatory regimes with a safety-first mindset. Steps will include harmonizing and clarifying federal and provincial hydrogen regulations, supporting the development of national and provincial codes and standards, and improving access to natural gas and ensuring its quality to support incremental hydrogen production.

Lead the way and build alliances

Under this policy pillar, the Roadmap envisions Alberta building public-private partnership and government-to-government relationships, including with Indigenous governments, to support clean hydrogen development.

In the near term, the Roadmap aims to coordinate the development of clean hydrogen hubs and partnerships across Alberta, support the establishment of Canadian and global carbon intensity thresholds for clean hydrogen and improve public literacy on clean hydrogen.

The establishment of carbon intensity thresholds for clean hydrogen is a key implementation measure under this heading. As the Roadmap illustrates, blue hydrogen produced with natural gas through steam methane reforming (SMR) is currently the most economically competitive form of low-carbon hydrogen production in Alberta. However, the carbon intensity of hydrogen produced through this process exceeds the carbon intensity threshold for clean hydrogen currently endorsed by Canada and recognized in Europe. The Roadmap states that Alberta will collaborate with other jurisdictions to develop science-based carbon intensity thresholds, definitions and measurement and reporting standards for hydrogen production. While the Roadmap is inclusive of all forms of low-carbon hydrogen, such thresholds and definitions will shape the domestic and international market for Alberta-produced hydrogen.

Pursue hydrogen exports

The Roadmap envisions establishing market access and locking in export markets in the near term. Market access is to be pursued through establishing a clean energy corridor with connection through British Columbia and other jurisdictions. The Roadmap notes that liquid hydrogen carrier ships are under development to meet overseas demand. Pipelines will be another important route for hydrogen export, particularly to meet high demand in California. The Roadmap also cites potential to export hydrogen in the form of clean ammonia, and notes remaining challenges in the form of technology barriers for export and the need to establish carbon intensity standards as described above. The province also hopes to pursue hydrogen export memoranda of understanding to lock in exports by 2023.

Hydrogen policy elsewhere

Alberta’s hydrogen ambitions as set out in the Roadmap are complemented by federal policy. In December 2020, Canada adopted its Hydrogen Strategy for Canada (Strategy). The Strategy strives to achieve emission reductions while creating domestic and international economic opportunities through strategies similar to the Roadmap, including strategic partnerships, de-risking investment, updating regulation, pursuing international markets and supporting innovation. We provided an overview of the federal Strategy after its release in December 2020.

Internationally, the Roadmap positions Alberta as on pace with or ahead of other energy industry leaders. In 2020 and 2021, at least 13 other countries globally adopted hydrogen strategies.[1] Norway, whose economy is largely anchored by energy resources, published a roadmap for implementing its hydrogen strategy as part of a June 2021 policy plan for the Norwegian energy industry.[2] Norway’s roadmap sets targets for 2025, 2030 and 2050, and specifically targets creation of five hydrogen hubs to fuel marine vessels in Norway’s significant marine transportation industry, as well as development of industrial production and technology innovation pilots by 2025. Unlike Alberta’s, Norway’s roadmap focuses on creating a domestic market and does not include targets for international trade.

California, a leading U.S. state in emissions reduction policy, has introduced a suite of regulations that incentivizes the up-take of alternative fuel and zero-emission vehicles, and aims to build up alternative fuel vehicle infrastructure. In addition to these incentives, California has put in place hydrogen fuel specifications implementing a recognized international standard for hydrogen fuel quality.[3] These regulatory developments may provide examples for achievement of some of Alberta’s goals for integrating hydrogen into the transportation fuel sector and for regulatory design.

The International Energy Agency’s (IEA) recent tracking report on hydrogen and hydrogen policy development[4] notes that hydrogen technologies have remained resilient through the COVID-19 pandemic. Notably, Canada has emerged as a leader in hydrogen electrolysis, with capacity similar to that of China or half the capacity of the rest of Asia.[5] The high-level ambition and target set out in the Roadmap will, if achieved, position Alberta as a leading jurisdiction in the promising emerging international market for clean hydrogen.

Implications and outstanding details

While the Roadmap offers a clearer picture of Alberta’s ambitions for clean hydrogen production, integration of hydrogen into Alberta’s natural gas utility network and participation in the international hydrogen market, important details that are likely to determine the scale, speed and overall success of the implementation measures it sets out remain outstanding. These missing details include Alberta’s plans to change the CCUS regulatory framework, provide funding for pilot and early demonstration projects, promote public-private partnerships and use the Clean Hydrogen Centre of Excellence to advance Alberta’s hydrogen ambitions.

Implementation of the Roadmap is likely to lead to further questions for policy makers, regulators, market participants and energy consumers, such as how to meet the significant expected demand for electricity to power the hydrogen production, compression and transportation processes. Meeting this increased demand and managing knock-on effects for electricity pricing may prove a crucial challenge in developing a resilient clean energy mix domestically.

Over the coming months, market participants and other stakeholders should watch for details of the Roadmap’s implementation as they become available, as well as steps to implement the Roadmap’s near-term objectives.