Feds must ‘justify’ hydrogen cash: expert

By Palak Mangat May 15, 2024


Photo of Justin Trudeau talking with German Chancellor Olaf Scholz in front of Canadian and German flags.

Prime Minister Justin Trudeau and German Chancellor Olaf Scholz signed a Joint Declaration of Intent to establish a Canada-Germany Hydrogen Alliance in 2022. (Justin Trudeau.)

Natural Resources Minister Jonathan Wilkinson is being urged to better help Ottawa “justify” investing billions in hydrogen production and development, as one expert remains skeptical there is a strong market for its “end use.”

Wilkinson published a progress report on the feds’ 2020 hydrogen strategy in April, which seeks to position the country as a “world-leading producer, user and exporter of low-carbon hydrogen” and related technologies on the path to net-zero by 2050. The strategy also aims to have 30 per cent of Canada’s end-use energy be from clean hydrogen by that date. 

The report identifies three recommendations the government is lagging on, all of which fall under the umbrella of ensuring there is end-user uptake of hydrogen.

It suggests governments and industry must do more to boost “awareness” about the uses and benefits of hydrogen, find ways to connect hydrogen supply to international markets, and help users determine whether it is a viable option for their operations.

Since 2020, 80 end-use projects have been identified, mainly in “clusters” in B.C., Alberta, Quebec and southeastern Ontario. They include transportation like truck and bus projects, alongside those focused on ports, rail, vehicle refuelling and heavy industry.

For York University environment professor Mark Winfield, the conclusions are in line with what recent “literature has been saying, which is that the potential markets are being overestimated.”

Winfield told Parliament Today that while hydrogen will play a role in decarbonizing difficult-to-electrify sectors like steel, fertilizer and heavy transportation manufacturing, the feds’ strategy overblows the fuel’s use case.

“The actual end uses are much more limited than people think,” he said, noting environment commissioner Jerry DeMarco also flagged the issue when he said the department was being “overly optimistic” about hydrogen uptake in his 2022 audit of the strategy.

For instance, the progress report forecasted that low-carbon hydrogen could account for up to 35 per cent of the transportation sector’s energy use by 2050 — a projection that assumes wide pickup in Canada’s freight and marine sectors.

With Ottawa spending billions to boost hydrogen production, Winfield said the government’s sales pitch to the public about the prospects of hydrogen needs to line up with reality.

“We’re spending an awful lot of money to develop a supply chain for which there may not be any demand. That’s the bottom line,” he said. “We’ve got all this money going into hydrogen production, but we just aren’t seeing the end uses either domestically and certainly internationally, which would justify those investments.”