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EY Canada’s new report, Canada’s hydrogen future — dangers and opportunities, in cooperation with The Canadian Energy and Climate Nexus, highlighted the significant opportunity presented by hydrogen.

By 2050, the total Canadian yearly market potential might exceed $100 billion, supporting Canada’s objective of decreasing greenhouse gas (GHG) emissions to 511 million tonnes of carbon dioxide equivalent (Mt CO2 eq) by 2030 — down from 729 Mt CO2 eq in 2018.

“The scale of this reduction requires a multifaceted approach to establish a clean-fuel energy mix that can continue to meet the country’s growing energy demands,” explains Lance Mortlock, EY Canada Energy Leader. “Canada has an immediate opportunity to integrate existing energy infrastructure into the evolving hydrogen value chain to become a global leader in hydrogen production, distribution and market use. It’s time for leaders across public and private sectors to assess the size of the opportunity and how their respective organizations can help enable the hydrogen future.”

Hydrogen now accounts for less than 1% of Canadian energy demand, but is expected to account for up to 27% by 2050. If projections prove accurate, hydrogen could lower Canadian GHG emissions by 26% in the same time period as less carbon-intensive and cost-competitive alternatives.

“While current use cases like industrial feedstock, ammonia production and vehicle fuel cells will continue to be applicable in the future, there are many other market applications of hydrogen — such as blue ammonia production and diesel, gasoline and natural gas replacements — that are still in early stages of exploration,” adds Mortlock. “Greater investment, innovation, government subsidies and incentives will be required to accelerate the transition from the status quo of fossil fuels to less carbon-intensive and more cost-competitive options like hydrogen.”

The paper finds many impediments at each level and substage of the value chain and makes four recommendations to accelerate the use of hydrogen as a source of energy:

Supporting policy and regulation: In addition to incorporating hydrogen into all levels of government’s energy policies, environmental rules and fuel standards will be required to level the playing field and promote investment, research, and innovation.

Developing ecosystems: By deploying the full value chain at a cost-effective scale, local regional ecosystems can demonstrate the sustainability of hydrogen as an alternative fuel source without requiring continued public investment and subsidies.

Potential ecosystems would have a stable supply, the capability to produce low-cost hydrogen, significant nearby markets, the ability to connect supply and demand, and active business, government, and academia.

Supporting potential manufacturers through financial incentives, funding programs, subsidies, and long-term policies can go a long way toward encouraging the private sector to pursue development of the necessary market applications.

Access to international markets: Continuing to develop partnerships such as the International Partnership for Hydrogen and Fuel Cells in the Economy and the International Energy Agency’s Hydrogen and Advanced Fuel Cell Initiatives can help expand the potential export market and encourage upstream investment.

Nedim Husomanovic

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