The role of hydrogen in Canada’s transition to net-zero emissions
This paper explores the role of hydrogen in helping Canada meet its net-zero emissions goals. On the supply side, we caution against the blanket categorization of production methods by “colours”, and instead encourage a focus on the metrics that matter: cost and lifecycle emissions per kilogram. Hydrogen derived from methane, with sequestered carbon dioxide (i.e. “blue” hydrogen) will likely be the method of choice for some time in western Canada, while hydrogen via electrolysis (i.e. “green”) will likely take off in Québec, spreading to other provinces as clean renewable power costs fall. High levels of sequestration (i.e. 90%+) and upstream methane leakage prevention will be essential for hydrogen to meaningfully contribute to Canada’s net-zero goals. On the demand side, we find while hydrogen can do many things, its highest value will be in areas where alternatives for decarbonization are costly or scarce, such as steel and chemicals production, as well as potentially rail and heavy freight. We take a deeper dive into the potential for hydrogen in the electricity system, both by absorbing excess generation via electrolysis, and providing much needed reliability as a peaking product, enabling higher shares of variable renewable energy. We find that by 2030, hydrogen has the potential to compete with natural gas as a dominant firm power source.
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