$25 Billion Up For Grabs In Canada’s Progress-Mild, Actuality-Poor Hydrogen Technique

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Over the previous few years I’ve revealed assessments of the hydrogen methods of a number of jurisdictions, together with america, Australia, Japan, Morocco, Algeria, Egypt, the EU, and the Canadian province of Ontario, amongst others. Information of the German chancellor coming, cap in hand, begging for liquid pure gasoline and hydrogen from Canadian politicians as a part of his vitality disaster world tour a few years in the past crossed my display, and when requested I’ve given my opinion of the Maritimes’ hopes of a hydrogen export success story.

However I’ve averted Canada’s hydrogen technique. And it has been avoidance. Canada continues to be wrapped across the axle by the legacy fossil vitality business. Canada’s authorities, particularly because the Liberals took cost once more in 2015, has diversified radically, dropping oil, coal, and gasoline percentages of GDP to solely 0.9% mixed as of 2020, with a quick upward blip because of the European vitality disaster since. That’s down from 8.3% within the early Eighties, indicative of Canada’s progress of the non-fossil segments of its economic system.

Regardless of that, all politicians nonetheless pander to the oil and gasoline business, not simply conservative ones. For no good purpose, the Liberal authorities purchased a pipeline with no future as a result of its homeowners realized that there was no financial case for rising its capability. Subsequently, the crown company accomplished tripling its capability for a vastly greater value of CA$34 billion (US$25 billion) than initially budgeted and it’s entered operations as of this month. My projection, based mostly on shut scrutiny and evaluation of vitality and transportation tendencies globally, together with evaluation of the standard of Alberta’s crude and the price of refining it, is that the pipeline will probably by no means attain full capability, will see diminishing capability by 2035, and certain be bankrupt by 2040.

Canada dedicated with the remainder of the G20 to get rid of fossil gas subsidies in 2009. On the time, the Conservatives have been in energy and paid solely lip service to the pledge. The Liberals began attempting to unravel the subsidies once they took energy in 2015, however foundered on the absurd tangled shoals of line objects in dozens of ministries and companies the place fossil gas lobbyists through the years had managed to slide in benefits for the business.

Pure Sources Canada was higher considered till very not too long ago as Fossil Fuels Canada With Some Individuals Doing That Different Stuff. Subsidies for fossil fuels ballooned in the course of the vitality disaster on the time when the business was seeing huge income. Throughout COVID, extra billions have been despatched to the business, earmarked for ‘cleanup’ of the left-behind mess that the business wasn’t bothering to wash up itself.

Many components of Canada have accomplished a superb job of decreasing greenhouse gasoline emissions. Ontario was a pacesetter globally in shutting down coal vegetation, pledging to take action within the early 2000s and finishing the job in 2013, avoiding 37 million tons of CO2e yearly. Quebec is a number one jurisdiction for electrification.

However features elsewhere within the economic system have been fully matched by rising oil and gasoline emissions in Alberta particularly, but additionally Saskatchewan. Methane emissions have additionally risen with elevated fracking, burning of pure gasoline to energy oil and gasoline services, and chilly heavy oil processing with sand on the Alberta-Saskatchewan border.

Canada’s slowly rising carbon worth and rebate is studied globally as a number one and fiscally conservative, market-based strategy to sweeping greenhouse gasoline emissions out of each nook of the economic system. It’s working, so after all it’s being attacked by the Conservatives, the place populist and simple-minded “Axe the tax” slogans with no pretense of a greater strategy to exchange it are gaining floor.

Sadly, the best way Canadian politics works is that the smart, centrist Liberals retain energy for 10-15 years, then Canadians get uninterested in them and we throw elections to the Conservatives for some time. This used to work properly when the Conservatives have been a reputable and severe center-right occasion, within the welfare of all Canadians, aligned with empirical scientific actuality and having tight management over their radical fringe. Typically even exceptionally properly, as within the Brian Mulroney days that noticed NAFTA, the Montreal Accord, and the acid rain treaty come into drive. These days are gone, and the Conservatives are a bunch of lightweights with little bench power and insurance policies written by among the most conservative parts. Mulroney was probably the final credible conservative chief aligned with empirical actuality, regardless of his flaws, and he tried to get the present crop to simply accept and lean into the truth of local weather change earlier than his passing.

It’s possible that the subsequent election will see the Liberals out of energy and the Conservatives in energy, probably with a majority. They’ll unravel just about all the good work on local weather and probably diversification of the economic system whereas they’re at it, beholden and aligned as they’re to the fossil gas business in Alberta.

Whereas I can look with relative dispassion and distance on the hydrogen foibles of the remainder of the world, it’s troublesome to keep up emotional objectivity for the topic in Canada. It’s miserable. Therefore, the avoidance. However like these disagreeable however obligatory visits to medical doctors, it’s time to face it.

The impetus for this was Michael Liebreich forwarding me Canada’s progress report on its 2020 hydrogen technique. Sure, 4 years have handed since Canada revealed its personal addition to the groaning bookshelf of misguided methods on the Swiss Military molecule.

His pithy remark was “take a look at the assets it’s absorbing! 31 motion factors, should contain many a whole lot of individuals, after which it’s a number of tens of tens of millions right here, a number of tens there, it’s a whole lot of tens of millions of {dollars} being [commonly used and somewhat vulgar phrase indicating wasted effort]. Wonderful!”

I’m definitely not going to argue.

This chart from the 2020 doc is pretty typical for this class of factor, and serves as a useful gizmo to make it clear that Canada had bitten deep into the hydrogen-for-energy apple and despatched right into a fairytale daydream. At the moment Canada makes use of hydrogen to crack and cleanse its very heavy Alberta crude, manufacture ammonia-based fertilizers, and a handful of a lot decrease quantity finish makes use of. Experiments with hydrogen for transportation have failed throughout Canada, with British Columbia, dwelling to Ballard Energy and lots of different hydrogen vitality ecosystem companies, having a quiet coverage of ignoring hydrogen for just about all transportation after the disastrous Whistler Olympics bus trial.

Even in 2020, it was clear that battery-electric autos have been going to dominate roads, and that rail electrification was a worldwide answer that solely North America was not actively progressing on. Regardless of that, the technique’s imaginative and prescient for 2050 was 5 million gas cell autos on Canada’s roads. That’s one in 5 autos having gas cells, which was clearly not going to occur given international failures of hydrogen gas cell trials, together with in Canada, and the failure of hydrogen gas cell autos to promote. Nearly the final hydrogen fleet in Canada, Quebec’s 50 Mirais, have been quietly returned to Toyota late final 12 months with out fanfare or evaluation of the failure.

Solely 11 months after the technique got here out, I revealed my projection of aviation demand and decarbonization by way of 2100, and never solely was I projecting a powerful alternative for electrification, however felt it probably that sustainable aviation biofuels would dominate the sector. In spite of everything, they have been already being bunkered and have been clearly going to be inexpensive, whereas e-fuels could be vastly dearer, one thing I revealed on once I checked out direct air seize agency Carbon Engineering. NREL e-kerosene within the chart under is biokerosene, and the pathways to biofuels are huge, as are the biomass feedstocks out there from waste streams.

It took a number of months longer for me to get round to a whole workup and projection by way of 2100 of maritime transport, however the identical story performed on the market, with all inland and most quick sea transport merely electrifying, long-haul transport diminishing quickly as we gained’t be transport fossil fuels, and biofuels offering the vitality required the place batteries don’t suffice.

Additionally in 2022, Nature revealed a paper which did the price and technical evaluation to seek out that it wasn’t mass or quantity of batteries which have been limiters in maritime energy, however capital value. At a worth of US$100 per kWh, 1,500 km routes have been economically aggressive with present bunker fuels with out together with any damaging externalities. We’re already underneath $100 per kWh within the early months of 2024. At $50 per kWh, 3,000 km routes have been aggressive. Transportation battery big CATL has introduced that it will likely be transport batteries for $56 per kWh within the fourth quarter of this 12 months.

There isn’t any place for hydrogen as a transportation gas, and this was clear in December of 2020 when the technique was revealed, not less than for individuals who had accomplished the price workups. Equally, e-fuels are a lifeless finish, uncompetitive with batteries and grid ties on the bottom and uncompetitive with biofuels for longer haul aviation and transport. Anybody trying on the precise numbers and precise prices of how hydrogen and artificial fuels have been manufactured have been seeing this clearly lengthy earlier than 2020. I’ve had conversations with international thought leaders like Dr. Joe Romm and Bruce McCabe, each of whom did the price workups within the 2000s and realized the identical factor.

That is extra clear now, with the Worldwide Power Company’s e-fuels replace of late final 12 months making it clear that artificial fuels would value 4-6 instances present fossil fuels, whereas biofuels would solely be 2-3 instances the price.

To be clear, the Canadian hydrogen technique’s low-carbon fuels class does embrace biofuels processed with hydrogen, one thing which is a progress space, however precise utilization shall be restricted to aviation and maritime transport.

The pure gasoline substitute class is solely delusional. A kilogram of hydrogen has 0.12 gigajoules of warmth vitality, so 8.3 kilograms are required for a gigajoule. The worth level anybody real looking now imagines for inexperienced hydrogen sooner or later is US$5 per kilogram for manufacturing, and the truth is that present strike costs are averaging simply over US$10. Choosing out the low finish of that, 8.3 kilograms would value US$41.50 {dollars}, or CA$47.

What’s the present value per gigajoule of pure gasoline in Canada? In BC, it’s CA$2.23. In Ontario, it’s slightly below CA$3. That is the worth of heating for residential, business, industrial, and electrical era warmth being paid at the moment, unique of distribution and administrative adders. One of the best case state of affairs is 16-21 instances the price of that. It makes the heating oil prices in japanese Canada pale by comparability. And pure gasoline is way inexpensive to retailer and distribute than hydrogen, so connection and distribution prices will enhance as properly. The fact of inexperienced hydrogen delivered to houses and companies would probably be 25 instances the price.

Nobody goes to pay this a lot for warmth when there are alternate options, together with warmth pumps, induction stoves, electrical arc furnaces, wind generators, and photo voltaic panels. Inexperienced hydrogen will not be remotely viable as a substitute for pure gasoline besides as an industrial feedstock for issues that completely require hydrogen, reminiscent of ammonia, and they’re few and much between.

Blue hydrogen is cheaper than inexperienced hydrogen, together with having greater lifecycle greenhouse gasoline emissions, however solely by about half in one of the best case state of affairs. Which means 8-10 instances the price per gigajoule to make it, however nonetheless with the price adders for storage and transportation. There isn’t any world by which a rustic that makes the selection to energy itself with hydrogen is economically aggressive with smart international locations that keep away from it and easily electrify with renewables.

The ten million tons of hydrogen to exchange pure gasoline within the ‘transformative’ state of affairs in 2050 are specious nonsense, they usually have been specious nonsense in 2020.

You’ll be aware that grey crude manufacturing is the most important shopper of hydrogen in each eventualities in 2030. That’s correct, as Alberta’s crude is each very heavy and excessive in sulfur, the 2 traits which drive up demand for hydrogen in refineries. The belief that Canada’s refineries are literally going to extend manufacturing of gasoline and diesel based mostly on Alberta’s crude by 2050 flies fully within the face of local weather motion and financial actuality. The world is pivoting away from burning petroleum merchandise.

By 2050, the world shall be properly down the trail of electrification of transportation and biofuels displacing fossil fuels globally. Canada’s hydrogen technique assumes a rise in petroleum manufacturing.

The fact for Alberta’s crude is that it will likely be first off the market. It is going to be required to decarbonize its extraction, processing, and refinement additional, which implies burning filth low cost pure gasoline to energy steam-assisted gravity drainage, burning filth low cost pure gasoline to energy fossil gas services and pipelines, and utilizing grey hydrogen to refine Alberta’s crude shall be off the desk. The latter is the massive kicker, because it requires about 7.7 kg of hydrogen to refine a single barrel of the stuff, per a workup I did mid-last 12 months. Even at US$2.50 for blue hydrogen, that’s a US$19 high quality low cost towards Brent crude by itself.

Inexperienced or blue hydrogen will enhance the standard low cost towards aggressive crudes globally whereas the market is awash in low cost, low-sulfur crude that’s near water. The mixture will imply that Alberta’s product gained’t discover patrons. As an alternative of Canada’s refineries being a progress marketplace for hydrogen, they’ll be ramping down and shuttering.

You’ll be aware that different industrial makes use of barely transfer the needle on demand between 2030 and 2050. That’s the one precise marketplace for hydrogen, because it contains each ammonia fertilizers and metal manufacturing, the place hydrogen is perhaps used as a decreasing agent however positively not as a supply of warmth.

I developed my first projection of world hydrogen demand in late 2021, lower than a 12 months after Canada revealed its hydrogen technique. The writing was on the wall already. Michael Liebreich’s hydrogen ladder was already in model 4.1 at that time and informing international discussions in regards to the precise future for hydrogen.

The final time Liebreich and I mentioned this, over dinner in London final 12 months, his projection for finish recreation hydrogen was greater than mine, however nonetheless a lot decrease than the fantasies of a hydrogen economic system. His hydrogen ladder contains coding to point the place hydrogen has to compete with organic pathways, for instance methanol, and direct electrification pathways. With each replace, and it’s now at 5.0, increasingly finish use instances fall into the rung of doom, the place there may be zero financial viability.

These prices per gigajoule aren’t remotely exhausting to work up and are lifeblood analyses for the general public concerned within the hydrogen technique. The prices of decarbonizing Alberta’s heavy, bitter crude are available to the individuals who participated within the hydrogen technique. Why didn’t they inform the technique when so lots of the contributors can do the maths?

This chart on metal manufacturing from the technique exhibits the place Canada’s head was at in 2020. They have been underneath the phantasm that inexperienced hydrogen could be low cost, out there at a price to metal producers of US$1-2 per kilogram. That’s properly underneath the price of manufacturing inexperienced hydrogen, and manufacturing prices exclude all the prices of storage, transmission, and distribution of hydrogen.

Black and grey hydrogen at the moment, the place hydrogen pipelines exist as in Germany and Texas, prices US$6-8 per kilogram delivered. It prices over $10 when trucked. That’s the most cost effective hydrogen that may exist, made out of filth low cost pure gasoline with none carbon seize.

Inexperienced and blue hydrogen will value rather more than that. Boston Consulting Group revealed a bit late in 2023 saying that the ‘consensus’ of €3 per kilogram inexperienced hydrogen by 2030 was not remotely real looking, and that €5-8 was the probably vary. That’s the price of manufacturing the hydrogen, not the price of delivered hydrogen. As I mentioned on the time, the consensus was amongst STEM- and economics-illiterate fantasists. The common strike worth for inexperienced hydrogen manufacturing offers in 2023 was US$10.24 per kilogram.

The very excessive value per gigajoule of hydrogen and the very current alternate options of warmth pumps, warmth pump sizzling water heaters, induction stoves, and the like implies that there shall be no hydrogen gasoline utility distribution community. The price of hydrogen delivered could be based mostly on customized constructed pipelines, not leveraging a large buyer base.

There isn’t any world by which present Canadian metal vegetation, clustered in southwestern Ontario, will get inexperienced hydrogen for US$1-2. That’s the one progress marketplace for hydrogen. There are three companies I’m conscious of, Boston Metals, Fortescue, and a 3rd whose title escapes me, that are already demonstrating direct discount of iron ore into iron utilizing electrical energy and electrolysis processes with none hydrogen concerned. I’m awaiting additional outcomes from that, however anticipate it’s prone to dominate that business together with biomethane as a decreasing agent in present DRI syngas applied sciences from Midrex and ArcelorMittal. We’re already seeing European metal companies turning down huge subsidies to make inexperienced metal with hydrogen as a result of the hydrogen prices excess of anticipated.

Canada’s Hydrogen Technique Doesn’t Begin From Actuality

Common readers will know the place that is going, having learn my (ignored) strategic steering to Ontario, RMI, and others. Having labored professionally in technique improvement and consulting for about 25 years, amongst different issues I’ve learn just about each e-book on the topic. The one one I like to recommend for enterprise and coverage discussions — not army discussions — is Richard Rumelt’s Good Technique Dangerous Technique.

Rumelt defines the kernel of a great technique has having three parts. First is {that a} bleak, pragmatic, and clear-eyed perspective of actuality should be the idea. After that, insurance policies on what avenues a company or nation will probe for benefit and to keep away from dangers should be created. Then motion plans should be in place.

For those who get actuality improper, every thing else falls aside, and that’s what Canada’s hydrogen technique has accomplished. Like Australia’s internet zero plan which fantasizes a couple of international hydrogen export business that can allow them to export much more vitality than they already do — the nation exports 4 instances as a lot fossil gas vitality as their complete economic system consumes — Canada’s technique begins with a false assumption that hydrogen is a serious participant in vitality and as such falls over badly.

Consequently, Canada’s progress has been principally non-existent. Seven restricted truck and bus trials underway. 4 prepare trials claimed, however one was a three-month vacationer prepare trial in Quebec final 12 months, they usually should be counting CPKC’s — the amalgamation of Canadian Pacific and a US railroad agency — trials throughout North American to rise up to 4 trials.

5,700 households served by tiny percentages of grey hydrogen blended with pure gasoline, one thing which will increase the price of the gasoline and diminishes the vitality it may possibly present. There are 15.3 million households in Canada, so this homeopathic trial is lower than the focus of carbon dioxide within the ambiance and vastly much less important. It’s a faint hope gasp by the gasoline utilities to delay the inevitable utility dying spiral that they need to be actively engaged on by strategically downsizing their networks, sub-isolation community by sub-isolation community, as truly clear-eyed gasoline utilities like Utrecht’s are doing.

Eight working hydrogen refueling stations, which is up one from 2020, though the one in Quebec Metropolis’s suburbs is gathering mud after the governmental fleet was deserted.

There’s a declare of $527 million in revenues for hydrogen sector firms, which is exceptional as Ballard has misplaced a median of $55 million yearly since 2000. Most hydrogen revenues come by way of large grants from governments for hydrogen bus and truck trials that are deserted as quickly because the governmental faucets shut.

Apparently virtually 4,300 persons are employed full time within the business, about 0.2% of Canada’s workforce. I assume that features numerous governmental staffers engaged on lifeless finish insurance policies, agreements and requirements. Whereas I’m not a small authorities ideologue by anybody’s normal, this can be a place the federal government may avoid wasting cash. It features a bunch of fossil gas business varieties attempting vainly to fake that the absurd prices per gigajoule of hydrogen will truly be paid by anybody. If the latter weren’t getting huge subsidies and governmental grants, I wouldn’t be significantly incensed about it, however most of this debacle is being funded by tax {dollars}, together with those that I pay.

Of the 78 tasks, solely 6 are at the moment in building and they’re just about all blue hydrogen from pure gasoline. The overwhelming majority haven’t reached remaining funding resolution, and as soon as once more the worldwide statistics on hydrogen manufacturing tasks make it clear that they’re unlikely to. Boston Consulting Group reported late final 12 months on the 1,300 proposed inexperienced hydrogen tasks of their information set, and solely 0.2% by tonnage had reached operation with the overwhelming majority coming nowhere close to remaining funding resolution. Bloomberg New Power Finance reported that of the 140 tasks of their information set, solely 10% had any type of off take settlement, most of them not agency.

This would be the actuality for Canada’s proposed hydrogen tasks as properly. Most of them are based mostly on false assumptions in regards to the market and the prices of producing and transporting hydrogen, and as spreadsheet jockeys who’re required to validate numbers and use real looking ones in value workups do their work, most of those will quietly disappear.

Naturally, of the six that underneath building, a giant one in Edmonton is manufacturing blue hydrogen utilizing autothermal reforming — heating pure gasoline within the absence of oxygen in a pressurized container to fabricate 4 tons of carbon for each ton of hydrogen — and nonetheless letting a minimal of 10% of the greenhouse gases escape, in all probability not counting methane leakage. They’re planning to make use of that for the non-existent transportation and electrical era markets for hydrogen, in order that’s not going to finish properly. I assume that they’re hoping that Edmonton’s crude oil refineries will take it, however Shell has already obtained billions for its personal blue hydrogen facility for that function and as famous, demand will plummet. Nonetheless, CA$475 million in funding for this blue hydrogen failure within the making. It’s fully unsurprising to me that the most important tasks which have truly reached building are from fossil fuels.

Naturally HTEC in Burnaby obtained virtually $25 million of governmental largesse and is constructing a small inexperienced hydrogen plant to place hydrogen into the tiny refueling community within the province. All to energy the handful of Toyota Mirais left within the province, together with UBC’s fleet which is usually parked on the HTEC station on Granville ready for the pump to work, for hydrogen to be out there in any respect, or for different drivers to complete the gradual refueling course of. Among the cash is earmarked to purchase a handful of hydrogen vehicles which they hope to hire out for drayage and the like, however the odds of the vehicles sitting gathering mud is excessive.

A renewable diesel facility in Prince George simply accomplished building, beating the Teralta waste hydrogen deal it appears. No assertion of how a lot cash it obtained within the progress report, however press releases point out not less than $43 million of the $380 million value was funded by the federal government. Not less than this facility will have the ability to present gas for long-haul maritime transport, so it’s not a waste of money and time. It’s attention-grabbing that the biodiesel facility didn’t take the hydrogen from the chloralkali plant. The power shall be manufacturing about 400 tons of renewable diesel a day from numerous oils and desires about 38 kilograms per ton of product. That means about 15 tons of hydrogen, and the chloralkali plant had 12 tons a day begging for a taker. As an alternative, that 12 tons shall be burned to displace 1 / 4 of the pure gasoline burned in an area paper mill, one thing that might merely electrify, and may have.

Whereas they’re claiming six tasks are underneath building, these are the one three that the doc has any reference to being in building, with a number of others in operation.

Naturally, lots of the claimed advantages are locations the place carbon seize is being utilized to present manufacturing — yet one more subsidy to the fossil gas business. Between the overwhelming pure gasoline reformation within the tasks underneath building and the existence of carbon seize, that is clearly a state of affairs the place the federal authorities is giving extra money to the improper business once more.

There’s $17.7 billion in funding tax credit up for grabs, $1.5 billion within the Clear Fuels Fund, $315 million from the Internet Zero Accelerator up to now, $15 billion within the Canada Development Fund which has a hydrogen precedence, virtually $900 million from the Canada infrastructure Financial institution up to now, $680 million within the Zero Emissions Car Infrastructure Program which is dedicated to losing a bunch of it on 30 hydrogen refueling stations, $2.7 billion within the Zero Emission Transit Fund which pays a premium for transit operators to waste time on hydrogen, $550 million within the Incentives for Medium and Heavy-Responsibility Zero-Emission Autos which can fortunately pay trucking companies to purchase hydrogen vehicles, one other $75 million within the Zero-Emission Trucking Program which as soon as once more will fortunately throw cash at hydrogen vehicles, and a cool billion within the Inexperienced Municipal Fund which can present grants to cities and cities which can be too silly to keep away from hydrogen just like the financial plague it’s. After 4 years, there’s just about nothing however fossil gas tasks to point out for it.

Approaching $25 billion of governmental cash is offered to be principally wasted on hydrogen tasks. A lot of these funds will help smart electrification, however numerous it’s only a lifeless finish. A lot of the funding will, after all, circulation to the fossil gas business for blue hydrogen. Their lobbyists and grant writers are among the many finest in Canada.

After all, to place this in context, the federal government did spend $34 billion on a fossil gas pipeline to nowhere. The hydrogen folly might be worse.