How Canada Can Fulfill Its Hydrogen Leadership Potential

Canada is endowed with vast territories, an abundance of water, mineral resources, biomass, hydropower (fourth largest in the world), and natural gas and oil. It is also home to one of the largest nuclear plants in the world. These are the perfect ingredients for building a strong hydrogen value chain, from minerals extraction to low-carbon and renewable hydrogen production, distribution, and utilization.

Moreover, Canada is already very well placed as it is one of the top 10 largest hydrogen producers in the world and a leading producer of hydrogen fuel cells. It is certain that Canada will benefit from the growing global demand for hydrogen. There is also a national push to develop CO₂ value chains and CCUS further as a solution to cutting CO₂ emissions. The Canadian government launched its Hydrogen Strategy in December 2020, outlining the country’s vision and action plan to harness hydrogen’s potential as a clean energy source. In May 2024, NRCan also issued the Hydrogen Strategy for Canada Progress Report – see Table 1 for some highlights. 

Critical raw minerals (CRM) are an important aspect of the hydrogen sector, and Canada is uniquely and excellently positioned in terms of exploration, extraction, processing, downstream product manufacturing and recycling, and renewable energy and energy storage (e.g., battery and hydrogen) technologies. These value chains will create wealth and sustainable, well-paying jobs in the country. In 2023, the Canadian government published a report entitled “The Canadian Critical Minerals Strategy — From Exploration to Recycling: Powering the Green and Digital Economy for Canada and the World,” which highlighted the opportunities for Canada to grow and build expertise along this green energy value chain as well as attract investors whilst respecting the rights of Indigenous peoples. Amongst Canada’s 31 critical minerals highlighted in this report, six have been prioritized by the government that will kick-start the clean energy transition — lithium, graphite, nickel, cobalt, copper, and rare earth elements (e.g., lanthanides — dysprosium, lanthanum, neodymium, etc.). 

Canada’s Hydrogen Opportunity

The target is for Canada to be a large producer of both low-carbon (LCH2) and renewable hydrogen (RH2) that will be used in various sectors as a feedstock and fuel in industry, in fuel cell vehicles for transportation, for storage or grid balancing for electricity, and as a fuel for buildings and communities. Any surplus will be exported as hydrogen derivatives, such as ammonia, to European countries like Germany, which will depend on hydrogen imports to power its economy, and the Netherlands. 

However, LCH2 and RH2 are currently expensive when compared to high-carbon hydrogen (HCH2). In 2023, HCH2 was produced at around US$2 per kg, compared to as much as US$10-15 per kg for LCH2 and US$20-30 per kg for RH2 (depending on the price of the “green electron”). Most countries are targeting a clean hydrogen cost of less than €2 per kg by 2030 or US$1 per kg, the latter of which comes from the US Department of Energy Hydrogen Energy Earthshots “1-1-1” initiative: US$1 for 1 kg of clean hydrogen in 1 decade. This target entails a vast increase in LCH2 production and more efficient and cost-effective hydrogen production and distribution/delivery technologies. 

Like in other regions of the world, Canada’s primary focus to reach net zero by 2050 has been on targeting industries and sectors that are difficult to decarbonize, especially energy-intensive industries like iron, steel, mineral and chemical processing, commodity chemicals, fertilizer, and heavy-duty transportation like freight trucking, shipping and aviation. In order to tackle these sectors, Canada is strategically creating and implementing so-called “Hydrogen Hubs” (like in Europe with the “Hydrogen Valleys”), clustering several industrial and government-funded initiatives to carry out both small and large pilot projects and technology demonstrations across the complete hydrogen value chain, from production to transport, distribution, end use, and storage. These hubs would also attract light and heavy-duty transportation manufacturers and power-to-gas manufacturers, to name a few. 

Projects like the Edmonton Region Hydrogen Hub, British Columbia’s Hydrogen Gateway and the SFU Clean Hydrogen Hub demonstrate Canada’s commitment to building comprehensive hydrogen infrastructure and innovation. In other regions like Quebec, the emphasis is on decarbonization via battery, hydrogen and other (ultra) low-carbon energy production technologies through its Vallée de la transition energétique (Energy Transition Valley). To achieve these ambitious projects, government support is crucial, and the Clean Hydrogen Investment Tax Credit will aim to provide CA$17.7 billion for clean hydrogen production. 

Capitalizing on Canada’s Hydrogen Advantage

At a House of Commons witness appearance in November 2022, I made the following recommendations: 

1. Accelerate the deployment and capacity of low-carbon intensity hydrogen technologies and renewable energy systems and work internationally with provinces and municipalities to accelerate the development of clean hydrogen codes and standards and the implementation of “hydrogen hubs” across Canada from west to east.
2. Engage with stakeholders, including Indigenous communities, and quickly implement community-led clean energy projects.
3. Innovate in low-cost and highly efficient hydrogen production technologies with better integration with renewable energy systems, better hydrogen storage and hydrogen transport systems.
4. Focus on local strategic minerals and sustainable materials for clean energy for the heating, transport, and industrial sectors, as well as innovations in recycling.
5. Implement policy and funding to support low-cost, clean hydrogen production in line with the US Inflation Reduction Act 2022, allowing Canadian manufacturers and project developers to compete for investment, develop and retain human capital, and create jobs.
6. Attract international experts and labour and put in place faster and much more efficient immigration processes.
7. Invest in extensive R&D programs and state-of-the-art R&D infrastructure to validate the technology and generate innovation, IP, and new industries, as well as in training programs for the next generation of Canadian hydrogen and clean energy engineers, scientists, technologists, and economists.