Carbon Capture and Hydrogen in Edmonton and Canada

Tell us about Capital Power and what it does in the hydrogen space. 

Capital Power is a publicly traded, independent power producer headquartered in Alberta. We have over 6,400 megawatts (MW) of capacity located in 26 plants across North America, with four more in development. We are very growth-oriented and future-oriented. In fact, our purpose is to power the world sustainably for generations to come, and so we work very hard on reducing emissions from thermal generation and expanding North America’s renewable portfolio as well.

“The pathway to Canada’s net-zero ambitions by 2050 is a linear journey from carbon capture, utilization and storage to hydrogen and a carbon-neutral power grid.”

In terms of hydrogen, the pathway to Canada’s net-zero ambitions by 2050 is a linear journey from carbon capture, utilization and storage to hydrogen and a carbon-neutral power grid. We have been working on emissions reductions from thermal generation since 2007 and have had a number of carbon capture, utilization and storage (CCUS) projects. CCUS is one of the two main ways we produce hydrogen for energy production. The other way is through the electrolysis of water. Closer to 2050, that will be the main way of producing hydrogen for power consumption. However, between now and then, we believe that more hydrogen will be produced from CCUS.

How do you see the hydrogen space in Edmonton, Alberta and Canada evolving over the coming years?

It is important to note that there are some incredibly keen and brilliant minds working on hydrogen all over Canada. In Edmonton and in Alberta specifically, there are some really cool projects. For example, the province announced earlier this summer that they were going to donate money to Air Products’ $1.3 billion hydrogen complex. There is already momentum going to make Alberta a hydrogen hub for Canada. People at both of our major universities are focused on this directly.

In addition, there are really cool investments being made. For example, recently there was an announcement that the province will be providing money to the Canadian Pacific Railway (CP Rail). They will be retrofitting two locomotives to be powered by hydrogen. These locomotives are going to carry freight trains between Calgary, Edmonton and Lethbridge completely emissions-free. This is a pilot program but they are hoping that as they gain experience with this, they will be able to decarbonize the entire freight rail system in Canada. It is very exciting that a lot of this really cool work is happening right here in Calgary, in Edmonton and Alberta.

A lot of the technology to produce hydrogen or capture carbon to make fuels like hydrogen is already there, but the demand is not. We need to create that demand. In the CP Rail example, my understanding is that they are using water electrolysis to create hydrogen in Calgary, but they are using CCUS to create hydrogen in Edmonton. It is our hope that people will want to have their goods transported by hydrogen-fuelled trains. 

How attractive is Canada’s CCUS space to foreign investors?

It is important for the audience to understand that CCUS is really important because it is the only type of technology that will avoid emitting new carbon and also potentially remove carbon from the atmosphere.

“We want to be able to continue burning fossil fuels without emitting greenhouse gases as Canada has abundant fossil fuel resources.”

Strangely enough, there are a lot of investors, especially outside of Canada and the United States that understand better than some Canadians and Americans that we do not necessarily hate fossil fuels, but the carbon emissions and greenhouse gas emissions from them. We want to be able to continue burning fossil fuels without emitting greenhouse gases as Canada has abundant fossil fuel resources. These fossil fuels could keep the cost of decarbonization low if we can make them more environmentally friendly. There are environmental, social, and governance (ESG) investors in Europe who understand this very well and are very interested in our progress on propelling decarbonization using CCUS. Foreign investors rely on the fact that industry experts believe that CCUS, along with expanding renewables and energy efficiency, will be key in achieving net-zero by 2050. 

As far as Canada is concerned, our record on human rights and some social problems is very good but we are also becoming an environmental leader. There is a growing group of ESG investors directly investing in responsible companies who are also placing pressure on banks to consider ESG considerations into their financing. They are placing pressure on insurance companies to consider ESG in their assessment of business risks, and they are also placing a lot of pressure on credit rating agencies to consider ESG considerations in their assignment of credit ratings. 

All of this is coming together to a point where ESG considerations are at least as important to many investors as financial ones. We like that trend as think that is the right thing for Canada and the world, and so we would like to befriend ESG investors everywhere. 

What are Edmonton and Canada’s unique selling propositions in the hydrogen and CUSS space?

Alberta has a burning platform and we need to figure this out. Because of that, Alberta has attracted some of the best minds in the world to help us address the energy transition problem and convert an industry that has been a heavy emitter of greenhouse gas into a lower or no carbon industry. We have a lot of expertise as well as the desire to be a world leader. 

“Alberta has the right geology that will allow us to capture and sequester both carbon and hydrogen.”

In terms of hydrogen and CCUS, Alberta has the right geology that will allow us to capture and sequester both carbon and hydrogen. Hydrogen storage is a bit of a long path at the moment because hydrogen has a very low volumetric density and so it is harder to capture and more expensive to store. It is also harder to move through pipelines at the moment, at least through our existing pipeline system because it is caustic and burns at very low temperatures, bringing safety concerns. However, experts in Alberta are working on key problems such as how to move hydrogen through pipelines and how to store captured carbon and use it to create hydrogen. Along with our desire to solve this problem, the biggest advantage we have is that we have so many great minds focused on this issue at the moment.

What has to be done and by who to accelerate Canada’s hydrogen opportunity? 

At a high level, three things need to happen. First of all, we need policy to settle down. I talked about the size of some of the investments that are needed. When a company makes a two billion or five billion-dollar investment that they hope is successful for decades, their shareholders would assassinate them if they did that irresponsibly. Companies need to have confidence in their project economics, and that requires policy stability. We need to all row our canoe in the same direction so that we can take these big bets. 

We are also going to need subsidies in the beginning. The demand is not all there yet and so companies providing carbon-reducing technologies now will need assistance from the government. We are seeing this support in Alberta and Canada in terms of investments in CCUS which will form the hydrogen infrastructure needed to take us out to 2050.

“The level of planning needed to convert natural gas pipelines to hydrogen will require a lot of coordination.”

Finally, we will need a high level of coordination. This is probably the hardest thing to do. Eventually, we will want to convert pipeline systems over to hydrogen. That requires the collaboration of industry players, regulators and the community. The level of planning needed to convert natural gas pipelines to hydrogen will require a lot of coordination. There are a lot of people out there that want us to be like a genie and make it all happen but it is actually going to take a lot of planning and careful thought.