Canada must harness hydrogen sector in climate-change fight: Senator Massicotte
Tags
As the world continues its fight against climate change and its transition towards environmental sustainability, the Government of Canada understands the importance an energy transition will play in its efforts to reach net zero by 2050.
Electricity will play a major role in reducing our carbon emissions in the coming decades. However, there are sectors such as steel and cement production, aviation, trucking and potentially even navigation, where this is not an option. Combined, these sectors account for a large share of our emissions today. Low-carbon-intense hydrogen may be a solution to these issues.
To be successful, Canada will have to overcome some of the challenges of the hydrogen sector and continuously analyze its hydrogen policy.
Attracting investments from both the federal and provincial governments as well as others in the private sector has been highlighted as one of the main challenges. Low-carbon-intense hydrogen as an energy source is a fairly new and costly technology that can be up to 30 times more expensive than natural gas. Given the high cost of production and uncertainty of the role it will play in the future, investors have not been easy to find for some low-carbon-intense hydrogen producers.
The Government of Canada must continue to attract investment by investing in research and development, and funding programs. Hydrogen, as we know it, is not a final product, which is crucial to understand. The government will also have to continue developing tax incentives and regulations to attract these companies to Canada. Some experts argue that green hydrogen will struggle to be competitive without a carbon tax. Such measures must be considered.
As more countries look to fight climate change, it will become more difficult to stay competitive. As things currently stand, the United States has released the Inflation Reduction Act, which puts pressure on all governments to act accordingly or risk being left out of the transition towards a net-zero economy. The act allocated $400 billion to the American transition to a green economy over 10 years, which will undoubtedly attract investment to the United States.
The Canadian government had previously been investing in clean hydrogen but had to take a stronger stance. This was done with the 2022 fall economic statement which included changes in policy and investments towards hydrogen production, as well as carbon capture and storage. We will likely see heightened competition as we approach our deadline of net zero by 2050. The government must continue taking meaningful action to remain competitive in attracting investment.
As expected, federalism often plays a role when dealing with an issue in Canada and hydrogen is no exception as each province and territory has its own priorities and plan. Additionally, much of the regulation of hydrogen policy falls under provincial jurisdiction, meaning provincial governments have the authority to control tax incentives to the sector and develop production regulations.
In a similar fashion, each province and territory can rely on its own strengths to produce hydrogen. We are likely to see the production of green hydrogen in Quebec and Newfoundland and Labrador thanks to their hydroelectricity and wind power. Alberta and British Columbia have significant experience in carbon sequestration, which will help them produce blue hydrogen. Such differences across the country make it difficult to develop a pan-Canadian strategy in hydrogen production, something the government will need to address.
Canada has many challenges to overcome, most notably issues surrounding investment, remaining competitive and developing a pan-Canadian strategy for hydrogen production. There have been some wins but going forward we will need to continue tackling these concerns and adapting to new ones. If we do not face these challenges in the hydrogen sector, Canada may once again fail to meet its critical climate targets.
Senator Paul J. Massicotte represents the division of De Lanaudière in Quebec. He is a member of the Senate Committee on Energy, the Environment and Natural Resources and the Senate Committee on Banking, Commerce and the Economy.
This article appeared in the March 6, 2023 edition of The Hill Times.
As the world continues its fight against climate change and its transition towards environmental sustainability, the Government of Canada understands the importance an energy transition will play in its efforts to reach net zero by 2050.
Electricity will play a major role in reducing our carbon emissions in the coming decades. However, there are sectors such as steel and cement production, aviation, trucking and potentially even navigation, where this is not an option. Combined, these sectors account for a large share of our emissions today. Low-carbon-intense hydrogen may be a solution to these issues.
To be successful, Canada will have to overcome some of the challenges of the hydrogen sector and continuously analyze its hydrogen policy.
Attracting investments from both the federal and provincial governments as well as others in the private sector has been highlighted as one of the main challenges. Low-carbon-intense hydrogen as an energy source is a fairly new and costly technology that can be up to 30 times more expensive than natural gas. Given the high cost of production and uncertainty of the role it will play in the future, investors have not been easy to find for some low-carbon-intense hydrogen producers.
The Government of Canada must continue to attract investment by investing in research and development, and funding programs. Hydrogen, as we know it, is not a final product, which is crucial to understand. The government will also have to continue developing tax incentives and regulations to attract these companies to Canada. Some experts argue that green hydrogen will struggle to be competitive without a carbon tax. Such measures must be considered.
As more countries look to fight climate change, it will become more difficult to stay competitive. As things currently stand, the United States has released the Inflation Reduction Act, which puts pressure on all governments to act accordingly or risk being left out of the transition towards a net-zero economy. The act allocated $400 billion to the American transition to a green economy over 10 years, which will undoubtedly attract investment to the United States.
The Canadian government had previously been investing in clean hydrogen but had to take a stronger stance. This was done with the 2022 fall economic statement which included changes in policy and investments towards hydrogen production, as well as carbon capture and storage. We will likely see heightened competition as we approach our deadline of net zero by 2050. The government must continue taking meaningful action to remain competitive in attracting investment.
As expected, federalism often plays a role when dealing with an issue in Canada and hydrogen is no exception as each province and territory has its own priorities and plan. Additionally, much of the regulation of hydrogen policy falls under provincial jurisdiction, meaning provincial governments have the authority to control tax incentives to the sector and develop production regulations.
In a similar fashion, each province and territory can rely on its own strengths to produce hydrogen. We are likely to see the production of green hydrogen in Quebec and Newfoundland and Labrador thanks to their hydroelectricity and wind power. Alberta and British Columbia have significant experience in carbon sequestration, which will help them produce blue hydrogen. Such differences across the country make it difficult to develop a pan-Canadian strategy in hydrogen production, something the government will need to address.
Canada has many challenges to overcome, most notably issues surrounding investment, remaining competitive and developing a pan-Canadian strategy for hydrogen production. There have been some wins but going forward we will need to continue tackling these concerns and adapting to new ones. If we do not face these challenges in the hydrogen sector, Canada may once again fail to meet its critical climate targets.
Senator Paul J. Massicotte represents the division of De Lanaudière in Quebec. He is a member of the Senate Committee on Energy, the Environment and Natural Resources and the Senate Committee on Banking, Commerce and the Economy.
This article appeared in the March 6, 2023 edition of The Hill Times.