As a Canadian Pacific Railway locomotive rolls along the tracks in Calgary, something is clearly wrong.
It’s the typical size and look you’d expect, but what’s missing is the quiet diesel grunt.
Instead, this locomotive is powered by hydrogen fuel cell and battery technology as part of a trial by the railroad to study whether low-emission vehicles are robust enough and reliable enough to one day revolutionize operations at the company.
Over the past few years, there has been an increased focus on hydrogen’s potential to decarbonize many industries and help countries meet their climate goals, while renewing energy systems along the way.
The next 12 months will be critical, experts say, in understanding whether this vision can become a reality in the near future or remain a figment of the imagination for decades to come.
There is excitement in the Canadian industry about what 2023 will bring, as several demonstration projects are set to take place and construction will also begin on a massive new hydrogen production facility.
Testing is in progress
For CP Rail, the hydrogen locomotive completed its first “revenue trip” a few months ago with the expectation that trains will be operating in Vancouver, Edmonton and Calgary by the end of 2023. The next step will be testing the technology through the Rocky Mountains.
“It’s a perfect test bed. If you can work there: heavy load, cold temperatures, the most challenging working conditions I have ever experienced in my career. And if it works there, it will work everywhere,” Keith, CEO of CP Creel, said during a speech at the RailTrends 2022 conference in November.
“If this proves its mettle and passes the very tough validation test we’re going to give it, [it will] really be transformative for this industry.”
Relying on hydrogen as a fuel source is not a new concept, but the technology is advancing to improve performance at the same time as there is increased focus on climate change around the world.
A new hydrogen-powered City of Edmonton bus sits in the parking lot of a transit garage. A second hydrogen bus will operate in nearby Strathcona County as part of a one-year pilot project. (Julia Wong/CBC)
This year will mark the start of several other experiments as hydrogen-powered buses and semi-trucks hit the roads.
A pair transit buses will carry passengers in Edmonton and nearby Strathcona County as part of a one-year pilot project.
New manufacturing facility
Meanwhile, a hydrogen fueling station is being built in Edmonton to allow the Alberta Motor Transport Association to test semi-trucks on the province’s highways. The organization aims to offer up to four different truck models this year for local companies to test.
“I think the next 12 months is very much a proof of concept,” said David Leisel, an energy systems architect at the Transition Accelerator — a non-profit organization created to help Canada meet its climate goals — and professor emeritus of in Biological Sciences at the University of Calgary.
David Liesel, an energy systems architect at the Transition Accelerator and professor emeritus at the University of Calgary, says hydrogen is cheaper than diesel, the higher cost of transporting hydrogen and building the Edmonton fueling station present challenges. (CESAR)
“We can actually make hydrogen cheaper than diesel today,” he said, although the challenge is the much higher cost of transporting hydrogen and building a gas station.
“We’re only going to drive those prices down as we scale,” Liesel said.
Hydrogen has been around for a long time, but there is renewed enthusiasm for the sector as a way to jump-start the transition to a low-carbon energy world.
Hydrogen is an energy carrier and, according to experts, it can be used mainly for heating and as a fuel for transport.
The amount of pollution associated with hydrogen depends on how it is produced. For example, if solar or wind facilities – instead of a coal-fired power station – produce the electricity used to produce hydrogen, emissions are relatively low.
Construction has just begun in northeast Edmonton on the world’s largest hydrogen plant by Air Products Canada. The $1.6 billion facility will use natural gas to produce hydrogen with the goal of sequestering 95 percent of emissions and storing them underground.
Francois-Philippe Champagne, federal minister of innovation, science and industry, is featured in Edmonton in November 2022, announcing funding to build Air Products’ $1.6 billion hydrogen plant, the world’s largest. (Janet French/CBC)
“The hydrogen challenge is a bit like the chicken or the egg challenge,” said Kevin Krausert, CEO of Avatar Innovations Inc., a Calgary-based firm that helps develop energy transition technologies.
“Who’s going to build a big hydrogen facility if there’s no demand for it, and who’s going to build a whole bunch of hydrogen trucks or trains if there’s no hydrogen to deliver it?” So you have this kind of challenge between supply and demand. “
Construction of the Air Products facility, he said, begins to overcome that problem.
‘Too Little Too Late’
There is momentum in Canada’s hydrogen sector, but some experts warn that the most critical question over the next 12 months is not so much the technology itself, but how willing governments are to support the industry.
“This is compared to what is happening to the south of us with the support of the United States policy, which is very strong and very attractive and can take all the capital [investment] that we can spend here and channel down south,” said Ed Whittingham, an Alberta-based public policy consultant.
Alberta-based public policy consultant Ed Whittingham says Canada will have to step up if it wants to be competitive in hydrogen technology with the U.S., which under new legislation can cover up to 75 percent of the cost of producing low-carbon hydrogen. (CBC)
The US Government’s Inflation Reduction Act [IRA] includes substantial subsidies to not only offset the cost of building a hydrogen facility, but also to subsidize its operations, among other funding programs.
In some cases, Whittingham said, up to 75 percent of the cost of producing low-carbon hydrogen could be covered by the U.S. government.
“What’s really going to determine whether hydrogen stays niche and remains small scale in Canada or becomes mainstream and Canada really becomes a serious competitor is our response to what the U.S. has done,” he said.
“And it could be a case, frankly, of too little too late.”
The federal government is offering a clean hydrogen investment tax credit to attract companies to develop new clean hydrogen projects. The tax credit will be worth at least 40 percent for projects that meet certain labor and low emissions requirements.
In its autumn 2022 economic statement, the federal government warned that subsidies offered in the United States were more generous and increased the challenge of attracting investment north of the border.
WATCH | Competition between Canada and the US to attract investment:
What’s holding back Canada’s hydrogen industry?
Ed Whittingham is a public policy consultant and former executive director of the Pembina Institute.
“Canada will need to do even more to secure our competitive advantage and continue to create opportunities for Canadian workers,” the report said. “Without new measures to keep pace with the IRA, Canada risks being left behind.”
Ottawa is currently accepting feedback on the proposed hydrogen tax credit.
$1.6 billion Air Products facility under development in Edmonton gets $300 million from federal government to construction and an additional $161.5 million from the Government of Alberta once the plant is operational.
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