Creating a hydrogen hub in Calgary region will require government funding and significant private sector investment

The Calgary region could kick start a hydrogen-fueled freight-hauling transportation corridor with as little as four tonnes of hydrogen per day in a province that already produces more than 7,000 tonnes of hydrogen daily.

But a fully fledged commercial hydrogen system for the region will require substantial investments in completely new value chains, including low-carbon hydrogen production facilities along with fueling stations and pipelines, according to researchers at the Transition Accelerator.

Government funding and policy support will be needed for pilot and early-stage hydrogen commercialization projects, Dr. David Layzell, PhD (photo at left) transition pathway principal at the Transition Accelerator, said during a webinar.

“This does need government engagement to make this happen. We’re not going to see this kind of transformation happen without government support,” he said.

The Transition Accelerator is a pan-Canadian organization that works with others to identify and advance viable pathways to a prosperous, competitive and net-zero emissions Canada in 2050.

Alberta already produces “the vast lion’s share of hydrogen in Canada,” mostly in the Edmonton region, said Zachary Cunningham (photo at right), energy systems analyst with the Transition Accelerator.

Nearly all this hydrogen is derived from natural gas and all of it is currently used as feedstock, mainly for oil refining and upgrading and the production of chemicals – mostly methanol and ammonia, he said.

“However, using hydrogen as fuel is new and hasn’t really made an impact on hydrogen demand yet,” Cunningham said.

Although burning hydrogen fuel doesn’t release greenhouse gas (GHG) emissions the amount of GHGs released during hydrogen production depends on how the hydrogen is produced, he noted.

Unabated steam methane reforming – the hydrogen production method most commonly used in Alberta – has the highest carbon intensity, or emissions per unit of hydrogen produced. The cost of this method ranges from $1.50 to $3.50 per kilogram of hydrogen.

Producing hydrogen with electrolysis, by using electricity to split water into hydrogen and oxygen, has the lowest carbon intensity if renewable energy sources like solar and wind power are used. The cost of this method ranges from $3.50 to $7 per kilogram of hydrogen.

Layzell said in order to establish a hydrogen economy in the Calgary region and move to net-zero emissions, hydrogen production will need to have low greenhouse gas emissions. This could be accomplished by coupling carbon capture and storage technology with current natural gas-derived hydrogen production methods or by using electrolysis with renewable energy sources.

Cunningham said in the early stages of adopting hydrogen as a fuel, it makes sense to focus on the most economic use cases.

It currently costs a lot more for transportation fuels, such as gasoline and diesel, than for fuels such as natural gas used for heating, he said. “Transportation is likely going to be the first pillar of hydrogen demand and that’s what we should be focused on in the initial stages.”

But even focusing just on the transportation sector in the Calgary region will require substantial investments in new hydrogen storage, transportation, production and manufacture of heavy-duty, hydrogen-fueled vehicles, Cunningham said.

“In addition to building a value chain from the ground up, which is a challenge, it's also necessary to build aggregate demand [for hydrogen] at the same time,” he said. That’s because demand will drive down the costs of building out a hydrogen value chain.

The challenge is getting through a “somewhat painful uneconomic stage” to get to where producing, deploying and using hydrogen is economic, Cunningham said. “And arguably we’re here right now in that painful uneconomic stage.”

Initial focus should be on hydrogen-fuelled heavy-duty freight transportation

The federal government’s hydrogen strategy has identified a potential market for hydrogen fuel of about 55,000 tonnes per day by 2050.

With a focus in Alberta on initially using hydrogen fuel in the transportation sector, the strategy that makes sense is to establish a network of hydrogen hubs connected by transportation corridors, Cunningham said.

Based on the Edmonton region already producing most of Alberta’s hydrogen, an Edmonton hydrogen hub was launched in April 2021 with $2.25 million in funding from the federal, provincial and municipal governments. Plans for the hub include more than 25 projects related to hydrogen production, transportation, end use and carbon capture and storage.

It is natural to consider Calgary as the next hub in Alberta, given the busy Highway 2 transportation corridor that connects the two cities, Cunningham said. “This corridor could [provide] the initial demand needed to spur initial infrastructure investments and supply, to which other potential end uses could tap into.”

Layzell said research by the Transition Accelerator shows the largest early-stage opportunities for the commercialization and large-scale deployment of hydrogen are in the heavy-duty transportation sector, deploying hydrogen-fuelled fuel cell tractor-trailer units.

“We need projects to actually pilot new ideas and new initiatives to see if they work, to demonstrate them and get some of the key decision-makers comfortable with this being a different way to deliver energy services,” he said.

The Edmonton hydrogen hub is currently running several pilot projects, including testing hydrogen-fuelled buses in Edmonton and nearby Strathcona. 

In another pilot project, ATCO is blending natural gas containing five-percent hydrogen by volume to supply heating for homes and businesses in Fort Saskatchewan, just northeast of Edmonton. ATCO also has built a demonstration home completely heated with hydrogen.

The Edmonton-based Alberta Motor Transportation Association has been working with Alberta freight-transportation trucking companies, in a pilot project called AZETEC, to test two Class 8 tractor-trailer units – each weighing 63.5 gross tonnes – hauling freight round-trip between Edmonton and Calgary. This pilot is expected to start this month, Layzell said.

In order to drive demand for hydrogen and incentivize trucking companies to buy hydrogen-fueled heavy-duty trucks, at least three new hydrogen fueling stations are needed along the Highway 2 transportation corridor – one each in Edmonton, Red Deer and Calgary, Layzell said.

Each of these fueling stations would require four tonnes of hydrogen per day, or a total of 12 tonnes, he said. “We also need a commitment for at least 10 years that [each] station is going to be able to deliver that kind of hydrogen in 10 years.”

To make the Highway 2 hydrogen transportation corridor economically viable will take building over four years to a fleet totalling 185 hydrogen-fueled tractor-trailers, transporting freight in the corridor by driving 300 days per year and six days per week, or 650 kilometres per vehicle per day or 195,000 km per vehicle annually.

“These vehicles would only last four years before they’re basically going to need a major overhaul and be traded off either into oblivion or into short-haul markets,” Layzell said.

That means manufacturers will need to build and sell 46 hydrogen-fuelled heavy-duty trucks every year for 10 years to meet the needs of the Highway 2 hydrogen hubs and transportation corridor, he said.

It would cost an additional $300 million to $400 million over 10 years to produce that many hydrogen-fuelled trucks and operate them on the highway, compared with the cost of producing and operating conventional diesel-fuelled trucks, Layzell said.

The hydrogen required could be transported to the fueling stations in liquid hydrogen trucks, each carrying two tonnes of liquid hydrogen. This will require a total of at least six trucks to supply the three fueling stations along the transportation corridor.

Calgary region has numerous opportunities to grow the hydrogen system

Once the heavy-duty truck freight-transportation hydrogen corridor is established, there are numerous opportunities to grow the Calgary region’s hydrogen hub, Layzell said.

In the transportation sector, demand for and use of hydrogen would increase substantially if hydrogen-fueled heavy-duty trucks started operating around Calgary’s ring road and running west to Banff (and possibly as far as Vancouver), east to the Saskatchewan border, and south to the U.S. border – a network all connected by hydrogen hubs.

There’s also an opportunity to build and run a hydrogen-fuelled train from the Calgary International Airport to downtown and west to Banff National Park.

In Calgary, the Canadian Pacific Kansas City Railway has built and tested a first-in-the-world hydrogen-fueled locomotive, made by converting a diesel engine.

Calgary’s hydrogen hub could be further expanded by using hydrogen fuel in City of Calgary buses, other vehicles, wastewater treatment plants and other city buildings, Layzell said.

The city is running a pilot project to test hydrogen in various vehicles and equipment in the municipal fleet, such as a fork lift, excavator, passenger vehicle, a Class 8 snow and ice truck, and a Class 8 refuse truck and backhoe.

“Fuel cell-electric vehicles, especially buses, get a much better fuel efficiency in terms of energy used per kilometre than a diesel engine,” Layzell noted.

The City of Calgary also is piloting, with London, U.K.-headquartered Atlantica Sustainable Infrastructure and TC Energy, the blending of hydrogen with natural gas to supply district heat in downtown Calgary.

Layzell said he expects Alberta energy regulators this year will consider approving the widespread blending of hydrogen with natural gas to supply homes and businesses. “Without [approving it] it’s really going to hold back the hydrogen economy.”

It is technologically feasible to use hydrogen-fueled combined heat-and-power systems to supply city facilities and buildings with both heat and electricity, he said.

Hydrogen fuel could also be used in Calgary International Airport vehicles and even to replace jet fuel, although this would require a major redesign of airplanes and their engines. For the foreseeable future, Layzell said, the “drop-in” low-carbon fuel for airplanes is going to be sustainable aviation fuel made from biomass – which Air Canada has already started using.

Expanding the Calgary region’s hydrogen hub beyond the Highway 2 transportation corridor would require building hydrogen-production facilities, fueling stations and new or repurposed pipelines in the region.

“For space and water heating, industrial heating or power generation, or export markets, we need to move hydrogen by pipeline,” Layzell said.

In total, he said, there is potential for a Calgary region hydrogen hub to support the production, deployment and use of more than 4,600 tonnes of hydrogen per day in all the potential applications. This will require the region to produce hydrogen coupled with carbon capture and storage at industrial scale in order to make the hydrogen supply economical and low-carbon.

The Calgary region has better solar and wind energy sources than Edmonton, Layzell noted. “Theres a very significant opportunity for solar and wind or other carbon-free power to be made into hydrogen.”

Also, he added, in complementing the Edmonton hydrogen hub, “There’s an opportunity for the Calgary region to focus on distributed, smaller-scale production of hydrogen where it is needed.”

Said Layzell: “It’s very important that as we look at trying to develop strategies to moving to a lower-carbon emission, a net-zero future, that we recognize that all parts of the [hydrogen] value chain actually have to make a profit and see opportunities in moving forward in order to keep this value chain together and be successful.”

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See also: Study says Calgary region has the “right stuff” for a hydrogen hub

Southeast Alberta well-suited to become Canada’s second hydrogen hub: report

Dedicated pipelines essential to creating a hydrogen economy in Canada: report