2 minute read 25 Oct. 2021
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Canada’s hydrogen future — risks and rewards

By Lance Mortlock

EY Canada Managing Partner, Energy

Forward-thinker. Strategist.

2 minute read 25 Oct. 2021

Climate change is becoming increasingly threatening globally and hydrogen can play an imperative role in reducing carbon emissions.

Why has the conversation around hydrogen meaningfully progressed over the past few years?

The answer lies with the climate change action urgency and hydrogen’s potential role in reducing greenhouse gas (GHG) emissions. For organizations across the globe, the question of reducing GHG emissions to mitigate rising temperatures has become paramount.

Achieving the GHG targets Canada has adopted is a multifaceted challenge that has several substantial barriers and will require meeting increased demand for affordable energy. Transitioning from the status-quo of fossil fuels to less carbon-intensive and more cost-competitive options will require investment, innovation, government subsidies and incentives.

Emissions reduction opportunity

2030

6%

of delivered energy to Canadians

2050

30%

of delivered energy to Canadians

GHG emissions abated

2030

45

Mt CO2eq.

2050

190

Mt CO2eq.

The abatement of

190

MtCO2eq is equivalent to removing over 41 million passenger cars driven for one year.

The opportunity hydrogen presents

Today, hydrogen is predominantly used as an industrial feedstock. While these use cases will continue to be applicable in the future, expanding the market application of hydrogen will be critical to realizing Canada’s GHG emission reductions goals and the 2050 net-zero target. It has broad applicability to replace diesel fuel in the transportation and mining sectors, gasoline in automobiles, and natural gas for heating and the production of low-carbon ammonia.

Key Canadian statistics

2020 H2 production

3

million tonnes

2050 projected H2 production

20

million tonnes

2050 projected GHG reduction

190

million tonnes or 26% per year

Key Canadian Statistics provided from the Canada 2020 Hydrogen Strategy by Natural Resources Canada

Currently, an estimated 3 million tonnes (Mt) of hydrogen (H2) are produced in Canada, which makes the country a top 10 producer globally. The production is expected to increase significantly as hydrogen expands its applicability across various industries and markets. Canada is well positioned to be a leader in hydrogen-related fields, benefiting a wide range of stakeholders and creating the potential for a nationwide opportunity in the space.

Regions across the country have access to the foundational elements required for hydrogen production and can use the knowledge and expertise of Western Canada to meet and accelerate the advancement of net-zero goals.

Consider whether your business is prepared to support the hydrogen future

  1. Should hydrogen become an organizational focus, and is our organization well positioned to compete?
  2. What parts of our business operate in the hydrogen value chain?
  3. Are our competitors positioning themselves to participate in the hydrogen future?
  4. What operating, investment and infrastructure requirements does our organization need to fulfil to capitalize on hydrogen opportunities?
  5. What subsidies and other government incentives exist with regard to hydrogen, and which of them apply to our organization?
  6. Do we have a complete understanding of the hydrogen market, and have we considered different scenarios associated with development of the energy sector?
  7. What other organizations can we partner with to bring complimentary capabilities together to drive value?

Energy market players in upstream, midstream and downstream could see new growth opportunities as well as several challenges and uncertainties over the hydrogen revolution. The time to support the development of the hydrogen ecosystem is now.

EY has prepared the following report to provide an overview of hydrogen and identify some of the many ways Canadian organizations can participate across the value chain. For a deep dive into these materials, download our report Canada’s hydrogen future – risks and rewards and contact our professionals to discuss the future of hydrogen in your organization.

The report provides a thought-provoking perspective on hydrogen’s role in our future. It aims to fuel constructive discussion around the risks and rewards of hydrogen. 

Canada’s hydrogen future — risks and rewards

Download report

Summary

In today’s environment, organizations can no longer ignore the physical, market and regulatory impacts of climate change. There is a global trend for organizations to seek to respond to the risks and opportunities related to climate change. This report provides a thought-provoking perspective on hydrogen’s role in our future and its impact on climate change.

About this article

By Lance Mortlock

EY Canada Managing Partner, Energy

Forward-thinker. Strategist.