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Alberta: Government is Charting a New, Diversified Future for the Natural Gas Sector and Hydrogen Playing a Leading Role

By October 17, 2020 6   min read  (1136 words)

October 17, 2020 |

Alberta’s Natural Gas Vision and Strategy lays out a plan for Alberta to become a global supplier of clean, responsibly sourced natural gas and related products, including hydrogen, petrochemicals, and recycled plastics.

The strategy shows the government’s actions to support the long-term growth and strength of the industry on its way to being a global competitor across multiple sectors.

Canada is among the world’s top five producers of natural gas, with about two-thirds of this production coming from Alberta. The industry employs tens of thousands of Albertans and has the potential to generate billions of dollars each year in revenue. Alberta is also well positioned to expand into new and exciting areas for growth in the natural gas sector.

A healthy and competitive natural gas sector is vital to the jobs and prosperity of all Albertans, and can play a major role in helping meet the growing global demand for sustainable energy. New ways to get the most value out of our natural gas reserves can help diversify our energy sector and help Alberta’s economic recovery.

Invigorating natural gas

Support for the strategy includes;

  • Advocating for natural gas development in Canada
  • Pursuing investment and improving competitiveness
  • Setting up world-class environmental frameworks
  • Enabling investment and involvement across the whole natural gas value chain

There are five sectors of the natural gas industry that have great potential for growth which are highlighted in the strategy: petrochemical manufacturing, hydrogen, Alberta industrial demand, Liquefied Natural Gas (LNG), and the plastics circular economy. In each sector, the Alberta government has set a goal for the future.

Petrochemicals

Alberta becomes a global top 10 producer of Petrochemicals, and expands and diversifies the current portfolio of products manufactured.

  • Alberta has one of the most established petrochemical manufacturing centres in Canada with room for potential growth in new and expanded facilities.
  • According to Alberta’s Industrial Heartland Association, there is an opportunity to grow Alberta’s petrochemical sector by more than $30 billion by 2030, resulting in more than 90,000 direct and indirect jobs over the construction and operation periods of new facilities, and more than $10 billion in revenue for the Government of Alberta from corporate and personal income taxes.

Hydrogen

Large-scale hydrogen production with carbon capture, utilization and storage (CCUS) and deployment in various commercial applications across the provincial economy by 2030. Exports of hydrogen and hydrogen-derived products to jurisdictions across Canada, North America, and globally are in place by 2040.

  • Global demand for hydrogen is projected to increase at least tenfold in the coming decades.
  • The Hydrogen Council estimates that by 2050, the global hydrogen sector could generate US$2.5 trillion per year and create 30 million jobs.
  • Alberta has several advantages in the production of “blue” hydrogen, which is made with ultra-low emissions by upgrading natural gas. The carbon by-product generated from this process can then be captured and permanently sequestered underground or used for another purpose.

Key Growth Areas Hydrogen

Developing a robust clean hydrogen economy can unlock significant economic value for Alberta and Canada while advancing critical environmental outcomes. Deploying hydrogen into the transportation and home heating sectors, and incorporating it as fuel for electricity generation and other industrial processes, is key to Canada’s ability to meet GHG reduction targets under the Paris Accord. Growing demand for hydrogen  provides Alberta with a new strategic opportunity to expand and integrate its natural gas value chain. This will benefit Albertans, Canadians and the world by creating jobs, generating government revenue and contributing clean fuel to the global economy.

Goals: Large-scale hydrogen production with carbon capture, utilization and storage (CCUS) and deployment in various commercial applications across the provincial economy by 2030.

Goal: Exports of clean hydrogen and hydrogen-derived products to jurisdictions across Canada, North America, and globally are in place by 2040.

Opportunity

  • Global demand for hydrogen could increase ten-fold by 2050
  • Alberta is one of the world’s largest producers of hydrogen for domestic industrial processes, including petrochemical manufacturing
  • Alberta has considerable expertise in producing and using low-cost, low-emissions hydrogen. Independent analysis suggests Alberta can be one of the lowest-cost producers of hydrogen in the world.
  • Alberta’s unique geology can facilitate additional carbon sequestration or utilization from hydrogen production.
  • Alberta has existing hydrogen and carbon dioxide transportation and sequestration infrastructure.
    Examples include Air Products’ Heartland Hydrogen Pipeline, the Alberta Carbon Trunk Line, and the
    Quest Carbon Capture and Storage project.
  • Low-cost carbon dioxide captured from hydrogen production can enable enhanced oil recovery, and Alberta is actively pursuing innovation in other uses of captured carbon dioxide.
  • Segments of Alberta’s energy sector are already selectively deploying or piloting hydrogen technology.
  • Momentum is building and Alberta could be a leader in domestic heavy transport decarbonisation, and clean hydrogen production for industrial, electricity and residential heating demands.
  • Hydrogen-derived products, such as methanol and/or ammonia, provide additional opportunity to increase the value of these resources. Methanol is the fastest growing product of the global primary chemical production. These resources do not require new-dedicated transportation infrastructure.

Economic Impact

The Hydrogen Council anticipates a US$2.5 trillion annual market for hydrogen and related equipment as well as 30 million jobs created in the global hydrogen economy by 2050.
• The Roadmap to a U.S. Hydrogen Economy suggests the hydrogen economy in the U.S. could generate:
– US$140 billion per year in revenue and 700,000 jobs by 2030;
– US$750 billion per year in revenue and 3.4 million jobs by 2050.
• Additional analysis is required to determine the specific economic opportunity in Alberta.

Actions

Actions Short-term Actions (Fall 2020–Winter 2021)
• Build alliances and map Alberta’s hydrogen system to determine deployment pathways, partnerships, barriers and gaps (commercial, technology, and policy), technology development opportunities, and targets.
• Establish common interests and partnership opportunities with the Government of Canada, including incorporating Alberta’s interests into a federal hydrogen strategy, to accelerate hydrogen deployment in Alberta and other provinces.

Medium-term Actions (2021 throughout 2023)
• Develop a Hydrogen Roadmap for Alberta detailing best deployment pathways, enabling policies, innovation strategy and funding support.
• Build support among western Canadian provinces to align policy to accelerate the deployment of hydrogen in western Canada.
• Remove red tape to be inclusive of hydrogen deployment and pass enabling policy, legislation, and standards.
• Working with industry, advance pilot projects and early demonstration projects, including supporting infrastructure, to build momentum.
• Explore opportunity to accelerate joint federal/provincial private sector funding to stimulate initial build-out of the provincial hydrogen economy.
• Investigate and consider opportunities for hydrogen as part of overall approach to the LNG export value chain.

Long-term Actions (2023 and beyond)
• Partner with industry leaders to accelerate scaling up and commercial deployment, as well as infrastructure build-out, for key target end-use applications. This includes exploring opportunities for broader hydrogen transportation utilizing existing natural gas infrastructure and pipeline corridors.
• Partner with other governments to ensure hydrogen transmission across Canada is enabled along dedicated economic/resource corridors.
• Attract and secure a world-scale hydrogen for energy export project to Alberta.

 

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