Event highlights – The California market for hydrogen

Understanding international demand for Alberta hydrogen exports

As the world transitions to renewable energy sources, hydrogen will play an integral role in Canada’s and the world’s transition to a low carbon economy. As such, hydrogen represents a significant economic opportunity for the Edmonton Metropolitan Region and the province of Alberta. The race to export hydrogen is on and our region holds some unique advantages and is well suited to become Canada’s first hydrogen node. The Edmonton region is one of the lowest cost places in the world to make low-carbon hydrogen and we have the expertise, talent, infrastructure and resources (low-cost natural gas and the ability to safely store CO₂) in our region to accelerate the launch of the hydrogen economy – but these advantages won’t last forever. That’s why Edmonton Global, together with our partner Alberta’s Industrial Heartland Association, are hosting a series of online workshops aimed at exploring the export market in key regions including:

• Japan
• California
• China
• South Korea

The workshop exploring the California market took place on March 25, 2021. It included some great insights from key stakeholders from both the public and private sector about California’s emerging hydrogen market.  Panelists from the California Governor’s office, the California Energy Commission, and the California Hydrogen Business Council spoke about California’s ambitious targets for shifting to zero emission fuels over the coming 25 years, and how hydrogen will play an important role in this shift.  Some of the key points raised during the workshop included:

• Don’t get confused by the colors.  California’s expectations around low cost, low carbon fuels include hydrogen derived from natural gas that makes use of carbon capture and storage technology.  California also has an established emission credit system that is part of their process for advancing low carbon fuels.
• The transportation sector is a large focus for California, but power generation is an opportunity they are beginning to look at
• The California regulators will evolve as required if presented with a compelling case for low-cost, low-carbon hydrogen supply—in particular, the requirements for “renewable” electricity mix on the grid, and “renewable” hydrogen content at the fueling stations.  They currently have subjective categories but anticipate moving to objective requirements such as carbon intensity.
• California has a rapidly growing hydrogen market and there will be advantages associated with having a diverse energy portfolio including a range of hydrogen suppliers from multiple jurisdictions, including Canada.
• Decisions on how to meet the state’s demand will be driven by the market, including the how hydrogen will be transported (rail, pipelines, ships) and its form (eg. liquified hydrogen, ammonia, methanol).
• Current gaps include the installation of hydrogen transport and distribution infrastructure and it will be important to work on this concurrently as hydrogen production and demand increases.
• Scale is a huge factor in delivered costs.  They were projecting cost equivalency to retail gasoline in the next 5-10 years and a recent Executive Order (N-79-20) is expected to speed that up.
• California is eager to share research results and best practices associated with the development of standards, including the blending of hydrogen into natural gas distribution systems.  Stakeholders within the Edmonton Region Hydrogen Hub are working hard to advance similar opportunity areas and there is value in connecting with the California Energy Commission process to learn more.

Maggie Hanna the President of Common Ground Energy Corporation and Fellow at the Energy Futures Lab attended the event and said, “The three presenters at this workshop are clearly the key people that Alberta needs to be talking to in order to further explore how to capitalize on the California market. Blending projects, in particular, look like they will create opportunities for Alberta hydrogen. If Alberta were to supply a maximum of 15-20% blended hydrogen into their existing natural gas exports, aimed at the California power grid, that would take them a significant way towards their decarbonization goals. It would also be pipeline friendly at less than 20% hythane.”

You can watch a recording of the workshop here:

The next workshop in this series, which will take place on April 15, 2021, will explore the Korean market for hydrogen.