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Updated June 2023


What is Hydrogen

Hydrogen is an energy carrier and one of the most abundant elements on earth that can be the fuel of the future. Hydrogen is a colourless, odourless, and flammable gas found almost everywhere on earth but only combined with other elements, such as carbon, nitrogen, and oxygen.

Hydrogen can be produced from natural gas by either steam methane reforming or autothermal reforming methods. These methods introduce high-temperature steam and a catalyst to methane, producing hydrogen, carbon monoxide, and carbon dioxide (CO2). With additional processing, carbon monoxide is converted to CO2. The following figure shows the three processes of hydrogen production and their by-products

Types of Produced Hydrogen

Source: Canada Energy Regulator

There is an opportunity for hydrogen to replace fossil fuels as a carbon-free energy source. Hydrogen-powered electric vehicles have zero emissions, whereas gasoline vehicles emit carbon monoxide, CO2, hydrocarbons, and nitrogen oxides—all sources of air pollution.

The refining and industrial sectors drive global hydrogen demand. However, demand for hydrogen is expected to expand to other industry sectors, such as transportation, power generation, and heating. In parallel with the growth in hydrogen demand, the end uses for the CO2 captured from blue hydrogen production are developing. Potential uses for CO2 include yield boosting (e.g., greenhouses, fertilizer), heat transfer fluid, welding, building materials, chemicals, and fuels.

Federal and Provincial Government Hydrogen Plan

The federal government has set a hydrogen strategy for Canada, leading to actions that will establish hydrogen production to achieve Canada's goal of net-zero emissions and be a leader in clean and renewable fuels by 2050. The near-term demand for hydrogen will be influenced by the market readiness of applications and commercial applications (e.g., heavy-duty trucks, power generation, industrial feedstock, and heat for industrial sites).

Alberta's hydrogen plan aligns with the federal government strategy. The Alberta Industrial Heartland region near Edmonton has the advantage of becoming one of the first hydrogen-producing hubs in Canada. It has access to plentiful natural gas and potential carbon capture, utilization, and storage (CCUS) sites, an existing hydrogen pipeline, and two CO2 pipelines. Leveraging the existing infrastructure will reduce upfront production costs of new (blue or green) hydrogen projects. Other Alberta advantages include experience and technical capacity in producing, handling, and using hydrogen at the industrial scale, positioning the province as the largest hydrogen producer in Canada today. Alberta has the necessary skilled labour that pioneered the Canadian energy industry to support the emerging clean hydrogen economy.

Production in 2022 and Forecast

In 2022, grey hydrogen production was estimated to be 2.0 million tonnes, and blue hydrogen at 0.5 million tonnes. Natural gas use also increased slightly in 2022. The hydrogen production forecast involves weighing the risks based on the likelihood of meeting the project’s operational date and production capacity.
Figure S9.1 shows the forecast for hydrogen production in Alberta.

Current uses of hydrogen in Alberta include industrial applications, such as chemical production, oil refining, bitumen upgrading, and nitrogen-based fertilizer production. ATCO is blending hydrogen with natural gas for residential heating systems. Other potential uses through pilot projects are for transportation, including hydrogen fuel-cell vehicles (cars, buses, trucks) and hydrogen co-combustion engines primarily for heavy-duty applications.


Several companies have announced hydrogen projects in Alberta:

  • Air Products’ first hydrogen liquefaction facility in western Canada is under construction.
  • Suncor and ATCO announced jointly building a production facility for clean hydrogen in the Alberta Industrial Heartland region. The project investment decision is expected in 2024.
  • ITOCHU Corporation of Japan, in partnership with Petronas Energy Canada, has signed a memorandum of understanding with the Government of Alberta to advance a project to build in Alberta a natural gas-based ammonia facility with CCUS to export ammonia to Asian markets.

Several pilot projects across the province are exploring new deployment applications and methods of cost-effective clean hydrogen production:

  • Ekona Power received Cdn$79 million equity investment to commercialize its low-cost clean hydrogen production technology.
  • Canadian Pacific Railway completed its first test on a hydrogen fuel cell in a locomotive and expects to have hydrogen-powered freight trains operating in Vancouver, Edmonton, and Calgary by the end of 2023.
  • The Invest Alberta Corporation, Alberta Transportation, and the Canadian Infrastructure Bank have signed a memorandum of understanding to build a Calgary to Banff hydrogen-powered rail passenger project. The project is currently under design.
  •  The Alberta Zero Emissions Truck Electrification Collaboration (AZETEC) plans to introduce two hydrogen-electric haul trucks to provincial highways in 2023, moving between Calgary and Edmonton.
  • A new pair of hydrogen-powered buses will transport passengers in Edmonton and nearby Strathcona County as part of a one-year pilot project.
  • ATCO and Qualico are partnering to build a fully hydrogen-powered community near Edmonton. Construction of the project is scheduled to start in 2023.
Limitations or Risks to the Outlook

Future construction costs for hydrogen facilities (blue or green) are expected to be lower. Hydrogen production is expected to become competitive as carbon taxes increase in the coming years. The economics of the hydrogen industry depend on climate change policies and government support. These dependencies and current high investment costs would probably affect short-term investment decisions. Several actions exist to improve hydrogen economics and reduce investment risk:

  • Create a transparent regulatory framework.
  • Blend hydrogen with natural gas using the existing natural gas networks.
  • Create hydrogen hubs to leverage shared infrastructure.

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