B.C. advised to develop tailor-made hydrogen plan

Adoption of greener fuel option needs to be based on a solid business case, observer says

B.C. can look overseas for examples of hydrogen economy development, but must ensure its efforts to promote adoption of cleaner fuels make economic sense in this market, cautions one expert | Scharfsinn86/iStock-Getty Images Plus

While B.C. has started down the path to developing a hydrogen economy with opening of a dedicated agency and strategy, observers agree that other global economies are further along the road.

Germany, China, South Korea, Japan and the Netherlands have started moving towards the clean fuel’s widespread use through policies encouraging the adoption of fuel-cell buses, hydrail and cars and the installation of fuelling infrastructure and cleaner hydrogen production.

What can Canadian policy makers take away from these experiences?

Holger Busche, scientific adviser in parliament of Germany’s state of Schleswig-Holstein, is among the top experts in this field.

He said jurisdictions like B.C. should look for models of hydrogen production, distribution and use that apply specifically to the province, not one-size-fits-all models from elsewhere.

“You always need some kind of a business case,” Busche said. “You can start at the beginning with some funding of governments or private foundations or whatever. But at the end of the day, you need some kind of business case that calculates [how the system works] on its own.”

In Germany’s case, officials accept that because most freight rail systems in Europe have already been electrified (60 per cent in Germany and 100 per cent in places like Switzerland), hydrogen use in train transport of cargo isn’t the fit.

Busche noted, however, that shorter passenger rail lines in Hamburg and Frankfurt running on hydrogen have been operating on a test basis – and the expectation is there will be more demand in urban areas where electrification rail infrastructure may be undesirable.

In addition, Germany is now considering combining hydrogen with sustainable power generation as a holistic power system. Busche said Germany’s emphasis on “green hydrogen” production – leveraging the country’s renewable wind and solar power to conduct electrolysis on water molecules – may result in hydrogen becoming an energy storage medium to combat irregular power generation.

Germany has welcomed the adoption of hydrogen throughout Europe. The European Hydrogen Backbone initiative envisions
hydrogen-based transport infrastructure built throughout the continent by 2040, which will create export opportunities for German production.

Centralized plans for the rollout of hydrogen infrastructure can also be found in South Korea, which plans to boost annual domestic consumption to more than five million tonnes by 2040 (current levels sit at about 130,000 tonnes annually).

Being a major automaker, South Korea is also pushing a dramatic expansion of the domestic fuel-cell electric vehicle (FCEV) fleet to three million vehicles (including 30,000 trucks and 40,000 buses). An expansion of refuelling station networks is also underway as part of South Korea’s post-COVID recovery, officials said.

Jaehoon Lee, general manager of the hydrogen business development team at Korean gas giant KOGAS, noted the goal is to start by mixing hydrogen with natural gas to begin the fuel’s consumption in South Korea, using existing gas line infrastructures to maximize the growth of the local market.

Lee added that Korea is focused on “blue hydrogen,” which is created from fossil fuels but offset by carbon capture.

One Vancouver player is already benefiting from this shift. Loop Energy (TSX:LPEN), a Vancouver-based hydrogen fuel cell systems manufacturer, said it has partnered with Korean bus manufacturer NGVI and is building its first bus in South Korea, slated for deployment in June.

Loop chief commercial officer George Rubin said that while macro-trends such as emission reductions are pushing people towards hydrogen, there are factors that make Korea a prime location for the hydrogen bus business.

“There is already a significant base of electrified buses that exist in the marketplace,” Rubin said, noting that it allows for a quick conversion to retain electrification’s performance while achieving fast refuelling through hydrogen. “It makes it easier to then augment these already battery-electric vehicles to a hydrogen-electric version – that then allows it to become that much closer functionally to what a diesel alternative can offer.”

Perhaps surprisingly, centralized planning – while helpful – isn’t absolutely necessary. One top example is China, the world’s largest hydrogen producer and its third-largest fuel-cell vehicle market.

The Chinese push to add hydrogen buses and other vehicles to satisfy its need for clean transport has been happening for more than a decade. That has benefited Vancouver companies such as Ballard Power Systems (TSX:BLDP), which at one point supplied more than 60 per cent of China’s fuel cell stacks for the country’s hydrogen buses. But that push has come largely without a centralized plan from Beijing.

That lack of planning, however, is countered by China’s use of fossil fuels and chemical-industrial might to produce hydrogen in large quantities in each location where the fuel is needed. That has negated the need for co-ordinated nationwide networks of hydrogen distribution.

During the Winter Olympics earlier this year, Beijing showcased its fleet of 800-plus hydrogen buses used for transporting athletes and officials around the city. And centralization appears on the way; Beijing this month unveiled plans to boost its annual green hydrogen production to 200,000 tonnes by 2025 to address criticism that current production is too polluting to achieve gains in fighting emissions.

While B.C. does not have the production capacity to facilitate a ground-up approach to development, there are hints that it is possible here.

Last October, Hydra Energy and trucking firm Lodgewood Enterprises signed B.C.’s first commercial vehicle supply contract in Prince George, allowing Lodgewood’s semi-trucks to undergo conversion and to use a diesel-hydrogen mix as fuel.

Dave Earle, president and CEO of the BC Trucking Association, said that while much attention has been focused on hydrogen fuel cells, the technology currently has limitations, such as its limited ability to produce peak power at peak loads, that make commercial trucking applications unrealistic.

But direct combustion of hydrogen in a fuel mix is being used now, and may provide an example for the province in the drive to lower carbon emissions, Earle said.

The other piece of the puzzle – until the question of how hydrogen will be distributed in B.C. is answered – is the need for pockets of local production to ensure trucks running on hydrogen mixes can access the fuel without range issues. Such is the case in Prince George, where Hydra produces hydrogen by collecting chemical companies’ byproducts.

“Look at Europe versus Canada,” Earle said. “In France and Germany, between them there are 130 to 140 million people that would all fit in the area of British Columbia. The chemical facilities – the ability to produce hydrogen as a byproduct – is astronomically greater in Europe than it is anywhere in North America, other than really the eastern United States. So it’s about trying to find those opportunities [to produce hydrogen], to look where it is, as opposed to where it needs to be, because it’s awfully, awfully hard to move it.”