Greenhouse gas emissions, with their attendant financial and environmental costs, have accelerated the transition to renewable power options and sparked increased investment in related research and development. Bottom line: companies are anxious to find ways to cost-effectively decarbonize.

Technological advances make wind and solar-generated power more accessible, but those options aren’t always economically feasible or practical. According to the Government of Canada, that’s where hydrogen will increasingly come into play. The government expects hydrogen fuel cells could ramp up decarbonization in transportation (for example in heavy duty trucks, trains) and areas of heavy industry.

“If Canada fully seizes the opportunity presented by hydrogen, it could lead to more than 350,000 sector jobs and direct revenues of over $50 billion per year by 2050,” states the country’s hydrogen plan, released in December 2020 by Natural Resources Minister Seamus O’Regan.

Hydrogen sounds like the perfect solution to the climate protection vs. industrial activity debate, but it’s important to keep an eye on the details. Not all hydrogen is created equal.

Yes, hydrogen is considered a clean fuel source, but it is also a processed product. And in the context of the energy transition, it is frequently categorized by colour, indicating its source. The majority of hydrogen produced in Canada is “grey hydrogen,” commonly generated through methane reforming, with that process powered by fossil fuels. In other words, the hydrogen produced may burn clean, but heavy greenhouse gas emissions can come at the time of its production as a fuel.

The real interest on the climate front is in the potential for “green hydrogen.” That is hydrogen produced through electrolysis of water, using renewable energy sources to fuel the process. Jurisdictions with enough renewable power to fuel the process—like Quebec—have an advantage.

Hydro-Québec is leveraging its strengths in hydroelectricity by investing hundreds of millions of dollars into hydrogen development, including $200 million for what will be one of the world’s most powerful green hydrogen electrolyzers in Varennes, near Montreal. The plant is due to be online in 2023. The hydrogen produced at the plant is set to, in turn, be used to manufacture power-producing biofuels. There is a growing market: biofuels are often blended into gasoline, offering fuel for meeting Canada’s Clean Fuel Standard.

The federal government expects to see new investment and diversification in hydrogen options through to 2030, then “rapid expansion” of hydrogen use, helping to meet Canada’s goal for net zero greenhouse gas emissions by 2050.