Hydrogen’s role in achieving Global Zero Emissions targets

As the global challenges posed by climate change continue to mount, countries around the world are looking for innovative and economically feasible sources of cleaner energy. The International Energy Agency’s (IEA) World Energy Outlook 2020 acknowledges that current clean energy technologies will not be enough to reach net zero emissions by 2050, and that “achieving this goal would involve a significant further acceleration in the deployment of clean energy technologies together with wide-ranging behavioural changes”.

The ongoing race to develop new clean energy technologies has brought blue and green hydrogen, a cleaner and cost-competitive alternative energy source, to the forefront of the renewable energy conversation. Alberta, through its expertise in energy and existing hydrogen infrastructure, has the opportunity to be a key player in the developing hydrogen fueled economy.

Zero Emission Vehicle (ZEV) Targets and Regulations

In order to meet net zero emission targets, several countries have introduced legislation restricting the manufacture and purchase of traditional internal combustion vehicles. The following are examples of legislation passed or currently being considered by legislatures around the world.

Canada

The Government of Canada has set ambitious federal targets with respect to ZEVs. The Government aims to have 10% of new light-duty vehicles (less than 3,856kg Gross Vehicle Weight Rating) be ZEVs by 2025, 30% by 2030, and 100% by 2040.

Notably, Bill C-12, which had its first-reading on November 19, 2020, would prescribe Canada’s national emissions targets in law and require certain governmental agencies to institute emissions reduction plans, progress reports, and ongoing assessments, including mandatory reporting if any of Canada’s emissions targets are not met.

Some provinces have also adopted legislation with respect to ZEVs. For example, in 2019, British Columbia passed the Zero-Emission Vehicles Act, which requires automakers’ sales to match each of the federal zero-emissions vehicles targets set out above. Quebec has also adopted similar requirements through its ZEV standard.

Hydrogen fuel-cell electric vehicles meet the British Columbia requirements, whereas Quebec’s requirements allow both hydrogen fuel-cell electric vehicles and hydrogen-powered combustion engines.

Europe

While Europe has not adopted mandatory ZEV production or sales targets, it has instituted strict CO2 standards that have lead to an increase in ZEV production and sales. Recently proposed changes to the EU’s CO2 standards will further tighten its auto emissions limits. Under the proposal, CO2 emissions from new cars would be 50 percent below 2021 levels, representing a 37.5% overall reduction in CO2 emissions. Meeting these standards would require that at least 2.3 million electric vehicles be sold in the EU in 2025, and at least 5 million electric vehicles be sold in 2030, representing 15% of total new vehicle sales.

China

The Chinese government has taken a direct approach to the adoption of ZEVs. Each Chinese vehicle manufacturer is currently required to make or import at least 12% electric vehicles.

China also offers generous subsidies for the purchase of electric vehicles, particularly for the purchase of hydrogen fuel cell electric vehicles. Subsidies for plug-in electric vehicles range from $1,500 to $3,600, whereas subsidies from hydrogen fuel cell electric vehicles range from $29,000 for cars and $72,500 for trucks and buses. The Chinese Ministry of Science and Technology announces that it plans to develop a “hydrogen city” in Shandong Province to specifically promote hydrogen fuel cell electric vehicles.

United States

The United States’ approach to incentivizing the production and sale of ZEVs has been providing subsidies to ZEV purchasers. In 2008, the United States congress passed ZEV tax credits ranging from $2,500 to $7,500 per vehicle.

Many U.S. States have also adopted policies aimed at increasing the manufacture and sale of ZEVs. 10 states have signed on the ZEV mandate, which requires 15 percent of all new vehicles sold by 2025 to be ZEVs. These states include, California, Connecticut, Maine, Maryland, Massachusetts, New Jersey, New York, Oregon, Rhode Island, and Vermont, together making up over 25% of the United States vehicle market. Several states have also adopted their own financial incentives to purchase ZEVs, including Colorado, New York, and Vermont, which allow tax credits to be applied at the point of sale, effectively reducing the purchase price of ZEVs.

South Korea

The Republic of Korea primarily relies on subsidies to drive the sale of ZEVs. Currently, Korea’s government provides subsidies between $5,000 and $11,000 to purchasers of ZEVs. Korea also offers some unique benefits to ZEV purchasers, including reduced highway tolls, discounts on public parking, exemption from the electricity base fee and discounted rapid charge rates. Korea has indicated that it will adjust the amount of its ZEV subsidies on an ongoing basis to reflect differences in the price between electric vehicles and combustion vehicles, encourage core component development, and maintain the supply of ZEVs.

In addition, Korea has plans to build three hydrogen-powered cities by 2022 in an effort to promote hydrogen energy in the Asia-Pacific region. The hydrogen-powered cities will include hydrogen fuel cell electricity, hydrogen fuel cell electric passenger vehicles and hydrogen powered buses. In 2019, the Republic of Korea’s government committed approximately $150,000,000 dollars to develop hydrogen vehicles and another $122,000,000 for the associated charging infrastructure.

With a focus on scaling up demand in the transport and electricity generation industries, Korea expects its domestic hydrogen market to reach 81 billion dollars by 2050. By 2040, Korea aims to have 70% of its hydrogen demand met by clean hydrogen, a significant portion of which will be imported. Canada’s abundance of clean hydrogen represents a valuable opportunity to help Korea meet its hydrogen goals.

Japan

Japan was the first country to adopt a basic hydrogen strategy and plans to become a “hydrogen society”, releasing its initial hydrogen strategy in 2017. Japan’s hydrogen strategy focuses on increasing hydrogen demand in the automotive, transit and commercial and residential industries. Japan’s hydrogen strategy estimates that the country will import approximately 300,000 tonnes of hydrogen annually by 2030.

In 2018, there were 12,900 hydrogen fuel cell vehicles worldwide. By 2030, Japan aims to produce over 600,000 hydrogen fuel cell vehicles. Japan estimates that the price premium associated with fuel cell vehicles will decrease from nearly $40,000 to less than $9,000 by 2025.

Japan has also announced that it will develop rail-transit vehicles powered by a hybrid system containing both fuel cells and lithium-ion batteries.

In the commercial and residential industries, Japanese manufacturer Panasonic is producing hydrogen fuel cells for single family homes and Toshiba Energy Systems & Solutions is beginning to supply large venues such as hotels and baseball stadiums with hydrogen fuel cell technology.

Hydrogen’s Role in Achieving ZEV Targets

The IEA’s World Energy Outlook 2020 projects that, to achieve net zero emissions by 2050, hydrogen fuel cell vehicles will make up 6% of global car and light truck sales by 2030. This increase in hydrogen fuel cell vehicles will contribute to the growing world demand for hydrogen, which the IEA projects will reach 118 million tons of oil equivalent by 2030, approximately 35% of Canada’s total energy consumption in 2018.

The projected growth in world demand for hydrogen stems from its characteristics as a clean and economical energy source. Hydrogen fuel cell electric vehicles, like battery electric vehicles, produce zero exhaust emissions. While hydrogen production creates CO2 as a by-product, the energy industry is continuously reducing the environmental impact of CO2 through developments in carbon capture technology. Further, in Alberta, CO2 is used to enhance recovery in traditional hydrocarbon wells. Carbon capture and alternative uses for by-product CO2, including enhanced recovery, will allow hydrogen producers to minimize the amount of CO2 released into the environment.

Demand for hydrogen will continue to grow as its cost of production decreases. The IEA cites advances in technology, economies of scale, and decreases in storage and compression costs as likely reasons why the cost of hydrogen as an energy source will continue to fall. The ENE-FARM program in Japan, for example, has seen the cost of its residential hydrogen fuel cell units drop by 75% from 2009 to 2019.

Canada’s Hydrogen Advantage

Canada is well positioned to be a leader in the hydrogen industry. We can produce green hydrogen in British Columbia and blue hydrogen in Alberta, have existing pipeline infrastructure that can economically transport hydrogen, and are continuously enhancing our carbon capture and enhanced recovery technology to capture and utilize any CO2 by-product.

As the cost to produce hydrogen continues to decrease, additional use cases including transport, heating, steel, cement, and chemical production and electricity storage will become increasingly economically viable.

The Asia-Pacific Energy Research Centre noted in its June 2018 report, “Perspectives on Hydrogen in the APEC Region,” that Canada’s potential to supply inexpensive hydrogen will greatly exceed our domestic hydrogen demand. Accordingly, hydrogen represents an important opportunity for Canada with respect to economic diversity, employment, and domestic and foreign investment. Canada must ensure that we protect our competitive advantage and invest in our hydrogen industry to establish our position as a world leader in clean and economical hydrogen.

Source: Lexology – Frank Y. Sur

 

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