This opportunity assessment, commissioned by the BC Government’s Clean Energy and Major Projects Office (CEMPO), includes a detailed report and ecosystem vision diagrams to explore the future development of a hydrogen hub in BC’s Lower Mainland. Download the assets.
Executive Report Summary
To drive progress towards CleanBC goals and implement actions from the BC Hydrogen Strategy, the BC Clean Energy and Major Projects Office (CEMPO) is working with Foresight to examine the potential for hydrogen hub development in the following regions where project development is underway and potential sources of demand exist: the Lower Mainland, Northeast BC, Interior BC (Kootenays and Okanagan), and Vancouver Island. By co-locating hydrogen production and end-use applications, hubs can ensure a balanced market while accelerating the growth of the local economy. The Lower Mainland is the first region to be assessed.
Foresight reviewed publicly available literature and consulted with regional experts to investigate the following three topics:
1
Supply
Potential sources of supply in the region, including feedstocks, production methods and locations, and transportation and storage.
2
Demand
Potential sources of hydrogen demand within the Lower Mainland, cost trends, and forecasts for demand growth.
3
Regional Considerations
Competitive advantages of the region and opportunities for collaboration with neighbouring jurisdictions, including workforce considerations.
It is now well-known that a variety of low-carbon energy sources, technologies, and innovations will be necessary to achieve regional emissions reduction goals, and hydrogen appears likely to fill a role in instances where direct electrification is neither technically feasible nor cost-effective. Relative to its peers, the Lower Mainland appears well-placed to develop a hydrogen hub for several reasons:
- Existing Infrastructure: The region has well-developed infrastructure that can be adapted for hydrogen production, storage, and distribution.
- Existing Expertise: The Lower Mainland is home to a variety of hydrogen experts and leaders, including leading technology companies and academic institutions.
- Low Carbon Electricity: BC's renewable hydroelectric power provides a low-carbon pathway for hydrogen production.
- End-Use Applications: There are multiple potential demand-side applications for hydrogen use in the region, including ports, highways and railways.
- Supportive Policy: Local and provincial commitment to foster sectoral growth through the groundwork of the BC Hydrogen Strategy and complementary programs and policies.
Sources of Supply
A variety of low carbon hydrogen production methods are being developed in BC. When it comes to considering how low carbon hydrogen can scale in the region, two technology pathways appear to stand out:
Pyrolysis
Produces hydrogen from natural gas, using high temperatures to break the chemical bonds in methane into hydrogen and solid carbon. Known as “turquoise hydrogen”.
Electrolysis
Produced by splitting purified water into hydrogen and oxygen, using electricity. Known as “green” hydrogen when renewable sources of electricity are used as the feedstock (e.g., wind, solar, or hydro).
“Byproduct” or “waste” hydrogen, which is already being commercially produced as a byproduct of chemical and industrial processes, is the early mover in the region, with projects already in development.
As we look towards 2030-2035, cost and carbon intensity projections are critical variables. The BC Hydrogen Strategy estimated that a competitive production cost would need to be no higher than $3/kg by 2030. A literature review indicated that current projections for 2030 production costs province-wide fall between $1.68-$6.71/kg for pyrolysis and $4.2-$9.87/kg for electrolysis. Additionally, transportation costs after production can add between $0.2/kg to $6/kg. Further process and technology improvements will be needed to reach cost objectives.
Furthermore, latest research from CICE estimated the carbon intensities of both pathways:
Pyrolysis
19.9-21.4 gCO2e/MJ
Electrolysis
12-16.2 gCO2e/MJ
Both fall below the low carbon threshold of 36.4 gCO2e/MJ adopted in the BC Hydrogen Strategy; the threshold is meant to be a starting point to define low carbon production, and represents a 60 per cent reduction “below the intensity of hydrogen produced from natural gas”.
End-Uses
Demand is another matter and is subject to change as technologies evolve between now and 2050. However, the current evidence suggests that the hub’s primary hydrogen end-use will be heavy transportation. Based on expert feedback and literature, we separate potential end-uses based on whether they appear feasible and well-suited for the hub's needs by 2035.
Well Suited for the Region in 2035
- Heavy-Duty Vehicles: Fuel cells use hydrogen as a fuel to create electricity, water, and heat. Fuel Cell Electric Vehicles (FCEVs) are being explored as an internal combustion engine replacement for transportation applications that have limited cost-effective decarbonization options. The Lower Mainland has a large and growing opportunity to build its hydrogen hub around the heavy-duty market, as the region is home to several industry leaders developing fuel cell technologies and fuelling stations, such as Ballard Power Systems and HTEC.
- Rail: Hydrogen-powered trains, which emit only water vapour, offer a sustainable alternative to diesel locomotives. The Lower Mainland is a well connected rail hub and a key connection point facilitating inter-provincial travel.
- Industrial Decarbonization (Hydrogen as a Chemical Feedstock): Hydrogen serves as a crucial feedstock in various chemical manufacturing processes and in petrochemical refining.
In Development/Further Evidence Needed
- Marine Transportation: Vancouver is home to the largest port in Canada. In heavy shipping and other forms of marine transportation, fuel cells are being explored as one decarbonization solution. Other options, such as ammonia (a hydrogen carrier) and methanol, are also being investigated.
- Aviation: Hydrogen can be a key feedstock for the production of low carbon Sustainable Aviation Fuels (SAF), in fuel cells, or combusted in modified turbine engines. Ongoing research, development, and piloting of fuel cell technologies is taking place in the region.
- Industrial Decarbonization (Hydrogen for Heat & Power Generation): Low carbon hydrogen can substitute for fossil fuels used as energy sources and combusted to produce high-temperature heat in industrial processes. A few industries stand out for the region, though the most prominent in the next decade is the cement and concrete industry, which is well established in the Lower Mainland. There is also a possibility that hydrogen fuel cells could provide on-site power generation for industrial facilities.
Not Suitable for the Region in 2035
- Export Commodity: The Lower Mainland’s deep-sea ports and robust transportation infrastructure (road and rail networks) facilitate access to global markets. However large-scale hydrogen export would need to overcome significant costs and technology challenges.
- Energy Storage: Hydrogen can be stored until needed and used as a source of power generation either through a fuel cell or combustion. However, this does not project to be a cost-competitive use of hydrogen in the Lower Mainland, where electric infrastructure is reliable and widespread and project development for industrial use has yet to take off.
- Buildings (Blending Hydrogen for Heat): Some companies are exploring using hydrogen to reduce the carbon intensity of gas supply by blending it with natural gas and injecting it into the pipeline network, for commercial and residential building customers. While this could be an initial offtake in the absence of other sources of demand, there would be logistical and safety challenges with this approach, and most importantly current evidence suggests it would not yield meaningful emission reductions.
Regional Advantages and Challenges
Competitive Advantages of the Lower Mainland
- Geography: Access to low-cost electricity, water, key infrastructure (e.g., ports, pipelines) and the US border makes it a strategic location for hydrogen production and distribution. The robust local economy and demand for clean technologies provide a strong market base for hydrogen.
- Skilled Workforce and Innovation: The region's competitive edge is enhanced by a high concentration of trained and experienced workers, supportive post-secondary institutions, and a cluster of hydrogen tech companies.
Challenges to Overcome
- Public Awareness and Trust: More work needs to be done to build public awareness and trust in hydrogen technologies (e.g., educational campaigns). This includes addressing safety concerns and change management to further improve social license.
- Local Regulatory Hurdles: Governments and regulators must work with industry to streamline regulatory processes and reduce delays and uncertainty.
- Jurisdictional Alignment: Standardized safety protocols, environmental regulations and infrastructure are needed between states and provinces.
- Resource Management: Some of BC’s competitive advantages require careful management. Monitoring resource constraints, particularly water and electricity, is essential to ensure sustainable hydrogen production.
- Workforce Development: The high regional cost of living is contributing to a loss of skilled workers; workforce development efforts need to be integrated with a broader plan to tackle the cost of living. Further availability of training and upskilling programs are also needed to support the hub's growth.
Mapping the Ecosystem
Building on our first ecosystem vision map for Metro Vancouver, we invited innovators, industry, academia, government, and Indigenous communities in the region to envision what a future hydrogen ecosystem could look like in 2035. Click to download.
Recommendations for Hub Partners
Based on the findings of this opportunity assessment, Foresight developed recommendations for hub partners to advance the Low Mainland hydrogen hub within the decade. We encourage readers to review the full report for further information on each recommendation and their varying timelines.
1
Supply
- Focus on pyrolysis and electrolysis technology development
Recommendation Lead: All Partners - Provide further public clarity on electricity supply
Recommendation Lead: Province, Utilities - Continue support for market-based policies that increase competition between hydrogen and carbon-intensive fuels
Recommendation Lead: Province - Undertake a Lower Mainland permitting case study to help make the municipal permitting process more transparent and understandable for project proponents
Recommendation Lead: Province, Local Governments
2
Demand
- Focus the Lower Mainland hub’s development around heavy transportation and industrial decarbonization use cases for hydrogen
Recommendation Lead: All Partners - Limit consideration of blended hydrogen for heat as a pathway to reduce emissions in the Lower Mainland
Recommendation Lead: Province, Utilities - Continue government funding and support for demonstration projects
Recommendation Lead: Province
3
Regional Considerations
- Explore new ways to enhance knowledge transfer between the region and nearby hubs
Recommendation Lead: All Partners - Explore the creation of a regulatory task force
Recommendation Lead: Province, Utilities, BCER - Increase collaboration to discuss how to prepare the hub to successfully develop and retain talent
Recommendation Lead: All Partners - Develop a hydrogen workforce development strategy
Recommendation Lead: Province, Industry, Post-Secondary Institutions - Continue support for public education and awareness activities
Recommendation Lead: Province, Local Governments
This opportunity assessment is meant to be a midpoint marker for the hub by acknowledging the progress to date and setting expectations for the coming decade. The path forward involves a combination of strategic planning, stakeholder engagement, and targeted investments. By working together to address identified challenges, public and private sector partners can realize the full potential of a hydrogen hub in the Lower Mainland.
