May 29, 2020

Is Canadian Hydrogen Fuel Cell Technology Soon To Be As Popular At Home As It Is Abroad?

Last year marked two significant turning points for Vancouver-based Loop Energy, a 19-year-old firm that has developed hydrogen fuel cell “range extenders” for short- and long-haul trucks. The company secured its first commercial sale of the product in China, and then completed a deal to sell a minority stake to Cummins, a global manufacturer of diesel and alternative energy drive trains. 
Last month, the run continued, when Loop secured another long-term contract in China, to support the conversion of Nanjing’s municipal bus fleet to hydrogen.
“We’re building on our momentum in China and we’re expanding in Europe and North America,” says Loop managing director George Rubin, who oversees the company’s global commercial strategy. The firm, he adds, will continue to seek “channel partners” in the truck and bus fleet markets, but not rail, marine or passenger vehicles. “We need to pick our battles.”
The next one could be in Canada. Rubin points out that while this country is home to an abundance of hydrogen fuel cell talent, it has only seen “limited” deployment in the 20-plus years since pioneering firms like Ballard and Hydrogenics began development and commercializing hydrogen fuel cell technology.

Stars aligning

To date, those well-known firms have mostly found lucrative markets elsewhere, a trend reinforced this week with the European Commission signaling that it intends to invest billions of euros in hydrogen technology and infrastructure as part of its economic recovery strategy.
But some hydrogen watchers say the stars are also aligning here — as the economy, technology, carbon taxes and volatile energy markets have converged on a point where some forms of hydrogen for truck and bus fleets are cost-competitive with diesel.
They also say that if the federal government is looking for new and cleaner markets for Alberta natural gas and Ontario surplus clean-grid electricity, hydrogen derived from both represent viable ways of greening the transportation sector. 
At a time when freight has become critical for a retail sector leaning heavily on e-commerce and deliveries, it seems the market is primed to take off — “particularly when you’re talking about freight trucks and the heaviest freight trucks,” says Ben Sharpe, a senior researcher with the San Francisco-based International Council on Clean Transportation (ICCT), which co-authored a recent study on Canada’s role in the electric vehicle transition.
Various studies project double-digit global growth of hydrogen fuel-cell vehicles in the next five to 10 years. In 2019, 18,000 were sold globally, but Research and Markets estimates that figure could grow to 6.5 million by 2032, with take-up accelerating with growth in the deployment of fueling infrastructure.

From blue to green

To get there, however, Robert Stasko, chair of the Hydrogen Business Council in Ontario, says “you have to connect a few dots before blue hydrogen and green hydrogen become a feasible path.” 
Most industrial grade hydrogen is produced from steam reforming of natural gas, as well as a by-product of some manufacturing processes, like cement production. Electrolysis, the use of power to separate water into its component elements, is the other method, but tends to be more costly and only yields energy-grade hydrogen if the electricity is under four cents per kilowatt hour. 
Because of the weight and life-span of vehicle batteries, hydrogen-powered drive trains are more effective in heavy fleet vehicles that can re-fuel at centralized depots, says David Layzell, a director of the Canadian Energy Systems Analysis Research initiative at the University of Calgary. “The transportation companies don’t want plug-in electric because it takes too long.”

Boon for Alberta?

The opportunity in Alberta is particularly relevant, given the dramatic collapse of the province’s energy sector. Recent pilot projects have demonstrated that carbon capture and storage facilities linked to natural gas reforming processes can yield energy-grade, emission-free hydrogen equivalent to half the wholesale cost of diesel, and a third the cost of hydrogen produced using electrolysis.
This so-called blue hydrogen “could be a really great stepping-stone until the production of hydrogen with electrolysis, which is still very expensive, [becomes more affordable],” observes ICCT’s Sharpe.
He says government investment in a new Alberta pipeline that would deliver natural gas for hydrogen-fuel applications along major trucking corridors “is a fantastic way to create jobs and position Canada well along the way to transition to zero-emission vehicles.”
In Ontario, meanwhile, a handful of pilot projects, including a joint venture between Enbridge and Hydrogenics and another linked to a Mississauga cement plant, were aiming to demonstrate the potential of using cheaper off-peak electricity to produce hydrogen using electrolysis as a means of both keeping costs down and locating production facilities close to end users (such as fleet depots). But, Stasko says, the pandemic has put such ventures on ice. “We’re in a stasis right now.”
For large transportation operators, the current volatility doesn’t significantly impact long-term capital allocation and fleet replacement decisions. “These kinds of decisions aren’t based on the next six-month change in prices,” says Loop’s Rubin.

Infrastructure strategy

With large-scale OEMs like Cummins, Volkswagen and Alstom now investing in hydrogen drive train components for buses, trucks and trains on a commercial basis, it seems clear that Canadian policy-makers should be focused on the other half of the famous chicken-and-egg dilemma: the production and distribution infrastructure required to deliver the hydrogen to operators. 
Sharpe points to the federal government’s 2040 goal of having an entirely electric vehicle fleet. “Canada is signaling that it’s very serious about transitioning the vehicle landscape,” he says. Natural gas infrastructure for creating hydrogen and sequestering carbon “is really a way to flip the script.”

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