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Enbridge is getting millions in hydrogen funding from feds

Illustration by Ata Ojani/Canada's National Observer

Gas giant Enbridge is receiving millions of dollars of new federal funding to help build Canada’s hydrogen economy. 

On Monday, Energy and Natural Resources Canada announced $9 million for six hydrogen projects. Of the money announced, $5.9 million is flowing to Enbridge — $5 million for a study investigating the potential to blend hydrogen into the Ontario gas grid and $900,000 for a “hydrogen hybrid demonstration project” using existing wind and solar energy. 

“Canadian businesses have the ambition and drive to provide clean energy solutions and become the supplier of choice in a net-zero world,” said Energy and Natural Resources Minister Jonathan Wilkinson in a statement. “Investments like the ones announced today are a great example of what the hydrogen opportunity can do for Canadians — helping create jobs, grow the economy and contribute to a sustainable future.”

Another $1.4 million was announced for TC Energy and Énergir’s Trans Québec & Maritimes Pipeline, which supplies natural gas to customers in Quebec, Atlantic Canada and the Northeast United States; $1.25 million for the University of British Columbia to develop methane pyrolysis technology (using heat to split hydrogen from methane), and $1 million to Ayrton Energy that is developing a technology to transport hydrogen over long distances. 

Several million spread across a handful of projects may seem like small potatoes compared to other federal financing worth hundreds of millions, but Alex Cool-Fergus, Climate Action Network Canada’s national policy manager, is frustrated to see the federal government pump any money into the hydrogen sector. In an interview with Canada’s National Observer she called hydrogen an improbable “techno-fix” that has been effectively marketed by the fossil fuel industry. 

The possible end uses for hydrogen are dwindling, which is eroding its forecasted demand. To put in perspective just how significant this is, four years ago Natural Resources Canada expected the global market could be worth up to $11.7 trillion, but now says it could be worth up to $1.9 trillion — an 84 per cent drop. 

“It's disappointing to see that the federal government continues to invest in this false solution, and that disappointment is amplified by the fact that some of this money is going to massive companies that don't need any more money,” she said, calling it a “slap in the face.”

“If [fossil fuel companies are] going to be investing in this at all, they should be using their own profits.”

Last year, Enbridge posted $5.8 billion in profit and greenlit $10 billion worth of new projects. Enbridge told Canada’s National Observer the blending study is to understand how it can leverage its expanding natural gas network in Ontario — something the government expects will be part of a future hydrogen network.

“If [fossil fuel companies are] going to be investing in this at all, they should be using their own profits.” #cdnpoli

“The study will also help assess the readiness of the natural gas system to handle hydrogen and explore a cost-recovery mechanism to encourage hydrogen production in Ontario,” Enbridge spokesperson Leanne McNaughton said. “This could lower the overall cost of hydrogen, making it more attractive for sectors that are challenging to decarbonize, such as transportation and industrial sectors.”

The use of public dollars to build a Canadian hydrogen economy comes as the industry struggles for relevance in a world increasingly turning to electricity for decarbonization needs. 

Hydrogen is sometimes characterized as a Swiss Army knife of decarbonization, because it could be used in a wide range of sectors, from hydrogen-powered transportation to cleaning up dirty steel production. But electric vehicles have all but been declared the winner in their category, and electric arc furnaces, combined with recycled steel, appear to be more cost-effective ways to decarbonize the steel sector. 

At the same time the global market for hydrogen is shrinking, BloombergNEF forecasts over 80 per cent of clean hydrogen will be supplied by just the U.S., China and Europe by 2030. 

It’s against this backdrop that Canada is fighting for its place in the hydrogen supply chain.

Canada’s hydrogen strategy envisions scaling up a low-carbon hydrogen sector, using a regional approach. In places with strong renewable energy potential, such as Atlantic Canada, there are plans to produce “green” hydrogen using renewables. In Western Canada, the approach is largely focused on “blue” hydrogen produced with natural gas equipped with carbon capture. The federal government interchangeably calls the various colours “low carbon” or “clean” hydrogen — umbrella terms designed to capture both varieties, even though the emissions associated with the different types of production vary significantly. 

In 2021, Cornell University professor Robert Howarth and Stanford professor Mark Jacobson published the first peer-reviewed study of blue hydrogen’s greenhouse gas emissions and uncovered its greenhouse gas footprint is more than 20 per cent higher than burning natural gas.

“Blue hydrogen is a creation of the fossil fuel industry,” Howath previously said in an interview with Canada’s National Observer. “It's clearly the gas industry's view of how to keep natural gas going indefinitely into the future in a carbon neutral world.”

For some supporters of hydrogen, building an industry that includes fossil fuel derived hydrogen could help it find its place in the economy of the future, to be decarbonized later, similar to how electric vehicles were rolled out before the power grid is fully clean. But for Cool-Fergus, the necessary pace of decarbonization to avoid catastrophic warming means there’s “no more room for these false solutions.”

“Whether it's blue hydrogen, whether it's green hydrogen, the reality is it's a dead end for almost every use of it, except for a couple of really hard to decarbonize industrial sectors,” she said. “So the question isn't so much what kind of hydrogen we're producing, it's more about how quickly are we electrifying everything?

“The fact that the government is spending so much time and resources on developing these strategies, these working groups, and all of the different investments that are happening is simply just a distraction from what we need to be doing,” she added.

Under Canada’s hydrogen strategy, a working group set up between the federal government and natural gas industry was launched to help develop recommendations. The natural gas working group was co-chaired by the Canadian Gas Association, and included Enbridge, TC Energy, Energir, Fortis, Woodside Energy, Canadian Natural Resources, Alberta Energy and several other groups. 

Wilkinson’s office did not return a request for comment before publication.

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