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Provincial Government Releases Low-Carbon Hydrogen Strategy

Published on
April 7, 2022

Earlier today, the Hon. Todd Smith, Minister of Energy (MOE), the Hon. David Piccini, Minister of Environment, Conservation & Parks (MECP), alongside local representatives and clean technology leaders, unveiled Ontario’s Low-Carbon Hydrogen Strategy.

Developed through extensive stakeholder consultations since early 2021, the strategy articulates Ontario’s vision and expectations for the growing hydrogen sector. Canada’s hydrogen economy is expected to contribute up to 30% of national fuel and feedstock, along with 350,000 new jobs, by 2050.

The strategy identifies eight near-term policies and investments that could enable an eight-fold increase of low-carbon hydrogen production in Ontario, while developing the technology and encouraging demand:

  1. Niagara Falls Hydrogen Production Pilot: Atura Power, a wholly owned subsidiary of Ontario Power Generation (OPG), proposes to develop a 20 MW electrolysis facility using water and electricity from the Sir Adam Beck hydroelectric generating station. Notably, the government granted an exemption to the Gross Revenue Charge (GRC) for electricity used by this project. The project is be completed as early as 2024, establishing the province’s first “hydrogen hub.”
  2. Hydrogen Hub Communities: identifying additional locations throughout the province, particularly with existing energy infrastructure, where it’d be feasible to concentrate close-proximity, high-volume hydrogen production and consumption – thereby reducing distribution/delivery infrastructure costs. Potential sites include Sarnia-Lambton, Nanticoke, Brighton, and Halton Hills.  
  3. Opportunities at Bruce Power: further analysis into leveraging surplus energy from Bruce Nuclear Generating Station for hydrogen production, as well as supporting a Centre of Excellence in the region.
  4. Interruptible Electricity Rate: an Interruptible Rate pilot for large electricity consumers, offering reduced rates in exchange for moderating consumption during system or local reliability events.  MOE will also undertake further consultations on additional electricity rates that could foster low-carbon hydrogen.
  5. Storage & Grid Integration Pilots: instructing the IESO to report back on options for storage and integration projects, such as the ongoing 2.5 MW hydrogen-blending pilot in Markham by Enbridge and Cummins.
  6. Industry Transition via Low-carbon Hydrogen: supporting the phase-out of industrial coal usage through low-carbon processes and hydrogen-ready equipment, such as Ontario’s $500 million investment in ArcelorMittal Dofasco’s $1.8 billion conversion to a hydrogen-ready electric arc furnace (EAF) in Hamilton.
  7. Carbon Sequestration & Storage Regulatory Framework: proposing changes to the Oil, Gas and Salt Resources Act and the Mining Act frameworks to enable carbon storage activities on Crown land, allowing for low-carbon hydrogen to be produced with natural gas when paired with sequestration.
  8. Support for Hydrogen Research: supporting two independent hydrogen research projects in partnership with Natural Resources Canada to advance hydrogen development.

The strategy further details Ontario-specific opportunities in the production, distribution, and consumption of low-carbon hydrogen, as well as potential for interprovincial/cross-border trade, and novel applications for hydrogen in existing industrial operations. It concludes on future areas of work, including collaboration with federal and municipal governments, addressing regulatory barriers, and raising public awareness of the benefits of low carbon hydrogen.

Read the full memo.

Happy to help.

If you are interested in learning more about the growing opportunities in this sector, please contact a Sussex consultant for more information and analysis.

Chris Benedetti, Managing Partner, cbenedetti@sussex-strategy.com

Bonnie Hiltz, Vice President & Energy Practice Lead, bhiltz@sussex-strategy.com

Mark Olsheski, Vice President, Energy Practice Group, molsheski@sussex-strategy.com

Patrick Gajos, Director and General Counsel, pgajos@sussex-strategy.com

Alex Simakov, Senior Associate, Energy Practice Group, asimakov@sussex-strategy.com

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