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Hydrogen’s Curious Connection to Gas

Canada’s gas transmission and distribution entities have been embarking on diversification and sustainability paths these past few years. Enbridge for example has become quite diversified and even though they are still primarily a gas company, they now own more than 45 wind farms, solar parks, waste heat recovery plants, geothermal projects and electrical transmission lines. TC Energy, another large gas transmitter has similarly invested in renewable energy and services. Enbridge has also started investing in carbon capture and hydrogen production and its this last point that we’ll focus on in this article because of the synergies and potential that hydrogen presents for gas providers.

Before getting to that, lets discuss (very high level) how hydrogen fuel is produced. Energy or chemicals are used to separate hydrogen from oxygen in water and then this hydrogen can be used for fuel for vehicles, power, etc. Seems simple enough and sounds on the surface to be a path to cleaner energy since the by-product of hydrogen usage are just water and air. Looking deeper, most large-scale hydrogen is being produced using energy rather than chemicals and in Canada, over 70% of power still comes from oil and gas (note this is an overall number and varies widely by province). So current hydrogen production uses a large amount of fossil fuels and energy and currently is not cost effective. This said, there are promising technologies around carbon capture and using off gases and energy waste from gas processing to produce hydrogen that are starting to lead to higher efficiencies.

Back to the gas companies as all this appears to be a solid approach to diversification for them. There is a new abundant and cheap fuel source (hydrogen), but it can’t be accessed unless processed by way of a fuel source already produced by gas companies (natural gas). Add to this, distribution infrastructure to run natural gas can be reconfigured in the future to run hydrogen gas too with additional investment. This includes transmission lines, distribution lines, fuel trucks, lines to homes, fuel pumps…basically large amounts of infrastructure in place could be repurposed to shift to a hydrogen economy in the future. Ignoring some of the complexity involved in this, high level it’s a very prudent and logical attempt to capture both immediate and long term value from a potential shift to hydrogen (should it occur), while also providing more sustainable products to its portfolio.

Its still unclear if the world will shift to hydrogen full scale though. There are competing vehicle fuel sources gaining strong footholds in the market including electrification and biofuels where electric vehicles are far further along in acceptance and use. Added to this, natural gas continues to compete with electric, coal, oil, nuclear, hydroelectric, solar and wind for general power and heat usage so making room for hydrogen could prove difficult given the lower cost options still available. Localized geographic pockets have built hydrogen fuel infrastructure such as California and British Columbia, while other areas such as Alberta are the beneficiary of investment in hydrogen plants, the latter mostly due to proximity to gas. So the real question is whether the expansive infrastructure that gas distribution companies have in place already can be leveraged to take hydrogen further quicker once the costs can be worked out or whether hydrogen will simply become a niche or an anomaly in the energy evolution journey we are on. Time will tell, but there appears to be a place for hydrogen in the future either as a mainstream fuel or at worst as a specialized one to complement existing and emerging power sources.

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