Hydrogen-injected natural gas to heat homes in Alberta city next year

Homes in Fort Saskatchewan, Alta., are to be warmed with natural gas blended with hydrogen beginning next year, a "first step" amid efforts to diversify the province's energy sector and potentially reduce carbon emissions.

Canadian Utilities said Tuesday about 5,000 customers will start using the blended gas, which will include up to five per cent hydrogen, after construction wraps up in the summer of 2021.

ATCO hopes the $5.7-million pilot project will provide a "roadmap" for future greenhouse gas emissions reductions in Alberta. It'll be the country's largest hydrogen-blending project, the Calgary-based company said.

"We want to show people what you can do and work on a vision with all the various parties, government included, about what it could become," said ATCO vice president Graeme Feltham.  "It's a really important first step."

The news comes as the provincial government works on plans to grow the hydrogen sector, viewed as a key part of its diversification goals. The province is to unveil the strategy by fall.

The government announced Tuesday it's backing Canadian Utilities' project with $2.8 million through a program, run by Emissions Reduction Alberta, that aims to spur innovation in the natural gas sector.

It is also providing funds to two other hydrogen projects, including one aimed at producing zero-emissions hydrogen.

"It's got incredible growth potential," Dale Nally, Alberta's associate minister of natural gas and electricity, said of the hydrogen sector in an interview.

"We are working on our hydrogen strategy because we want to know what is it going to take so that we can get in front of this."

Long referred to as the fuel of the future, hydrogen produces water — not carbon — when burned. But among its challenges is the economics of producing the gas in a large-scale and environmentally friendly way. 

Several jurisdictions worldwide, including England, are trying blending hydrogen into their natural gas systems as part of efforts to reduce emissions associated with home heating. 

Climate benefit depends on production

However, the climate benefit of hydrogen is highly dependent on how it is made, the Pembina Institute says.

The environmental think tank says "grey" hydrogen made by extracting it from natural gas using a thermal process, like steam methane reformation, offers little to no climate benefit. 

But it says "blue" hydrogen made by extracting hydrogen from natural gas — and then using carbon capture and sequestration technology to store the remaining carbon — has a low to moderate carbon intensity.

"Green" hydrogen, made from water using electrolysis powered by renewable energy, offers the greatest climate benefit.

"Hydrogen created with renewable energy or natural gas with carbon capture and storage can play a key role in decarbonizing Alberta's energy systems," Simon Dyer, Pembina's deputy executive director, said in a statement.

"However, only a small fraction of today's hydrogen is low carbon. Blending low-carbon hydrogen with fossil fuels can deliver incremental reductions in carbon intensity." 

Dyer said he's looking forward to learning more about ATCO's plans and the projected carbon intensity of the hydrogen.

Supplying hydrogen a 'major business'

The new pilot project is set to use "grey" hydrogen purchased from a producer, but with the carbon capture technology in the province, ATCO's Feltham said he has "no doubt" about the future potential.

"It's really about what the possibility is and to show people what's possible," Feltham said.

The Fort Saskatchewan Blending Project is expected to begin in September, with construction starting early next year. A five-per-cent hydrogen blend is low enough that users won't notice the difference, he said.

He said the company has made a number of presentations to city council and the next step is community engagement.

The province, meanwhile, is working with the federal government and industry on a strategy for the hydrogen sector, which has become a major business globally, according to the International Energy Agency. 

The Paris-based organization said in a recent report that demand for hydrogen has grown more than threefold since 1975 and continues to rise, but it is almost entirely supplied from fossil fuels.

With an abundance of natural gas, Nally believes Alberta is well-placed to be a global leader, adding hydrogen is already being produced in the province at two hubs. Alberta's carbon capture technology are also assets, he said.

"I can tell you that we have alignment with the federal government, as well as a number of provinces that are also interested in a hydrogen economy," he said. "There's no reason why we couldn't be a global leader in hydrogen."