Positive Energy Advisory Council Member
Deputy Director, ARC Energy Research Institute
On January 19, 2021, the ISSP hosted a panel entitled Hydrogen and Canada’s Energy Future: Opportunities, Challenges, Next Steps. This blog is an adaptation of the author’s remarks.
The opening words of Canada’s new hydrogen strategy state, “For more than a century, our nation’s brightest minds have been working on the technology to turn the invisible promise of hydrogen into tangible solutions.” It is with a mix of optimism and pragmatism that I say the promise of hydrogen can finally be realized.
It’s easy to get excited about disruptive energy transitions, but they don’t always work out. I’ve studied these transitions, many of which offer lessons for how to place the promise of hydrogen in context. For instance, in my energy museum, I have a 1971 issue of Popular Science showcasing a “breakthrough” electric car that looks suspiciously like Tesla’s Model 3 and had many of the same performance parameters. Now, with Elon Musk and Tesla, we're finally at an inflection point for electric vehicles after false starts in the 1970s, 1990s and 2000s. What were the conditions that finally allowed this to happen? More importantly, what conditions were absent in the past that precluded the adoption of electric vehicles? (To see that issue of Popular Science, visit my Energyphile project.)
Hydrogen has also had several cycles of unfulfilled promise. The last wave of hydrogen excitement was around 2000, and there are many parallels to our present moment. Hydrogen stocks were rocketing upwards. Some of the names are even the same. Many of those stocks 20 years ago were riding the Web 2.0 wave, reminiscent of the current tech surge. So what can explain the failure of hydrogen in the 2000s? What conditions were absent?
Thomas Edison identified one crucial condition for success when he asked, “Which comes first, the light bulb or the grid?” The answer is a fully functioning, commercial light bulb. If you look at many successful energy transitions, the application has been proven first, before the investment and infrastructure followed. This is especially true for hydrogen, which will require a significant amount of new infrastructure. In this respect, hydrogen is distinct from other emerging low-emission technologies, which are mostly plug and play. EVs and batteries can work with our existing electricity grid; you can plug in wind and solar and unplug coal on the front end.
Of course, hydrogen technology itself is not enough. Nor is throwing money at it the answer. Investment can be fleeting. If expectations are set too high, investors will lose money. If investors lose money, they don't come back for a long time. The public markets can be your best friend or they can be a nightmare.
Building out hydrogen infrastructure will also require political stability and policy and regulatory coherence. I think the government is on the right track and our regulatory bodies are positioning the challenge properly, but business needs to know that supportive policies will endure through a full investment cycle.
Technology and innovation are not the limiting factors for hydrogen. Where the hydrogen strategy is lacking, where we need a deeper conversation and understanding, is on the financial side. One key idea that's missing in Canada’s hydrogen strategy is the development of a more mature hydrogen trading market. If you look at all the other energy commodities — oil, gas, petroleum products and electricity — they each have a fully functioning and transparent trading market. For hydrogen to expand into the mainstream, a fully functioning market across the entire supply chain is necessary. That's not to say it can't happen, but we’re not yet close.
Canada’s hydrogen strategy offers some excellent food for thought, but as the report itself says, it is only a call to action. Now comes the time to think about how we are going to actually execute the details and make sure we put the horse before the cart. I’m optimistic we have far more of the necessary conditions than we did 20 years ago. By spending more time understanding the remaining challenges, we can make the invisible promise a reality.
Energyphile is a project exploring the past, present and future of energy transitions. Explore Peter's museum and read the stories at energyphile.org.