Business in Vancouver: Advocates float hydrogen export industry idea

Liquefied natural gas has been called a “bridge” fuel that will help countries meet climate change objectives, because it is a lower-carbon alternative to coal for power generation.

But further out, as governments move to free their economies from fossil fuels entirely – 2050 being one of the target dates – even natural gas could be phased out for uses such as heating.

Matthew Klippenstein, a clean-tech consultant, has a novel idea for “future-proofing” B.C.’s natural gas sector: build capacity now into the nascent liquefied natural gas (LNG) industry to allow B.C. to pivot, and continue using its abundant natural gas, to produce hydrogen, instead of LNG, for export to Asia.

“Of course, this market doesn’t exist yet, which is another reason for the province to take the financial risk of upgrading this infrastructure,” Klippenstein said recently at a forum on the economics of LNG hosted by Resource Works. “But there are very tantalizing signs that this will move forward.

“The reason to do this is to avoid locking B.C. into an emissions exporting path.”

In a submission to the provincial government under its clean-growth strategy, Klippenstein calls on the province to provide a “top-up” to the industry so that natural gas pipelines built for an LNG industry can be engineered to move hydrogen to the West Coast for export to Asia, which is already the biggest market for hydrogen fuel cell vehicles.

“If the province provides that top-up, it doesn’t impair the business economics, and it allows us to be a future-proofer,” he said. “When the market comes, natural gas out of the Montney shale, we can take the hydrogen off that. We can capture the carbon. We can export the hydrogen. We can be an energy exporter without the emissions.”

“It’s a very, very good idea,” said Juergen Puetter, a renewable-energy entrepreneur who built B.C.’s first wind farm and is now working on a project called Blue Fuel Hydrogen.

Preparing a natural gas pipeline to eventually carry hydrogen would require only minor tweaks in terms of materials and components, Puetter said.

“It might be too late for the LNG Canada project,” Klippenstein said. “But I hope there’s still time for, perhaps, Woodfibre, definitely for the Chevron [NYSE:CVX] LNG project.”

Hydrogen is used in fuel cells to provide zero-emission electricity. B.C.’s Ballard Power Systems (TSX:BLDP) was a pioneer of hydrogen fuel cell technology. It was decades ahead of its time. Markets for fuel cell vehicles have been slow to develop, but they have begun to pick up in China.

Ballard recently closed a $163.6 million deal with Chinese auto equipment manufacturer Weichai, which now owns 19.9% of Ballard.

Weichai has committed to powering 2,000 vehicles over the next couple of years using hydrogen fuel cells, said Guy McAree, Ballard’s director of investor relations.

“If you think about 2,000 fuel cell vehicles, we’ve never seen that kind of volume anywhere in the world before,” McAree said. “The kind of scale of the market in a place like China suggests that there could be a long-term opportunity too for hydrogen supply, because you have to have an awful lot of fuelling stations. Even if fuel cells only take a small percentage of the market, it’s still going to be a very big opportunity.”

A number of other companies in the hydrogen and fuel cell space have grown up around Ballard. Hydrogen In Motion, for example, this week was awarded the Mitacs Award for Exceptional Leadership, industry category, for developing a nanomaterial that acts like a sponge for hydrogen, allowing it to be stored at low pressure.

That’s the sort of innovation that might make B.C. a leader in being able to store and transport hydrogen more efficiently.

Most hydrogen is made from natural gas, which is mostly methane. Methane contains one carbon and four hydrogen atoms. The hydrogen can be stripped out and the carbon can be sequestered back where it came from – underground in spent natural gas wells. The carbon dioxide can also be used in fracking.

With its abundance of natural gas, short shipping distances to Asia and hydrogen technology hub, B.C. could position itself as a leader in the hydrogen energy space, Klippenstein said.

One challenge to Klippenstein’s proposal might come from renewable energy.

Although most hydrogen is made from natural gas, it can also be made from water using electrolysis. But it’s about four times more expensive, due to the high amounts of power required for the process.

But as more wind power gets built, hydrogen production is likely to become a storage solution. Because it’s unpredictable and can produce an overabundance of power when it’s not needed, wind can be a serious headache for power grid managers.

One solution is to use surplus wind power to produce hydrogen from water, store it and then power fuel cells with it when the power is needed.

Klippenstein doesn’t see that eliminating hydrogen production from natural gas, however. He said hydrogen from natural gas will continue to be competitive.

“It’s completely feasible to have both scenarios going on at once.” 

Clean-power entrepreneur wants to make hydrogen from wind and water

As part of the City of Vancouver’s plans to become 100% fossil-fuel-free by 2050, it plans to phase out natural gas and replace it with renewable natural gas (RNG).

The problem is that there simply aren’t enough landfills or dairy farms in B.C. to supply all the RNG the city would need to replace natural gas.

So Juergen Puetter, a renewable-energy entrepreneur who built B.C.’s first wind farm, has come up with a plan to provide the city with lower-carbon natural gas from wind and water.

Puetter recently formed Blue Fuel Hydrogen, which proposes to produce hydrogen from wind power and water and add it to the natural gas stream that supplies much of B.C. with gas for heating.

Puetter’s plan would require a new dedicated wind farm, plus additional grid power from BC Hydro.

Using the electricity, a Blue Fuel Hydrogen plant near Chetwynd would separate the hydrogen and oxygen from water using electrolysis. The hydrogen would then be injected into the natural gas stream.

“It goes down and ends up displacing the equivalent of 10% of the gas that’s being consumed in Vancouver and makes it fully renewable, saving 180,000 tonnes of CO2, and has a minimal cost impact on ratepayers,” Juergen said.

Juergen said hydrogen produced from the Chetwynd plant would also be sold into other markets in North America.

Are hydrogen fuel cells still in the race to drive the car of the future?

It’s ironic that in Vancouver, where Ballard Power Systems (TSX:BLDP) pioneered the hydrogen fuel cell, there are still only about a dozen fuel cell cars on the road.

They were the car of the future in the 1990s, and still are. But the future is inching closer.

Major automakers like Toyota, Honda and Hyundai are now making fuel cell cars. They aren’t easy to get in B.C., but that may change soon, thanks to a new zero-emission vehicle (ZEV) mandate that will be introduced in the spring of 2019.

By 2025, under the mandate announced last week, 10% of light-duty cars and trucks sold in B.C. will have to be some form of low- or zero-carbon-emission vehicle. That includes battery electric, hybrid electric and hydrogen fuel cell cars.

The mandate applies to the manufacturers more than to auto dealers. They are required to supply electric or fuel cell cars to the market or pay a penalty.

The government’s Clean Energy Vehicles for BC program offers rebates of up to $6,000 for fuel cell cars.

The problem is that there are only two hydrogen fuelling stations in the Lower Mainland, although a third is being built in Burnaby, said Matthew Klippenstein, a clean-tech consultant and adviser for Plugin BC.

“The hope of the fuel cell community is, now that there is a ZEV mandate, the automakers will allocate fuel cell vehicles and electric vehicles to British Columbia because now there’s real money on the table.”


Byline: Nelson Bennett