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Navigating the Hydrogen Horizon: A Comprehensive Analysis of Hydrogen Policies in Canada Manas Sriram Yemmanur Venkat 101301127 SERG 5001 Sustainable Energy Policy for Engineers ABSTARCT

With the world community stepping up its efforts to switch to more sustainable energy sources, hydrogen has become a key component in reaching decarbonization targets. In order to shed light on Canada's methods for entirely using hydrogen as a clean energy carrier, this research study critically evaluates the country's emerging hydrogen legislation. This research uses a multidisciplinary methodology that includes policy analysis, technology assessments, economic analyses, and environmental analyses. An outline of Canada's present energy situation and the necessity of incorporating hydrogen into its energy portfolio are given at the outset of the article. After that, a thorough examination of state and federal hydrogen policies is conducted, including the financing sources, incentives, and legal frameworks designed to promote hydrogen production, distribution, and use. Finally, this study thoroughly analyses and critically evaluates Canada's hydrogen policy. Purpose: Canada has all the components needed to create a competitive and sustainable hydrogen economy, including strong international connections, a robust energy sector, abundant feedstocks for hydrogen production, and world-class innovation. Canada satisfies every need to create a sustainable hydrogen economy, including an abundant supply of feedstocks for hydrogen synthesis, a strong energy sector, and strong international ties. This essay examines Canada's hydrogen policies and their possible immediate effects. Summary Box:  What are the different strategies the Canadian government takes to implement the hydrogen action plan in Canada, and what are its pros?  Is the current strategy beneficial for hydrogen? What policy changes should be implemented for better energy derivation through hydrogen?  What should an ideal plan be for a seamless transition from non-renewable to hydrogen energy? Background: Canada is leading the way in international efforts to create a sustainable hydrogen economy and maximize the potential and power of low-carbon hydrogen. Canada is positioned to deliver on net zero potential due to the climate commitments made by both its federal and

provincial governments, abundant financial support, and its world-renowned capabilities in cleantech innovation and hydrogen-focused R&D. By 2050; the nation hopes to rank among the top three producers of clean hydrogen worldwide and provide up to 30% of its energy needs in the form of hydrogen [1] . As a result, there will be more than 5 million fuel-cell electric cars on the road and a domestic supply of more than 20 million pure hydrogen tonnes annually. The growing need for hydrogen worldwide has opened up export markets for Canadian businesses. The production, distribution, storage, and fuelling infrastructure for hydrogen and end-use applications like trains, heavy-duty vehicles, material handling equipment, marine and aviation propulsion systems, and stationery and backup power solutions are all well-served by Canadian companies. However, since 2012, Canada has stopped funding hydrogen-clean technology and innovation, which has allowed other nations to overtake them. By reinvesting in research and development, Canada can leverage its competitive advantage and increase its technological presence in developing international markets [2] . Discussion: Since it is the simplest and lightest element on Earth—roughly fourteen times lighter than air—hydrogen is ranked first on the periodic chart. Approximately 75% of all mass in the universe is made up of hydrogen, making it the most plentiful element. Hydrogen is invisible, tasteless, odorless, and non-toxic in its natural gaseous state, making it challenging to detect . Figure 1: Properties of Hydrogen [1] In addition to providing economic and environmental advantages, hydrogen is a unique and adaptable energy carrier that may significantly contribute to the decarbonization of energy systems. Hydrogen has several uses as an energy carrier and can be either a compressed gas or a liquid. It can transport significant amounts of energy from its production site to the point

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of usage since it has the highest energy per mass of all fuels. When utilized in a fuel cell, hydrogen is produced using renewable energy sources and is free of pollutants and carbon during consumption. Canada ranks among the top ten countries in the world for producing hydrogen, with an estimated 3 million tonnes produced annually, primarily via steam methane reforming of natural gas for industrial uses such as fuel refinement and nitrogen fertilizer manufacture. Although steam-methane reforming is not considered a low-carbon intensity hydrogen pathway in and of itself, Canada is ideally positioned to go towards cleaner methods in the future. With its hydroelectric generation capacity, Tier-1 nuclear status, world-class CO2 storage geology, abundant fossil fuel reserves, large-scale biomass supply, potential for growth in variable renewables, and freshwater resources that can all be used to produce hydrogen, Canada has one of the lowest carbon intensity electricity supplies in the world. The country is well-positioned to create hydrogen from electricity because 82% of Canada's electricity comes from non-GHG-emitting sources, and 67% originates from renewable sources [1] . Figure 2: Types of Hydrogen [3] Electricity is used in electrolysis to separate water into hydrogen and oxygen. This procedure uses an electrolyte or membrane and an electric current to split water into hydrogen and oxygen. The three primary electrolyser technologies are Alkaline, Proton Exchange Membrane (PEM), and Solid Oxide Electrolysis Cells (SOEC) . An older technique that has been around for over a century is alkaline. It can scale to over 150 MW, has cheap capital

costs, and works best with a continuous load. The membrane technology used in PEM fuel cells is also used in PEM electrolysers. Electrical utilities seeking flexible demand to complement fluctuating renewables can benefit from their ability to respond dynamically and operate at various loads. The last technique, SOEC, works at high temperatures and is currently being sold. These electrolysers can be combined with solar thermal, geothermal, and nuclear power plant output heat [1] . Capturing, Utilising, and Storing Carbon All hydrogen production must be carbon-neutral to meet Canada's net-zero by 2050 target. This includes hydrogen from fossil fuels and CCUS or electrolytic hydrogen from non-GHG-emitting electricity. Alternatively, all hydrogen production must be offset, for instance, through direct air capture of CO2. In Canada right now, hydrogen produced from fossil fuels with CCUS is more affordable than hydrogen produced by electrolysis, especially because natural gas is so readily available at a low cost.\ Strengths Weakness es Opportunit ies Threats One of the top 10 hydrogen producers globally. High production costs. Potential to export clean hydrogen to Europe, Asia, and the United States. Competitio n from other countries in the hydrogen market. Excellent base on which to build out clean hydrogen infrastruct ure. Limited infrastruct ure for hydrogen production and distributio n. Early economic recovery. Technologi cal challenges in hydrogen production. Strong governme nt support for hydrogen technologi es. Limited public awareness of hydrogen technologi es. Potential to generate more than 350,000 high-quality jobs. Uncertainty in the future of hydrogen technologie s. Table 1: SWOT analysis of Hydrogen Policies of Canada Canada's hydrogen strategy:

The Hydrogen Strategy for Canada (the "Canada Strategy") was released on December 16, 2020. The Canada Strategy aims to achieve net-zero emissions by 2050 and position Canada as a global industrial leader in clean, renewable fuels. To achieve these goals, the Canada Strategy set out near-term, midterm, and long-term goals: I. Near terms: Canada is concentrating on setting the groundwork between 2021 and 2025 by organizing and creating new infrastructure for the supply and distribution of hydrogen. This will enable the country to support Canadian demonstrations in emerging applications and early deployment of HUBs in mature applications. II. Mid-term: After that, the usage of hydrogen will be concentrated on growth and diversification in the 2025–2030 era as the technology advances and the entire array of end-use applications approaches commercial technical readiness levels. III. Long term: Canada hopes to fully profit from the rapidly expanding hydrogen economy between 2030 and 2050 as new commercial uses and increased technological deployment happen, underpinned by the country's robust supply and distribution network [4] . Figure 3: Hydrogen Electrolyser facilities by region [7] The strategy includes 32 suggestions that were created through eight pillars after stakeholder consultation:  Pillar 1: Strategic Partnerships - Work together to chart the future of hydrogen in Canada by strategically utilizing new and current partnerships.  Pillar 2: De-Risking of Investments - Create business plans, long-term regulations, and funding schemes to entice businesses and governments to contribute to the expansion of the hydrogen economy.  Pillar 3: Innovation: To guarantee that Canada keeps its competitive edge and position as the world leader in hydrogen and fuel cell technology, take steps to promote further R&D, establish research priorities, and encourage cooperation amongst stakeholders.

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 Pillar 4: Codes and Standards - Update current codes and standards and create new ones to stay up with this quickly evolving business and eliminate local and global deployment obstacles.  Pillar 5: Enabling Policies and Regulation: Ensure hydrogen is incorporated into clean energy strategies and roadmaps at all governmental levels and provide incentives for its use.  Pillar 6: Awareness: In an era of fast-evolving technology, take the lead at the national level to guarantee that people and communities are informed about the safety, applications, and advantages of hydrogen.  Pillar 7: Regional Blueprints - Establish a cooperative, multilevel government endeavor to expedite the creation of regional hydrogen blueprints, pinpointing particular prospects and strategies for hydrogen production and use.  Pillar 8: International Markets: Collaborate with our overseas partners to guarantee that hydrogen is a part of the worldwide push for clean fuels so Canadian businesses may prosper domestically and internationally [5] . The Canadian government employs many climate policies, such as carbon pricing, the Clean Fuel policies, and other requirements, to promote economic decarbonization. These regulations indirectly aid in the development of hydrogen in Canada. In order to help finance clean hydrogen initiatives, the most recent budget contains nearly $17 billion in tax credits between now and 2035. The primary regulatory tool that the Canadian government is employing to lower greenhouse gas emissions throughout the economy is carbon pricing. In Canada, the cost of carbon is expected to increase from $65 per tonne of greenhouse gases on April 1, 2023, to $170 per tonne by 2030. 86 Canada's carbon price structure is derived from the Greenhouse Gas Pollution Pricing Act, 2018 (GGPPA) and its implementing regulations. Numerous witnesses informed us that specific projects would only proceed with assurance about future carbon prices and that the price signal established by Canada's carbon pricing system is essential to developing initiatives in the country's hydrogen sector. A few witnesses mentioned the potential advantages of the Clean Fuel Regulations for the emerging hydrogen transportation industry [6] . More significantly, for the overall development of the hydrogen pathway, it is claimed that specific low-carbon intensity hydrogen production techniques or uses in new industries and

applications won't be financially viable compared to conventional hydrogen or other alternatives in the absence of sufficiently high-carbon prices.~ This may cause the chance to develop and implement specific hydrogen pathways to be lost or delayed when energy infrastructure is constructed to support other energy sources that replace hydrogen in the future. The Clean Electricity Standard is a regulation the Government of Canada proposed. The proposed Clean Electricity Standard would set a goal to achieve net-zero emissions in the electricity sector by 2035. Box 1: [Regarding the Canadian hydrogen market, the world's largest PEM (Proton et al.) electrolyser supplied with renewable energy producing up to 8.2 tonnes per day of low- carbon hydrogen is in Bécancour, Québec. This new manufacturing facility will produce hydrogen more efficiently than the conventional method, which prevents the emissions of around 27,000 tonnes of CO2 year] [7] . Future Considerations: Some of the considerations the federal government must foresee are given below, which are recommended by a report by the Senate committee. 1. Growing Hydrogen Supply and Demand : To advance the hydrogen industry, the Canadian government, various governmental levels, and businesses are attempting to resolve a "chicken-and-egg problem." Put another way, government initiatives must increase the supply and demand for hydrogen for the industry to realize its full potential. Private capital is hesitant to invest in manufacturing facilities if no buyers are ready to offtake the hydrogen supply. However, the possible uses of hydrogen are more constrained without the capability, expertise, labour or force, and infrastructure that come with a mature domestic hydrogen supply chain; as a result, domestic demand and infrastructure investments are modest. As the hydrogen business in Canada is still in its infancy, witnesses contended that governments should put some foundational regulations in place to help the sector take off. 2. Hydrogen Hubs: One possible way to address the issue is building hydrogen hubs. In order to optimize supply and demand and capitalize on regional variations in energy systems, resource availability, energy prices, skilled workforce, and other considerations, hydrogen infrastructure is being constructed in these places. According to multiple

witnesses, hydrogen hubs will assist in cutting costs associated with producing and distributing hydrogen in the areas where they are located. 3. The Potential to Export Hydrogen and Hydrogen Technologies: The export potential was highlighted with the August 2022 signing of the Canada-Germany Hydrogen Alliance. In order to "open the door for our private sector to start exporting energy products into the European market — Germany first, then the Netherlands, and then further into the European Union," NRCan officials stated that signing the Canada-Germany deal was crucial for Canada [5] . Policy Recommendations: Some of the most essential policy recommendations—which, in my opinion, are necessary for a viable hydrogen future—come from the Senate Committee on Hydrogen Energy study.  Recommendation One The Government of Canada must improve how it models the environmental, economic, and social benefits and costs of its energy programs and policies by taking a system perspective and being more transparent about the trade-offs between options.  Recommendation Two The Government of Canada must make its energy models and related methodologies transparent and accessible to peer review and public scrutiny and improve governance to enhance accountability and public trust.  Recommendation Three The Government of Canada must quickly implement the recommendations of the Commissioner of the Environment and Sustainable Development (CESD) concerning the CESD's hydrogen audit, including completing comprehensive modelling for the use of hydrogen, publishing a hydrogen market development roadmap, adopting a standard framework for estimating the emission reductions of government policies and improving federal modelling assumptions.  Recommendation Four The Government of Canada must present credible economic and energy transformation plans for achieving NZE2050 and any interim targets along the way, informed by the CESD's comments about factoring in the "environmental, economic and the social costs, the negative

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externalities that are not captured by carbon pricing and the negative temporal externalities that are borne by future generations.  Recommendation Five Where possible, the Government of Canada must seek arrangements to share the funding, risk, and rewards with hydrogen suppliers and investors pro-rated, ensuring mutual benefit and risks.  Recommendation Six The Government of Canada must take into account the dynamic of other countries'\ hydrogen subsidies on Canadian businesses as it develops incentives for the domestic hydrogen sector so that, commensurate with its risks and investments, Canada claims its fair share of the results.  Recommendation Seven The Government of Canada must apply its national carbon pricing framework more stringently across economic sectors and reduce any exemptions to the framework that may exist. It should take measures to increase certainty that the national carbon pricing framework will endure and that the carbon price will continue to rise.  Recommendation Eight The Government of Canada's hydrogen and NZE2050 policies must define low carbon intensity standards that are technology agnostic and continually lower the allowed carbon intensity on track with credible NZE2050 pathways.  Recommendation Nine The Government of Canada must focus on growing the domestic low-carbon intensity hydrogen supply and demand for the critical sectors and applications to help achieve NZE2050. However, it should invest strategically, in partnership with other levels of government and the private sector, and not take on too much risk with public funds [5] . Conclusion: The low-carbon intensity hydrogen market in Canada is still in its infancy. In order to reach net zero emissions by 2050, low-carbon intensity hydrogen may be the fuel of the future, but it will need to demonstrate its worth, affordability, and effectiveness compared to other

decarbonization strategies. Understanding systems is necessary to comprehend hydrogen's role in the energy system. The government needs to be informed that certain hydrogen-related expenditures allow for production routes with high carbon intensity that are not in line with national climate policies. The development of the low-carbon hydrogen industry might be accelerated by government policies that set continuously decreasing carbon intensity criteria across the economy while also opening the door for other decarbonization strategies. This study gives the reader a thorough understanding of Canada's hydrogen policies and projected trajectory toward a clean future. References: 1. Canada, N. R. (2022, August 23). The hydrogen strategy. https://natural- resources.canada.ca/climate-change-adapting-impacts-and-reducing-emissions/canadas- green-future/the-hydrogen-strategy/23080 2. Solomon, B. D., & Banerjee, A. (2006). A global survey of hydrogen energy research, development and policy. Energy Policy, 34(7), 781–792. https://doi.org/10.1016/j.enpol.2004.08.007 3. The CECN. (2022, July 14). About us - The CECN. The CECN - the Canadian Energy and Climate Nexus. https://thececn.ca/about-us 4. Canada’s hydrogen policy landscape: A comparative overview. (n.d.). Gowling WLG. https://gowlingwlg.com/en/insights-resources/articles/2022/canadas-hydrogen-policy- landscape/#Ont 5. 406. (n.d.). https://sencanada.ca/content/sen/committee/441/ENEV/reports/Hydrogen- energy-report_e_Final_WEB.pdf 6. Beauchemin, A. (2023, May 29). What can we expect from clean hydrogen in Canada? CBC. https://www.cbc.ca/news/science/clean-hydrogen-canada-1.6856584 7. Hydrogen Tech World. (2021, November 24). World’s largest PEM electrolyzer installed in Canada . Hydrogen Tech World.com. https://hydrogentechworld.com/worlds-largest- pem-electrolyzer-installed-in-canada