Alberta's Hydrogen Roadmap: Efficacy and Efficiency of the Province's Vision for Supporting Low-Carbon Hydrogen
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2022-11-10
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Abstract
Alberta's Hydrogen Roadmap sets a vision for how the province will grow a hydrogen economy to diversify its energy sector, benefit the economy and contribute to emissions reductions. This paper examines the efficiency and efficacy of Alberta's proposed policy actions to support low carbon production and makes recommendation for how to further advance this strategy. It finds that Alberta's Roadmap as industrial policy may be warranted and also finds that Alberta's Roadmap is a solid start to building its hydrogen economy. It sets forth strong policy actions to reduce emissions in existing production, grow demand by implementing hydrogen in carbon-intensive sectors, and support technology and innovation.
A weak carbon price combined with the current high cost of low carbon hydrogen production make it unlikely that the hydrogen industry would develop and produce a maximum benefit in an appropriate timeframe for reaching net zero goals if left to the market. Unless the gap between the cost of emissions and the cost of emissions reduction is closed or significantly decreased, no financial incentive exists for companies to act. Government policy tailored to each of these market issues could support the development of hydrogen to produce economic and environmental benefits. However, without such tailored policy, industrial policy could simultaneously address several of these failures.
In addition to Alberta's proposed policy actions, this paper offers four recommendations to further support low carbon hydrogen production and deeper decarbonization:
1. Increase the stringency and emissions coverage of carbon pricing to signal firms to reduce emissions and improve the economic feasibility of low/zero carbon technologies.
2. Fund innovation to improve low carbon hydrogen feasibility and reduce investment risks/uncertainty.
3. Provide transparency and establish stricter eligibility requirements for fossil fuel subsidies.
4. Prioritize adopting a hydrogen emissions classification system that establishes an emissions threshold aligned with global standards.
5. Establish a regulatory framework to avoid overlap and confusion between regulatory bodies and existing legislation.
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Mahoney, S. (2022). Alberta's Hydrogen Roadmap: Efficacy and Efficiency of the Province's Vision for Supporting Low-Carbon Hydrogen (Unpublished master's project). University of Calgary, Calgary, AB.