Green hydrogen – coming soon

Norton Rose Fulbright recently hosted a green hydrogen roundtable in its Vancouver office, featuring Simon Currie, our former global head of energy, and new leader of an affiliated energy business accelerator. Guy Gensey, BC’s director of energy and industry decarbonization, and Juergen Puetter, CEO of Blue Fuel Energy, also spoke. Simon has assisted a number of hydrogen and related renewable development projects in Australia, and our Vancouver office has helped commercialize fuel cell technology for over a decade.

Hydrogen has long been of interest as an emissions-free energy source. Its use, production, and transportation loom as a new energy disruption in BC, and globally, due to stronger public environmental awareness, climate legislation, and carbon pricing. This update draws on our recent roundtable experience to provide a brief primer on hydrogen development for BC businesses, and identifies some of the legal needs faced by early movers in the hydrogen economy.

Use: Hydrogen can be combusted (oxidized) to yield heat and water vapour as a byproduct. Or, fuel cells react hydrogen with oxygen to yield an electric current, like a battery. In both cases, the hydrogen can either be used as a primary fuel, or as a backup for energy storage purposes.

Production: Hydrogen is produced from either water or hydrocarbons (natural gas or syngas from, e.g., coal). “Green” hydrogen refers to using renewable electricity to generate hydrogen, where electrolysis splits water molecules into hydrogen and oxygen. Steam reforming uses a catalyst to convert natural gas/syngas and steam into, ultimately, hydrogen and carbon dioxide. Carbon capture and storage (CCS), often in oil/gas underground formations, or an equivalent industrial use, is necessary to ensure that carbon-sourced hydrogen is sustainable.

Transportation: As a gas, hydrogen can be transported in compressed form in tanks, or injected into pipelines along with natural gas, and then combusted or recaptured downstream. As a liquid, hydrogen can be transported in tanks, or via a “carrier” substance (e.g., “charging” toluene with hydrogen¹, or using methanol²).

Examples:

• In Canada, Vancouver has emerged as a centre of excellence for the development of fuel cells. Local companies have advanced fuel cell technology that powers fleets of vehicles across the globe. Hydrogen refueling stations have recently been established in Vancouver³ and Australia,⁴ while such networks are already established in several Japanese locations.⁵

• Modular electrolyzing plants are available in a wide variety of sizes, catering to energy storage, backup power, and fuel cell fleet maintenance applications. In particular, hydrogen generation offers intermittent renewable power generation (i.e., wind and solar) an energy storage opportunity, to “time shift” electricity and better match energy production with grid demand.

• Manufacturing “green” ammonia from water and renewable electricity instead of natural gas offers both a fertilizer industry with no carbon impact, and supports intermittent renewable generation by matching demand to energy production.⁶

• A number of shipping companies are testing the use of fuel cells to power marine transportation, using tanks of compressed or liquefied hydrogen.

• In multiple locations worldwide, including BC’s lower mainland, efforts are underway to test injecting hydrogen into the existing natural gas distribution network, to lower overall emissions.⁷ Relatedly, hydrogen gas-powered generation turbines have been installed in several locations.⁸

BC and the hydrogen economy

BC is clearly well positioned for the hydrogen economy. It has the necessary industry experience and human capital, complementing broad public support for climate legislation. Carbon pricing and carbon standards are already in place. BC also enjoys abundant water resources, and has an electricity surplus, with grid electricity that is 98% carbon free. Pursuant to government policy, BC Hydro is now seeking to further electrify the provincial economy and attract new load. Indeed, the potential for renewable hydrogen export from BC is being studied by ITM Power, Chiyoda Corporation, and Mitsui, with support from BC Hydro.⁹

Legal issues confronting hydrogen development

Early movers in the hydrogen economy have a number of legal needs:

• Innovative proprietary designs and technologies often need legal advice concerning technology, licensing, and patent protection issues.

• Proponents may seek to share the risks associated with investing in a nascent industry, demanding best practices in joint venturing and partnership arrangements, to manage taxation and governance challenges.

• Both capital investment and technology development require financing expertise.

• Understanding permitting and regulatory processes and their associated risks is an important up-front step, that may drive both project design and financial structures. Government or utility incentives for new load or for clean energy development may be necessary to catalyze early projects, such as qualifying for greenhouse gas offset credits.

Footnotes

¹ New hydrogen bonds break the benzene ring: https://www.chiyodacorp.com/en/media/2013/post-77.html

² E.g., http://bluefuelenergy.com/blue-fuels/methanol

³ E.g.: https://www.newswire.ca/news-releases/air-liquide-adds-vancouver-international-airport-to-canadian-hydrogen-energydemonstration-project-538998381.html;

https://docs.wixstatic.com/ugd/364a5b_3609fa40eb1a424eb15d980d4fee3c1f.pdf

⁴ https://reneweconomy.com.au/moreland-council-launches-hydrogen-powered-garbage-truck-scheme-35203/

⁵ https://www.reuters.com/article/us-japan-hydrogen/japan-venture-aims-to-build-80-hydrogen-fuelling-stations-by-2022-idUSKBN1GH072

⁶ http://www.siemens.co.uk/en/insights/potential-of-green-ammonia-as-fertiliser-and-electricity-storage.htm

⁷  E.g., https://www.fortisbc.com/MediaCentre/Blog/Pages/20171215-FortisBCs-Long-Term-Gas-Resource-Plan.aspx

⁸ NRF is advising Hydrogen Utility (H2U) on Australia’s first renewable hydrogen electrolyser plant, which will include a 10MW hydrogen-fired gas turbine, supported by local wind and solar power and a 5MW hydrogen fuel cell: http://www.abc.net.au/news/2018-02-12/hydrogen-power-plant-port-lincoln/9422022 Also see a Dutch generation project involving CCS: http://bellona.org/news/ccs/2017-07-23661

⁹ http://www.itm-power.com/news-item/british-columbia-renewable-hydrogen-study