Hydrogen-injected natural gas to heat homes in Alberta city next year

Homes in Fort Saskatchewan, Alta., areto be warmed with natural gas blended with hydrogen beginning next year, a"first step" amid efforts to diversify the province's energysector and potentiallyreduce carbon emissions.

Canadian Utilitiessaid Tuesdayabout 5,000 customers will start using the blended gas, which will includeup to five per cent hydrogen,after construction wrapsupin the summer of 2021.

ATCOhopes the$5.7-million pilot project will provide a "roadmap" for future greenhouse gas emissions reductions in Alberta. It'll be the country's largest hydrogen-blending project, the Calgary-based companysaid.

"We want to show people what you can do andwork on a vision with all the various parties, government included, about what it could become," said ATCO vice president Graeme Feltham."It's a really important first step."

The news comes as the provincial governmentworks on plans to grow thehydrogen sector, viewedas a key part of its diversification goals. The province is to unveil thestrategy byfall.

The governmentannounced Tuesdayit's backing Canadian Utilities' project with$2.8 million through a program, run by Emissions Reduction Alberta, that aims to spurinnovation in the natural gas sector.

It is also providing fundsto two other hydrogen projects, including one aimed at producing zero-emissions hydrogen.

"It's got incredible growth potential," Dale Nally, Alberta's associate minister of natural gas and electricity, said of the hydrogen sector in an interview.

"We are working on our hydrogen strategy because we want to know what is it going to take so that we can get in front of this."

Longreferred to as the fuel of the future, hydrogenproduceswater not carbon when burned. But among its challengesis the economics of producing the gas ina large-scale and environmentally friendly way.

Several jurisdictions worldwide, including England,are tryingblending hydrogeninto their natural gas systems as part of efforts to reduce emissions associated withhome heating.

Climate benefit depends on production

However, the climate benefit of hydrogen is highly dependenton how it is made, the Pembina Institute says.

The environmentalthink tanksays "grey" hydrogen made by extracting it from natural gas using a thermal process, like steam methane reformation,offers little to no climate benefit.

But it says "blue" hydrogenmade by extracting hydrogen from natural gasand then using carbon capture and sequestration technology to store the remaining carbonhas a low to moderate carbon intensity.

"Green" hydrogen, made from water using electrolysis powered by renewable energy,offers the greatest climate benefit.

"Hydrogen created with renewable energy or natural gas with carbon capture and storage can play a key role in decarbonizing Alberta's energy systems," Simon Dyer, Pembina's deputy executive director, said in a statement.

"However, only a small fraction of today's hydrogen is low carbon. Blending low-carbon hydrogen with fossil fuels can deliver incremental reductions in carbon intensity."

Dyer said he'slookingforward to learning more about ATCO's plans and the projectedcarbonintensity of the hydrogen.

Supplying hydrogen a 'major business'

The newpilot project is set touse "grey" hydrogen purchased from a producer, but with the carbon capture technology in the province, ATCO's Feltham said he has "no doubt" about the future potential.

"It's really about what the possibility is and to show people what's possible," Felthamsaid.

The Fort Saskatchewan Blending Project is expected to begin in September, with constructionstarting early next year. A five-per-cent hydrogen blend is low enough that users won't notice thedifference, he said.

He said the company has made a number of presentations to city council andthe next step is community engagement.

The province, meanwhile, is working with the federal government and industry on a strategy for the hydrogen sector, which has become a major businessglobally, according to theInternational Energy Agency.

The Paris-based organization said in a recent report thatdemand for hydrogen has grown more than threefold since 1975 andcontinues to rise, but it is almost entirely supplied from fossil fuels.

With an abundance of natural gas, Nallybelieves Alberta is well-placed to be a global leader, adding hydrogen is already being produced in theprovince at two hubs. Alberta's carbon capture technology are also assets, he said.

"I can tell you that we havealignment with the federal government, as well as a number of provinces that are also interested in a hydrogen economy," he said. "There's no reason why we couldn't be a global leader in hydrogen."