New “Hydrogen Alliance” Offers Canada Opportunity to Export Ammonia to Europe

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THE CONVERSATION

This article originally appeared on The Conversation, an independent, nonprofit source of news, analysis and commentary from academic experts. Disclosure information is available on the original site.

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Author: Barry E. Prentice, Professor of Supply Chain Management, University of Manitoba

A recently announced export agreement between Canada and Germany offers Canada the opportunity to export hydrogen to Europe.

The Hydrogen Alliance proposes a “Canada-Germany Transatlantic Supply Corridor” to start exporting hydrogen by 2025. This goal could be achieved sooner with the export of hydrogen from the West canadian.

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The transport of hydrogen is more problematic than its production. Hydrogen can be transported as a compressed gas or liquid hydrogen, but it is more economical to convert it to anhydrous ammonia – which liquefies at much lower pressures – for shipping.

The supply chain proposal is to ship ammonia from Alberta to Europe in purpose-built ammonia shipping containers through the Port of Churchill in Manitoba. Ammonia containers shipped from Alberta would connect to the Hudson’s Bay Railway for delivery to a container terminal in Churchill.

From Churchill, the ammonia could be delivered directly to a container ship to Europe, or go through a feeder service to Halifax to be loaded onto larger container ships to cross the Atlantic Ocean.

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While a few regulatory hurdles need to be removed, such as cabotage – the movement of domestic freight by foreign shippers or trucks – restrictions on feeder transport routes, the project poses minimal financial and business risk.

Blue vs Green Hydrogen

At the heart of the alliance is disagreement over what kind of hydrogen should be produced. Germany wants to import green hydrogen, but Canada wants to continue producing blue hydrogen. Last year alone, the Alberta and federal governments agreed to a $1.3 billion investment in blue hydrogen production that could lead to the construction of a hydrogen plant in Edmonton.

Blue hydrogen is hydrogen produced from the removal of carbon from methane (natural gas). Instead of the carbon being released into the atmosphere, it is permanently captured and stored underground.

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Green hydrogen is produced with renewable or carbon-free energy, but it is expensive and is expected to remain so until at least 2030. In 2020, the cost of producing blue hydrogen was $1.50 to $2.0 per kg, compared to the cost of green hydrogen at $2.5 to $5 per kg.

The agreement does not guarantee that the hydrogen that Canada produces must be green. However, if Germany ends up resisting the export of blue hydrogen from Canada, other EU countries will no doubt step in and take its place.

Revitalizing the Port of Churchill

For decades, the Churchill Corridor has been deprived of sufficient traffic to sustain its infrastructure costs. When grain handling was the mainstay of the port, annual volumes never exceeded 650,000 tonnes.

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The Hudson’s Bay Railroad requires about two million tons of traffic each year to be economically self-sufficient. In 2022, the governments of Manitoba and Canada pledged $147 million to upgrade and maintain the railroad, which is prone to service disruptions.

Ammonia exports could provide the volume needed to make the railroad sustainable. A 20 foot container (TEU) of liquid ammonia is equivalent to 13.7 tonnes. Two million tonnes would equal 146,000 TEUs, or about 365 double-stack train movements per year. As production increases, Western Canada could supply a 3,500 TEU ship per week.

Container cranes would also allow Churchill to attract other exports. The Hudson’s Bay Railroad would be a low-cost route for exporting grains and pulses to Europe and the Middle East. Opening a container terminal in Churchill could reduce transportation costs to Nunavut and replace diesel generators with hydrogen fuel cells.

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Most of the assets needed to develop an ammonia supply chain through the Port of Churchill already exist, with the exception of a container crane and a port terminal to accommodate vessels of 3,500 TEUs and above. The guarantee of long-term traffic flows should make it possible to compensate for any public investment necessary for the construction of additional infrastructure.

Fighting the “energy war”

The potential market for hydrogen is enormous and the risk is minimal. Regardless of the end of the invasion of Ukraine, the EU will never again allow the Russians to hold such a large share of their energy market.

Russia has leveraged its power in global energy markets to support its economy, which has been largely cut off from the rest of the world by sanctions. In solidarity with Ukraine, Europe and many other countries have desperately sought alternatives to Russian oil and gas.

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Canada could help Europe fight this “energy war” with Russia by offering an alternative to Russian energy sources. By exporting blue hydrogen from Alberta through the Churchill Corridor, Canada could increase the volume of exports from Newfoundland and Labrador.

Fight against climate change

Oil movements through the port of Churchill would likely raise objections from environmentalists due to the risk of spillage, but ammonia is another story. While anhydrous ammonia should be handled with care, any accidental release is likely to be confined to a single container and will dissipate quickly.

The export of hydrogen through the Port of Churchill is also consistent with the Government of Canada’s environmental policy. Blue hydrogen, which has a relatively low carbon intensity score, has the potential to help Canada meet its greenhouse gas reduction target by 2050.

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A low-carbon economy will require lower-carbon hydrogen production, and blue hydrogen is a step in the right direction. Supplying blue hydrogen to export markets will also reduce carbon emissions globally.

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Barry E. Prentice does not work for, consult, own stock or receive funding from any company or organization that benefits from this article, and has disclosed no relevant affiliations beyond his appointment university.

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This article is republished from The Conversation under a Creative Commons license. Disclosure information is available on the original site. Read the original article: https://theconversation.com/new-hydrogen-alliance-offers-canada-an-o https://theconversation.com/new-hydrogen-alli

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