Market Snapshot: Hydrogen update—a small molecule’s role in Canada’s energy system

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Release date: 2025-09-17

Hydrogen Projects in Canada

With the focus on reducing greenhouse gas emissions, hydrogen is emerging as a potential key player in Canada’s energy landscape. Canada currently produces around 4 million tonnes^Footnote 1 per annum (Mtpa) of hydrogen, with significant contributions from Alberta, which accounted for 2.6 Mtpa in 2024, including 0.5 Mtpa paired with Carbon Capture and Sequestration (CCS).^Footnote 2 A further 5 Mtpa of clean hydrogen^Footnote 3^Footnote 4^Footnote 5 projects have been announced or are under development across the country.^Footnote 6 Infrastructure for transporting and storing hydrogen is also expanding to meet growing demand, though current global infrastructure remains lacking.^Footnote 7

The Progress Report for Hydrogen Strategy for Canada^Footnote 8 by Natural Resources Canada describes various modelling efforts in Canada, in which most scenarios see hydrogen accounting for between 3% and 12% of Canada’s energy demand by 2050. Scenarios with high hydrogen support or cost reductions see this share reach as high as 18%.

Hydrogen Production Methods

Hydrogen can be produced in many ways, commonly categorized by emissions intensity. These ways include: coal or biomass gasification^Footnote 9, the latter of which can be paired with CCS; Steam Methane Reformation (SMR) or Autothermal Reformation (ATR)^Footnote 10, which can both be paired with CCS^Footnote 11; methane pyrolysis; and electrolysis^Footnote 12^Footnote 13. Hydrogen can also occur naturally, and there is ongoing research and exploration to better understand this resource.^Footnote 14^Footnote 15

Figure 1: Summary map: Hydrogen developments in Canada since 2020—production, end-use, hubs, and strategies

This figure shows a map of Canada, illustrating hydrogen developments in production, demand, and strategy publications.

Source and Text Alternative

Source: Hydrogen Strategy for Canada: Progress Report, Section 1.1, NRCan

Text Alternative: This figure shows a map of Canada, illustrating hydrogen developments in production, demand, and strategy publications. End-use applications are shown as coloured triangles and operating and developing production facilities are shown as pentagons and circles, respectively. The colour indicates the type of production pathway. The size of the circles shows the overall size of the production facility. The shade of provinces or territories indicates the level of development of hydrogen strategies within the region, with darker shade indicating the province has a strategy in place. This figure also illustrates the location of hydrogen projects spread widely across Canada, with more fossil fuel-based hydrogen projects being developed in the West and more electrolysis projects in the East. Biogasification projects are being developed across the country.

Applications and Future Projects

Hydrogen is an energy carrier^Footnote 16 with many applications and a wide range of production methods. Currently, most of the hydrogen produced today is used in crude oil refining, steel making, and the chemical industry,^Footnote 17 but other potential uses include as a fuel or as a method for storing energy from renewable sources. The world uses more than 97 million tonnes^Footnote 18 of hydrogen annually, 99.6% of which is produced from fossil fuels, typically without using CCS.^Footnote 19

Plans for decarbonizing multiple industries internationally and within Canada depend increasingly on hydrogen. As shown in Figure 1, many projects are underway to leverage clean hydrogen in end-use applications like trucking and heavy industry, as well as production facilities for hydrogen via electrolysis, SMR/ATR, and biomass gasification. The future of clean hydrogen in Canada is especially promising in addressing hard-to-abate sectors, including heavy transportation, high-temperature industrial processes, and in fertilizer production,^Footnote 20 where hydrogen is synthesized to ammonia—a common feedstock for fertilizer production.

Federal financial support for hydrogen projects is currently available through the Clean Hydrogen and Renewable Energy Investment Tax Credits, the Clean Fuels Fund, the Canada Growth Fund, and the Canada Infrastructure Bank, while provincial and territorial support mechanisms vary per region. The Progress Report for the Hydrogen Strategy of Canada^Footnote 21 highlights the developments in both codes and standards and the establishment of hydrogen hubs across the country, allowing for specialized infrastructure to aid in developing the hydrogen industry in Canada.

Footnotes

Footnote 1

Energy Fact Book, NRCan, page 100

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Footnote 2

Emerging Resources – Hydrogen, AER

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Footnote 3

EU unveils methodology to calculate emissions savings in low-carbon fuels, White & Case

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Footnote 4

Clean Hydrogen Investment Tax Credit (ITC), Government of Canada

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Footnote 5

Hydrogen Production and Distribution, Alternative Fuels Data Center, US DOE

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Footnote 6

Hydrogen Strategy for Canada: Progress Report, 1.1 Status of the Canadian hydrogen industry, NRCan

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Footnote 7

Global Hydrogen Review 2024, IEA, Page 106

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Footnote 8

Hydrogen Strategy for Canada: Progress Report, NRCan

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Footnote 9

Towards hydrogen definitions based on their emissions intensity, IEA

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Footnote 10

SMR or ATR without the use of CCS is commonly referred to as grey hydrogen. However, as terminology usage can vary widely, it can be clearer to refer to the emissions intensity of the hydrogen production pathway.

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Footnote 11

SMR or ATR paired with CCS is commonly referred to as blue hydrogen. However, as terminology usage can vary widely, it can be clearer to refer to the emissions intensity of the hydrogen production pathway.

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Footnote 12

Global Hydrogen Review 2024, IEA, Page 66

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Footnote 13

With hydrogen from electrolysis, the emissions intensity of the electricity used is linked with the emissions intensity of the hydrogen. For example, hydrogen derived from electricity produced by burning coal would not be low carbon hydrogen, but hydrogen derived from electricity produced from wind or solar would be much lower in emissions intensity. Hydrogen made with electricity from renewables is commonly referred to as green hydrogen. However, as terminology usage can vary widely, it can be clearer to refer to the emissions intensity of the hydrogen production pathway.

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Footnote 14