Quebec Unveils Green Hydrogen and Bioenergy Strategy

On May 25, 2022, the Quebec government released its much-anticipated provincial strategy to promote the growth and development of the green-hydrogen and bioenergy sectors in the province. The Quebec Green Hydrogen and Bioenergy Strategy 2030 (QC Strategy) policy outlines, in broad strokes, how the Quebec government aims to increase green-hydrogen and bioenergy production and distribution in pursuit of the province’s ambitious energy transition plan. (The QC Strategy is available in French only. For general information on the strategy in English, click here.)

In our March 2021 Blakes Bulletin: The Quebec Energy Transition: A Preview of the Emerging Green Hydrogen Sector, which focuses on the role of the green hydrogen sector in Quebec, we discussed the Quebec government’s Plan for a Green Economy 2030 (Green Plan), which focuses on the electrification of the economy. We have also previously examined the Canadian federal government’s vision for the development of the hydrogen sector in Canada in our February 2021 Blakes Bulletin: Canada’s Hydrogen Strategy: An Ambitious Framework for a Strong Hydrogen Economy.

In this bulletin, we focus on the Quebec government’s proposed measures in the QC Strategy to strengthen the production, use and distribution of green hydrogen in Quebec. In particular, we outline how the Quebec government intends to prioritize the types of hydrogen-related projects that will benefit from its support and an approximate timeline for the deployment of such support.

FIVE GUIDING PRINCIPLES OF THE QC STRATEGY

As a starting point, the QC Strategy sets out the following five guiding principles to ensure that the green-hydrogen and bioenergy sectors successfully contribute to the province’s goal of reaching carbon neutrality by 2050, as stated in their Green Plan:

1. Capitalize on the complementarity of the green-hydrogen and bioenergy production sectors with the reduction of energy consumption and direct electrification

2. Develop natural resources and residual materials sustainably by making circular-economy and lifecycle analysis central to green-hydrogen and bioenergy projects

3. Foster the collaboration and participation of regional, local and Indigenous communities in the deployment of the green-hydrogen and bioenergy sectors

4. Attract investment and export Quebec expertise

5. Contribute to Quebec’s energy by substituting renewable energy produced in Quebec for imported fossil fuels

The above guiding principles will inform how the Quebec government intends to prioritize green-hydrogen projects and applicable timelines.

CRITERIA AND TIMING FOR DEVELOPING HYDROGEN PROJECTS

The QC Strategy provides a list of criteria to consider in determining which hydrogen-related projects to prioritize. The goal for providing such criteria is to balance resource sustainability with economic, social and environmental impacts and, therefore, provide a road map for economic partners in the hydrogen space. The criteria include:

• The relevance of the project to direct electrification

• How the project will contribute to the reduction of GHG emissions in Quebec and the energy transition

• The level of investment required and the economic impact

• The structuring effect of the project on the value chain (i.e., increase in demand, development of local expertise, consolidation of local manufacturing bases or technological complementarity)

• Technical feasibility of the project (maturity of the technology, necessary infrastructure, long-term potential of the project and required duration of the Quebec government’s financial support)

For example, the Quebec government proposes prioritizing the use of green hydrogen in the steel industry, oil refinement and synthetic-fuel production where green hydrogen could replace grey hydrogen used in industrial processes.

The QC Strategy also provides a development timeline applicable to the hydrogen sector in the province:

• In the short term (from now until 2026), the focus will be on developing infrastructure necessary for green hydrogen production used on the production site itself or within the same geographical region, supporting pilot projects, developing expertise and a normative framework applicable to the hydrogen industry, and evaluating the criteria and conditions to support green hydrogen export related projects.

• In the medium term (2026-2030), the QC Strategy aims to consolidate the consumption of green hydrogen in priority sectors, support the use of green hydrogen in sectors deemed to be promising, continue to support pilot projects and implement an operational framework that could allow for large-scale green-hydrogen-production projects.

• In the long-term (beyond 2030), the QC Strategy will include support for infrastructure construction, further consolidating the consumption of green hydrogen in priority sectors and deploy large-scale green-hydrogen-production projects.

THREE PILLARS TO DECARBONIZATION

The QC Strategy also refers to the following three pillars intended to help meet its objectives:

Pillar #1

The first pillar is for developing infrastructure for production and distribution of clean energy and increasing the use of green hydrogen in priority sectors for local and regional consumption. To this end, the Quebec government will develop a reference framework to ensure that future green hydrogen projects are consistent with Quebec's decarbonization objectives and guiding principles. The C$1-billion CRNE fund (Fonds Capital ressources naturelles et énergie or Natural Resources and Energy Capital Fund) is another Quebec government initiative that can provide financing to companies operating in fields such as production, storage, transport or distribution of substitute fuels or the production and distribution of renewable energy.

Some measures the government plans to implement in support of this first pillar include:

• Increase the requirements for minimum volumes of renewable gas fed into gas networks

• Adopt an installation and safety code for hydrogen

• Provide financial assistance for the purchase of equipment allowing the use of bioenergy and green hydrogen across various sectors

• Consider the possibility of expanding regulations respecting minimum renewable content (or a maximum carbon intensity index) to all fossil fuels

• Implement an initiative to reduce the price gap between fossil fuels or fossil-fuel-derived hydrogen and renewable alternatives

Pillar #2

The second pillar focuses on knowledge and innovation, aimed at improving and promoting knowledge surrounding clean energy and developing innovative solutions and processes. Similarly, the government plans to carry out industry-specific studies, implement mechanisms for keeping data up to date and support innovation by promoting collaboration between research and industry. The Quebec government is committed to providing ongoing funding for these initiatives.

Some measures the government plans to implement in support of this second pillar include:

• Characterize the different energy sources with a lifecycle analysis approach

• Determine the amount of captive hydrogen (on private land) consumed in Quebec

• Put in place research chairs and networks on hydrogen and bioenergy

• Support the training of a skilled workforce by providing specialized training in forest-biomass harvesting and supply-chain optimization

Pillar #3

The third pillar centres on collaboration, information and promotion of the production and use of green hydrogen in Quebec. The goal is to increase publicand privatesector commitment to the development of hydrogen and bioenergy sectors and promote the engagement of local and Indigenous communities in the development of these sectors. Accordingly, the government plans to promote local, national and international collaboration in the green-hydrogen and bioenergy sectors while promoting Quebec’s expertise and potential in these sectors on an international level in an effort to attract investment in Quebec projects.

Some measures the government plans to implement in support of this third pillar include:

• Forge strategic international partnerships

• Promote the QC strategy on an international level

• Keep the public informed about their role in fighting climate change by publishing studies and educational documents

• Develop and implement a communication strategy

Underpinning all of these pillars is, of course, social acceptance of the transition to clean energy. The Quebec government states that to ensure the success of the strategy, it will take various actions and approaches to promote social acceptance tailored to the needs and priorities of each community.

A LOOK AHEAD

We will continue to monitor developments in Quebec’s hydrogen sector, particularly with respect to the implementation and impact of the Quebec Green Hydrogen and Bioenergy Strategy 2030 and the emergence of the new regulatory framework governing the nascent hydrogen economy.

If you have any questions regarding the impact of the strategy on your business or business opportunities in the hydrogen sector, please contact:

Viorelia Guzun          +1-514-982-4087
Paulina Balabuch     +1-514-982-5035
Ana Lucia Lobos       +1-514-982-5023

or any other member of our Energy group.