Recovery Through Reform: Advancing a hydrogen economy while minimizing fossil fuel subsidies

The document examines Canada's approach to the hydrogen economy, specifically the tension between supporting 'blue hydrogen' (fossil fuel-based with carbon capture) and 'green hydrogen' (renewable-based). It argues that blue hydrogen is less environmentally effective due to methane leaks and high costs of carbon capture and storage (CCS), and is likely to be out-competed by green hydrogen by 2030. The author contends that subsidies for blue hydrogen constitute fossil fuel subsidies that undermine Canada's climate goals and net-zero 2050 target, recommending strict environmental and cost criteria for any public funding.

• Canada's national hydrogen strategy and those of provinces like Alberta prioritize blue hydrogen, with the federal government intending to support both production pathways and noting "significant growth potential" for natural gas-based hydrogen.
• Blue hydrogen is considered less environmentally sustainable than green hydrogen because carbon capture and storage (CCS) often ignores upstream methane emissions, which a 2020 Environment Canada study found to be twice as high as previously reported.
• CCS technology is described as unproven at commercial scale, expensive, and lacking a robust regulatory framework, with some forecasts suggesting it may not be at scale until the 2040s without significant policy changes.
• Market projections indicate that green hydrogen will likely be more cost-competitive than blue hydrogen within a decade, specifically by 2030, creating a risk of stranded assets for blue hydrogen projects.
• Subsidies for blue hydrogen are classified as fossil fuel subsidies under international definitions and may conflict with Canada's 2009 pledge to eliminate inefficient fossil fuel subsidies by 2025.
• International peers, specifically Germany and Spain, are prioritizing green hydrogen in their strategies, which may limit the future export potential for Canada's blue hydrogen.

APA

Beedell, E. (2021). Recovery Through Reform: Advancing a hydrogen economy while minimizing fossil fuel subsidies. International Institute for Sustainable Development. https://www.iisd.org/system/files/2021-02/hydrogen-economy-fossil-fuel-subsidies.pdf

Chicago

Beedell, Estan. Recovery Through Reform: Advancing a hydrogen economy while minimizing fossil fuel subsidies. International Institute for Sustainable Development, 2021. https://www.iisd.org/system/files/2021-02/hydrogen-economy-fossil-fuel-subsidies.pdf.

Wikipedia

{{cite report |last1=Beedell |first1=Estan |title=Recovery Through Reform: Advancing a hydrogen economy while minimizing fossil fuel subsidies |publisher=International Institute for Sustainable Development |date=February 2021 |url=https://www.iisd.org/system/files/2021-02/hydrogen-economy-fossil-fuel-subsidies.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{beedell2021recovery, author = {Beedell, Estan}, title = {{Recovery Through Reform: Advancing a hydrogen economy while minimizing fossil fuel subsidies}}, institution = {International Institute for Sustainable Development}, year = {2021}, month = feb, url = {https://www.iisd.org/system/files/2021-02/hydrogen-economy-fossil-fuel-subsidies.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }