The federal government of Canada and the provincial government of Alberta are each drafting hydrogen strategies to reduce emissions, which, in the case of Alberta, would allow it to cut the carbon intensity of oil sands production and expand it without breaching current caps on provincial emissions.

Alberta, the oil-producing province, is preparing a hydrogen strategy to use the so-called blue hydrogen to extract heavy oil at the oil sands, Alberta’s Associate Minister of Natural Gas Dale Nally told Reuters, noting that the strategy, expected to be unveiled next month, is being coordinated with the federal government.

The so-called blue hydrogen is made from natural gas where carbon emissions from the process are captured and stored. Blue hydrogen is a cleaner version of the ‘grey hydrogen’ which is made from natural gas and coal and currently accounts for most of the hydrogen produced in the world.

“Reducing the carbon intensity of the oil sands would allow of course more expansion,” Nally told Reuters in an interview.

Lower emissions in the oil sands, one of the most carbon-intensive forms of oil extraction, could stop investors from the exodus from Canada’s oil sands that began in the aftermath of the previous price crash in 2014.

Last month, Canada’s Natural Resources Minister Seamus O’Regan told Reuters that the country must slash the greenhouse gas emissions from its oil production in order to lure companies back to investing in increasing oil and gas production and expanding projects.

“If you do what is required to lower emissions, you will be rewarded with increased investment. If you don’t, you’ll be punished,” O’Regan told Reuters.

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Canada’s federal government is also preparing a hydrogen strategy for the oil sector as part of a course for a net-zero emission plan 2050, a source in the government with knowledge of the strategies told Reuters.

As long as Alberta stays within its provincial emissions limit, the federal government is not concerned about what greener strategies the province would use to keep within the cap, the source said.

By Charles Kennedy for Oilprice.com

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