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B.C. making changes to advance hydrogen industry

Press Release

Oct. 27, 2022

VICTORIA – The Government of B.C. is bringing forward changes that will further advance the production and use of hydrogen, generating economic opportunities, reducing emissions and supporting the transition to clean energy.

“People in British Columbia want to fight climate change and better protect our environment, while supporting clean energy jobs and economic growth,” said Bruce Ralston, Minister of Energy, Mines and Low Carbon Innovation. “We aspire to be a global hydrogen leader, and we are serious about supporting our hydrogen sector. These legislative changes enable further development of our growing hydrogen industry, and help our province transition away from fossil fuels to a cleaner, low-carbon energy system.”

The changes involve establishment of the British Columbia energy regulator, formerly known as the BC Oil and Gas Commission. It will have a modernized and inclusive board structure and the expansion of its regulator responsibilities will include hydrogen.

“Hydrogen BC and its parent organization, the Canadian Hydrogen and Fuel Cell Association, strongly support the Province’s intent to create a single-window regulator for low-carbon hydrogen development in British Columbia,” said Matthew Klippenstein, executive director, Hydrogen BC. “Project proponents will be able to work on different regulatory requirements concurrently instead of consecutively, helping our members bring more projects – and more jobs, and more emissions reductions – forward, quicker.”

Due to a patchwork system of legislation and regulations, there is currently no cohesive regulatory framework for hydrogen in British Columbia. This legislation will ensure an experienced single-window regulator provides a one-stop place for industry for permitting, and a consistent regulatory, safety and compliance authority for hydrogen projects from site planning to restoration. It will also ensure a more comprehensive consultation and engagement approach with Indigenous communities.

“This is a welcomed step that recognizes and supports our ambition to implement low-carbon energy solutions,” said Ged McLean, executive director, B.C. Centre for Innovation and Clean Energy. “The hydrogen component in particular will serve to simplify and accelerate the regulatory approvals process so our world-leading technology companies can go faster and further.”

Additional amendments will clarify government’s authority to regulate the safe and effective storage of carbon dioxide from any source, advancing a provincial approach to carbon capture, utilization and storage to support the production of low-carbon hydrogen and reduce emissions in hard-to-abate industrial sectors, which is a key action in the CleanBC Roadmap to 2030.

The legislation will also provide government and the regulator with expanded authority to hold those engaged in an oil and gas activity (such as wells, facilities and pipelines) responsible for cleanup, restoration and other obligations associated with that activity.

First Nations, plus stakeholders representing the hydrogen and oil and gas sectors were consulted on the proposed legislation and will continue to be involved in regulatory development and implementation. Additionally, the proposed changes restructure the regulator’s board, ensuring at least one director is Indigenous.

Learn More:

To read the B.C. Hydrogen Strategy, visit: https://www2.gov.bc.ca/assets/gov/farming-natural-resources-and-industry/electricity-alternative-energy/electricity/bc-hydro-review/bc_hydrogen_strategy_final.pdf

To learn about the BC Oil and Gas Commission, visit: https://www.bcogc.ca/

For information about the B.C. Centre for Innovation and Clean Energy, visit: https://cice.ca/

Two backgrounder follows.

Contact:

Ministry of Energy, Mines and Low Carbon Innovation
Media Relations
250 952-0559

BACKGROUNDER 1

Facts about hydrogen in B.C.

  • B.C. is recognized internationally as a global leader in hydrogen and fuel-cell research and development.
  • More than 50% of Canada’s hydrogen and fuel-cell companies are in B.C.
  • The province accounts for about 60% of research investment in hydrogen and fuel-cell development.
  • 98% of the electricity that British Columbia generates is clean or renewable, which can be used in green hydrogen production.
  • In July 2021, British Columbia became the first province in Canada to release a comprehensive hydrogen strategy.
  • The strategy clarifies how the Province will promote, provide incentives and support the development of hydrogen production, use and export over the next 10 years and beyond.
  • In March 2022, the Province established the B.C. Hydrogen Office to advise proponents about the project development process.
  • The role of the office is to advance all aspects of hydrogen projects and facilitate hydrogen’s role across B.C.’s energy systems.
  • Since the release of B.C.’s hydrogen strategy in July 2021, there are 49 proposed hydrogen projects in the Province worth $5 billion.

Contact:

Ministry of Energy, Mines and Low Carbon Innovation
Media Relations
250 952-0559

 

BACKGROUNDER 2

New regulatory framework for hydrogen, carbon capture and storage, expanded liability

Hydrogen

When burned or used in a fuel cell, hydrogen gas produces no carbon emissions. Hydrogen is one of the only solutions for decarbonizing sectors of the economy where direct electrification is not practical, such as heavy-duty transportation or industrial heating. When injected into the natural gas grid, hydrogen can displace fossil fuels for heating homes and businesses. It can also be used for producing low-carbon synthetic fuels to reduce emissions in transportation and industry. These attributes give hydrogen the potential to reduce British Columbia’s emissions by 7.2 megatonnes of carbon dioxide equivalent per year by 2050.

The economic opportunity is significant. A 2019 provincial hydrogen study showed that by 2050, B.C. could expect hydrogen to provide a positive $2.5-billion impact to the province’s annual gross domestic product, including economic activity from the domestic use and export of hydrogen and 3,750 new jobs in the province. Given B.C.’s proximity to export markets, it could capture a significant portion of the global hydrogen market, estimated to be worth more than $305 billion by 2050.

The Province released the B.C. Hydrogen Strategy in July 2021, outlining government’s support for the development of renewable and low-carbon hydrogen in B.C. The strategy includes more than 60 supporting policy actions that will unlock hydrogen’s potential, including support to stimulate hydrogen production and partnerships with industry to establish hydrogen hubs across B.C.

In March 2022, the Province established a dedicated office to rapidly expand hydrogen deployment and to streamline projects from proposal to completion. The BC Hydrogen Office is working with the federal and local governments to help attract investments and simplify the multi-jurisdictional review and permitting processes.

Proposed amendments to legislation:

Government has introduced amendments to the Oil and Gas Activities Act (OGAA) and the Petroleum and Natural Gas Act (PNGA) to enable further hydrogen development, sending a signal that it supports the transition to low-carbon energy. Proposed amendments would:

  • Rename the BC Oil and Gas Commission as the British Columbia energy regulator, restructure the board, and expand its regulatory responsibilities to include hydrogen.
    • While a patchwork of legislation and regulations exists, there is currently no cohesive regulatory framework for hydrogen production in British Columbia.
    • A consolidated regulator provides both a one-stop place for industry, and a consistent regulatory, safety and compliance authority for hydrogen projects from site planning to restoration.
    • The board of the regulator will be restructured to increase the number of members from three to a range from five to seven, and require that at least one director is Indigenous.
    • The purposes of the regulator will be updated to include supporting reconciliation with Indigenous Peoples, and the transition to low-carbon energy.
    • The proposed legislation provides certainty to the hydrogen companies and potential investors and signals that B.C. is ready to support the industry’s development.

Carbon capture and storage (CCS):

Carbon dioxide (CO2) emissions can be reduced with efficient technologies, low-carbon fuels and alternative energies. Carbon capture and storage (CCS) is an important mitigation strategy, and involves collecting CO2 produced at large industrial facilities and storing it permanently, hundreds to thousands of metres underground in geological rock formations.

B.C. is well suited for CCS. The Western Canada Sedimentary Basin in northeastern B.C. provides suitable porous and permeable reservoirs for CO2 storage.

CCS can complement other emission-reduction strategies, such as electrification, energy efficiency and renewable energies. Technologies such as CCS will reduce CO2 emissions, while allowing economic growth and prosperity.

Advancing a provincial approach to CCS is a key action in the CleanBC Roadmap to 2030.

Proposed amendments to legislation:

To provide certainty to industry, protect the public and the environment, and enable CCS projects to proceed, government is proposing amendments to the OGAA and the PNGA to clarify the use of underground storage space in British Columbia to support a regulatory framework for safe and effective storage of carbon dioxide from any source:

  • The proposed legislation clarifies government’s right to explore for, access, develop and use underground storage space for specific substances, including under private land.
  • The legislation will restrict anyone from using a storage reservoir for specific substances without a licence or lease.
  • As is currently the case for oil and gas activities, a company will need a right of entry to go onto private land and the land owner will receive compensation for loss or damage to the surface of their land, and rent for the use of the land.

Expanded liability:

Oil and gas operators in B.C. operate their wells, facilities and pipelines in accordance with a permit that is issued and enforced by the BC Oil and Gas Commission. In the event a permit holder becomes insolvent, cannot be located or no longer exists, the commission can designate the permitted site an orphan site. The Orphan Site Reclamation Fund (OSRF) – a levy on industry permit holders – is used to pay the cost of decommissioning and restoring orphan sites. This provides assurance the site will be restored in accordance with current standards and requirements, and all known contamination risks or hazards have been addressed.

B.C. is taking action to clean up orphan oil and gas well sites, addressing environmental concerns, while providing good-paying jobs for British Columbians. As part of the Dormant, Orphan and Legacy Sites Program, and with federal government support, major steps have been taken to restore more than 100 orphan well sites across B.C. since 2020, with participation from companies that are Indigenous-owned, Indigenous-community-owned, or with partnership agreements with Treaty 8 communities.

Proposed amendments to legislation:

To reduce strain on the OSRF going forward, government is proposing amendments to the OGAA to ensure those who profit from the oil and gas industry can be held responsible for permit obligations.

Although a permit holder may be insolvent, cannot be located or no longer in existence, there may be other parties associated with the permit holder that have benefited from site operations, and that can and should be held responsible for paying restoration and other costs associated with an orphan site. The proposed amendments:

  • introduce a new regulatory framework that expands the liability net beyond the permit holder to include anyone with a legal or beneficial interest in an oil and gas or storage activity.
  • expanded liability provisions will capture a company with a limited ownership stake in the permit for example, and company directors and officers.
  • The regulator will be able to:
    • order a responsible person or company to assume a permit, carry out work or reimburse the government for work completed, and
    • hold one or more of the responsible persons or companies liable for the entire cost of the obligation if the permit holder or other responsible persons cannot or will not pay their share.
  • Additionally, the proposed legislation will:
    • authorize government to transfer tenure for a site to someone willing to take it on to ensure it does not become an orphan site, and
    • authorize the selling of goods abandoned at an orphan site and deposit the proceeds into the OSRF.

Contact:

Ministry of Energy, Mines and Low Carbon Innovation
Media Relations
250 952-0559

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