Critical minerals value chains – Hydrogen fuel cells

Hydrogen fuel cells are essential for a clean and digital economy. The development of hydrogen fuel cells relies on the increased supply of responsibly sourced critical minerals, making this value chain a priority under the Canadian Critical Minerals Strategy.

Why are hydrogen fuel cells important for Canada?

Hydrogen fuel cells use hydrogen and oxygen to produce electricity, with only water and heat as by-products. This clean technology is used to:

• power fuel cell electric vehicles
• store energy for power back-ups
• heat homes and factories

Hydrogen is primarily used in industrial processes, such as refining petroleum and producing chemicals. Increasingly, it is used as fuel by sectors that are hard to decarbonize, such as steel and cement, and for storage and mobility applications to complement other green technologies, such as electric vehicle (EV) batteries.

As demand for hydrogen increases, producing this resource using renewable electricity and electrolysers has become a priority. Electrolysers use electricity to split water into hydrogen and oxygen, without emitting carbon dioxide into the atmosphere. Supporting innovative projects to increase the competitiveness of this value chain in Canada will further strengthen Canadian leadership in the hydrogen sector and support national net-zero climate goals.

Understanding the hydrogen value chain

The hydrogen value chain consists of 3 broad stages:

1. production
2. storage and distribution
3. end-use

Platinum group metals (PGMs), including platinum, iridium, palladium, as well as nickel, graphite, rare earth elements, zirconium, copper, cobalt and aluminum, are all critical minerals needed for the production of hydrogen fuel cells and electrolysers. China, South Africa, Russia and Indonesia are major producers of these critical minerals.

Global market snapshot

In 2022, global hydrogen production was 95 million tonnes, up 3% from 2021. Currently, fossil fuels are the primary raw material for global hydrogen production and its end-use in oil refining and chemical production continues to drive demand. Electrolytic hydrogen production in 2022 increased 35% over 2021 production levels yet remains around 0.1% of global hydrogen production.

Global fuel cell creation capacity reached 12 gigawatts (GW) in May 2023, up 10% from the previous year. Japan and South Korea lead the supply market. The ability to create electrolysers grew 150% to 9 GW, with China and Europe accounting for most of the increase.

According to the International Energy Agency, low-emission hydrogen production could reach more than 20 million tonnes by 2030 based on the current project pipeline, with more than 70% being electrolyser projects. Europe, Australia and Latin America are expected to be the top producers of electrolytic hydrogen by 2030.

The Canadian advantage

Canada has been a pioneer in the hydrogen and fuel cell sector for over 40 years and has the potential to supply more of the critical minerals needed to develop a Canadian hydrogen value chain. The Canadian industry is the fourth largest producer of PGMs worldwide, accounting for 5.5% of global production, and ranked third in palladium production and fourth in platinum production in 2022. Canada is also a top producer of nickel and aluminum.

Canadian firms are engaged in activities across the hydrogen value chain, including:

• production and end-use
• fuelling infrastructure
• fuel cell and electrolyser manufacturing
• research and development
• engineering

Industry highlights

• One of the world’s largest operating proton exchange membrane electrolysers is located in Bécancour, Quebec.
• The world’s first standardized automotive fuel cell stack production facility is in Vancouver, British Columbia.
• Large-scale electrolytic hydrogen production projects, which leverage our wind resources, access to fresh water and position to international markets, are under development in:
  • Atlantic Canada
  • British Columbia
  • Quebec

As Canada’s electricity grid expands and renewable energy systems, such as wind and solar, become more affordable, production of electrolytic hydrogen continues to grow. In 2022, Canada and the United States accounted for 10% of the worldwide capacity of installed electrolysers.

Canada’s value chain gaps and opportunities

Hydrogen fuel cells have significant potential to electrify heavy-duty and long-distance vehicles, such as buses, trucks and trains. In that sense, they add to Canada’s growing value chain for EV batteries, helping advance the electrification of Canadian transport towards a net-zero future.

Supporting Canadian innovation in electrolysers and fuel cell subcomponents and technologies will strengthen our leadership in this field. Areas to focus on include existing and alternative technologies, such as proton exchange membranes and solid oxide technologies, as well as mobility applications.

The potential for growth in the low-emission hydrogen sector in Canada is significant. Advancing all segments of the hydrogen value chain will:

• support large-scale deployment
• stimulate exports, investments and growth
• help seize domestic decarbonization opportunities

The Hydrogen Strategy for Canada and associated working groups point the way forward on this important effort.