Skip to content

Canada has short window to get ahead of U.S. hydrogen efforts, backer warns

Desire to move faster to replace oil and gas with clean energy exploded with Russia invading Ukraine

It is feasible to start exporting small shipments of Canadian-made hydrogen to Europe within three years but only if everyone moves quickly, the chairman of a company behind one of the biggest proposed green hydrogen projects in Atlantic Canada said Wednesday.

As the ink dried on the new Canada-Germany hydrogen alliance signed in Newfoundland and Labrador on Tuesday, World Energy G2 consortium director John Risley said time is of the essence.

World Energy G2 has applied to the Newfoundland government to build a hydrogen plant powered by a three-gigawatt wind farm near the western port town of Stephenville. The product, known as “green” hydrogen because it is made by splitting water atoms using zero-emission renewable energy, is the type Germany wants.

Risley said the application to the provincial government to get the needed permits went in last spring, but things are moving slowly.

“We’re encouraging them to understand that the opportunity for this industry is now,” he said. “It’s not something we can sit on our hands and sort of say, ‘Oh, well, we’re going to take our time and we’re going to spend a couple of years sort of thinking this through,’ because the opportunity will have been lost.”

The issue isn’t that others will swoop in and steal customers. There are plenty of those to go around. The issue is that the Canada-Germany agreement is aiming to get things flowing by 2025, and there are only so many companies and so many supplies available to build hydrogen plants from the ground up, Risley said.

The recently signed Inflation Reduction Act in the United States includes a lucrative hydrogen tax credit for projects that get going within the next year, which Risley said will be “an enormous stimulant” to a U.S. hydrogen industry.

“This is a very early-stage industry, there are not a lot of robust supply chain support industries to stand this industry up and it’s going to become very quickly overwhelmed.”

The industry is so young, a demonstration by one of the companies in the consortium fell flat during a trade show in Stephenville, hastily thrown together as a backdrop for the hydrogen agreement.

Prime Minister Justin Trudeau and German Chancellor Olaf Scholz toured booths at the show set up by various companies including one with toy cars powered by syringes of hydrogen. But when the leaders tried to race the cars, they failed. Scholz’s moved only a few centimetres. Trudeau’s didn’t move at all.

Trudeau and Natural Resources Minister Jonathan Wilkinson are both quick to acknowledge that a year ago, Canada’s discussions about hydrogen were looking into a much more distant future.

But when Russia invaded Ukraine and destabilized European energy supplies, the desire to move faster to replace oil and gas with renewables and clean energy exploded.

In the last six months, more than a dozen new Canadian hydrogen projects began moving faster, including Risley’s.

The speed is worrisome to some in Newfoundland, who fear getting into the game quickly is coming at the cost of proper scrutiny.

As Trudeau and Scholz landed in Stephenville on Tuesday afternoon, hundreds of people from the town of about 6,000 lined the fences around the airport tarmac to watch with interest and excitement. But outside the building holding the trade show, several dozen protesters stood in the rain.

Some were of the anti-Trudeau “Freedom Convoy” ilk, but many were there to raise their opposition mainly to the installation of hundreds of wind turbines in their neck of the woods.

The G2 project is to be built in three phases with 164 turbines in each.

Paul Wylezol, chair of the International Appalachian Trail, told The Canadian Press last week he has concerns about the environmental risk those turbines pose.

Risley said the consortium is working with residents to allay fears and respond to concerns, intends to sign agreements with local First Nations, and do anything else required in a robust permit process.

“We will do all those things,” he said. “We just need to be able to do them contemporaneously, we can’t do them sequentially. Because we’ll end up in a multi-year permitting process that will be not just incredibly expensive, but put us in the back of the line in respect of the supply chain issues I described.”

He said if product is going to be produced by 2025, construction has to start next year.

The G2 project intends to really make ammonia — a combination of hydrogen and nitrogen — for which marine shipping options already exist. Once in Europe, the ammonia would either be used directly, or split back into hydrogen and nitrogen.

The end uses of hydrogen are varied. Hydrogen is already a key component in oil refining and steel production but most of the hydrogen used there is made from natural gas in a process that contributes carbon dioxide to the atmosphere.

Hydrogen also has developing uses as a source of electricity or heat and to power vehicles.

What is hydrogen?

The first element on the periodic table, hydrogen is the simplest and lightest element — approximately 14 times lighter than air. Hydrogen is abundant throughout the universe, however on earth it is rarely found in its natural state, meaning it must be extracted from other sources (typically water and methane).

What is it used for?

Hydrogen can be used as a fuel in fuel-cell-powered electric vehicles, combusted to produce heat, or used in a range of chemical and industrial processes.

Is hydrogen a “clean” fuel?

Hydrogen is a clean-burning fuel, meaning it does not produce greenhouse gases, black carbon, particulates or ground-level ozone at the point of use. When used in an electrochemical fuel cell, like the kind that powers hydrogen vehicles, it emits only water and heat.

The carbon footprint of hydrogen production varies greatly, however. Hydrogen can be extracted from a variety of sources — including water and electricity, fossil fuels, biomass, and as a byproduct from industrial processes. From an environmental perspective, the goal is to use as many renewable or zero-emission sources as possible in the production of hydrogen.

Canada has identified the domestic deployment of hydrogen as key to meeting its climate change commitments. It says in a best-case scenario, up to 30 per cent of Canada’s energy could be supplied by hydrogen by 2050, resulting in 190 million tonnes of greenhouse gas emission reductions per year.

What is the economic opportunity?

Canada is already one of the top 10 hydrogen producers in the world, with an estimated three million tonnes of hydrogen produced per year (mostly by the chemical and oil and gas sector from fossil fuels).

Because demand for hydrogen is increasing, with the global market expected to reach more than $2.5 trillion by 2050, many believe Canada could become a leading supplier. The country already has rich feedstock reserves, a skilled energy sector labour force, and access to strategic infrastructure assets including pipelines and deepwater ports.

What are the challenges?

Many of the factors limiting hydrogen use today are economic rather than technological. While implementation of the federal Clean Fuel Standard will help to make hydrogen more cost-competitive compared to conventional fuel sources, experts say other forms of policy and fiscal support will be needed in the next five to 10 years to attract investment and help the industry achieve scale.

If domestic production and demand grows over time, dedicated infrastructure such as hydrogen pipelines and liquefaction plants will also be needed. Canada will be challenged with building these crucial assets in a co-ordinated and timely manner to ensure low-cost, clean hydrogen can be delivered to domestic and international markets.

—Mia Rabson, The Canadian Press

RELATED: Canada, Germany sign deal to start hydrogen shipments by 2025