Canada’s East Coast is poised to become a world leader in hydrogen development. But serious questions remain.
Hydrogen is a clean energy solution that is seen as safe, reliable, and environmentally responsible. When combusted, hydrogen produces no greenhouse gas emissions. Given growing global concerns about climate change, there is interest in using hydrogen within difficult to decarbonize sectors, such as industrial processes, heavy-duty transportation and utility heating markets. Developing a hydrogen economy is key to shift towards a low-carbon economy, many in the industry say, and Atlantic Canada may have a serious stake in that future.
Germany and Canada this week announced plans to begin work on deals to buy a million tonnes of green hydrogen annually from EverWind Fuels LLC’s planned facility in Point Tupper, Nova Scotia starting in 2025. German firms E.ON SE (EOAN:DE) and Uniper SE (UNO1:DE) will be involved in the project, which could involve production powered by offshore wind, with construction slated to begin in early 2023. They are prepared to buy up to a million tonnes of green ammonia a year from EverWind.
“We are excited about the opportunities that green hydrogen and green ammonia projects provide for the province, including new clean energy jobs, supporting Nova Scotia’s carbon emissions reduction targets, and establishing Nova Scotia as a global leader in the production of green hydrogen for domestic and export markets,” Ministry of Natural Resources and Renewables communications advisor Patricia Jreige told Resource World Magazine.
Also planned by Fortescue Future Industries (FMG:ASX) is a hydrogen and ammonia production and export project in Stephenville, St. George’s and Channel-Port Aux Basques, Newfoundland and Labrador, while World Energy GH2 wants to spend up to $12 billion to build up to 164 wind turbines on the Port au Port Peninsula on Newfoundland’s west coast to power the Stephenville plant. World Energy will supply 250,000 metric tons of green hydrogen per year to global markets at the completion of its renewable hydrogen project.
“The Canada-Germany agreement on hydrogen is born out of a geopolitical and environmental imperative to accelerate the development and trade of clean energy among close, committed democratic allies,” said World Energy CEO Gene Gebolys during the announcement.
“Canada is blessed with some of the best resources in the world and is home to a quarter of the world’s fresh water. It is 25 times larger than Germany with a population half its size. We are natural partners. The time to act is now, the place to act is here.”
German Chancellor Olaf Scholz, was in Canada for a three-day visit to explore green energy sources that would help the European country avoid buying product from Russia, a move prompted by Vladimir Putin’s invasion of Ukraine a few months ago. Hydrogen is seen as a suitable was to avoid greenhouse gas emissions from fossil fuels, as hydrogen only emits water when burned or used in a fuel cell.
Scholz told the Financial Post his country is moving away from Russian energy “at warp speed” and hopes Canadian hydrogen could be a medium or long-term solution to meeting the country’s energy needs.
E.ON SE chief operating officer Patrick Lammers called the project the start of a “transatlantic hydrogen bridge” in a statement. “This way we can bring the energy of the Canadian wind to Germany by ship. We are not just decarbonizing and diversifying our energy supply. We will create more energy security by co-operation between societies which share the same values and stand for democracy, the rule of law and a social market economy. This step is more urgent than ever.”
Scholz also said that Germany also hopes to increase its liquefied natural gas (LNG) imports from nations such as Canada which, although it has no LNG terminals with two being built on the West Coast, has plans to increase its natural gas export capacity by up to 100,000 barrels of oil equivalent per day by the end of this year.
Ironically Canada, which has portrayed itself as a world leader in efforts toward reaching carbon neutrality, did not appear as supportive as might be expected. While he said during the Germans’ visit that Canada is doing its part to add to the global energy supply and wants to be a key supplier of energy like hydrogen, he stressed the economic difficulties of adding LNG projects to the East Coast. That runs counter to recent indications that Canada and Germany have been discussing options for LNG terminals on the East Coast, with the Repsol S.A. (REP-U.TI:TLO) facility in Saint John, New Brunswick being the most feasible.
Energy experts agree that it may take considerable time and money to develop Atlantic Canada’s green hydrogen projects. That’s due to the infrastructure required, from wind turbines, hydrogen production facilities, pipelines and liquefaction plants to the terminals and regasification pants required overseas. Green hydrogen is also still a developing technology that remains more costly than conventional hydrogen production methods using natural gas, says University of Alberta professor Amit Kumar, the industrial research chair in energy and environmental systems for the National Sciences and Engineering Research Council. And producing hydrogen from wind-based electricity is 3-4 times higher than producing hydrogen from natural gas integrated with carbon capture and storage while some of the green hydrogen projects proposed for Atlantic Canada would only be capable of producing a fraction of the supply that can currently be produced using natural gas.
“The technology is still developing. The costs are still high. And the scale is still very small,” Kumar said.
But local governments welcome the projects and are optimistic about what the future may hold.
“These projects support our provincial goals of decarbonization and green energy leadership,” said Jreige. “It is incredibly encouraging to see Nova Scotia become a regional green hydrogen hub for Eastern Canada, including new green hydrogen and ammonia production facilities.”