As any long-time Ballard Power shareholder will tell you, hydrogen has been prone to bubbles and hype cycles since the 1990s. The latest bubble to burst has been in B.C., with the shelving of several large, early stage green and blue hydrogen production proposals.
In September 2024, just one year after Fortescue Minerals Group filed a project description with the BC Environmental Assessment Office for its $2 billion Coyote green hydrogen project in Prince George, the application was withdrawn. The project would have made green hydrogen for domestic use, and green ammonia for export. It appears no other large hydrogen project proposed for B.C. has even made it to that stage – filing a project description with the EAO.
In March, CBC reported that six other large hydrogen production proposals in B.C. — four green and two blue — had also been “paused.” “I just think the optimism got ahead of the real world,” said sustainability consultant Paul Gris, president of the Bolden Group. “The optimism got ahead of the economics and transportation and applications.”
Around 2021, after federal and provincial governments in Canada launched hydrogen strategies to promote both the use and production of clean hydrogen, a hydrogen gold rush ensued, with major hydrogen production facilities pitched in B.C., Alberta, Quebec and Newfoundland.
In May 2024, Natural Resources Canada reported 80 hydrogen production proposals had been announced across Canada. Given domestic and global hydrogen markets are still developing, it’s safe to say most of these projects will be winnowed out by sheer economic reality, cost being one of them. Green hydrogen, made from water and electricity, requires huge amounts of renewable electricity, while blue hydrogen, made from natural gas, requires carbon abatement in some form, such as carbon capture and storage. Both are costly, though green hydrogen is currently estimated to be two to three times more expensive to produce than blue hydrogen. B.C. simply does not have enough affordable or accessible clean electricity to power even one large green hydrogen production plant, let alone three or four, and it does not have the kind of carbon capture and storage infrastructure that Alberta has for blue hydrogen production from natural gas.
Fortescue’s Coyote project in Prince George would have required 1,000 megawatts of power — which is nearly the entire nameplate capacity of the new Site C dam. B.C. simply doesn’t have that kind of power to spare. Fortescue also realized that the projections for global hydrogen demand had been over-estimated, and began scaling back its renewable hydrogen business. Last year, the EU Court of Auditors reported that targets for hydrogen use and production were “unrealistic.” In other words, hydrogen production proposals globally are far exceeding projected demand.
Like many others, Barry Penner, chairman of the Energy Futures, said he initially thought there might be an economic case for green hydrogen production in B.C. “Before people knew much about it, it sounded good,” he said. “But as I explored more deeply into the physics and economics of creating green hydrogen, I became much more skeptical.” After visiting a green hydrogen plant powered by wind in Denmark last year, Penner learned electrolysis – splitting H2O to produce pure streams of hydrogen – can be energy inefficient. “The top technical person responsible for overseeing that project told me that it took six megawatts of electricity to make four megawatts worth of hydrogen,” Penner said.
The economics of large hydrogen production proposals in B.C. and elsewhere may also be challenged by demand uncertainty. The federal government’s national hydrogen strategy in 2020 estimated hydrogen could make up 24% of global energy by 2050, which is wildly optimistic. At most, under the most ambitious net-zero targets being met, hydrogen could make up 10% to 12% of final energy use, according to the International Energy Agency. The Intergovernmental Panel on Climate Change (IPCC) has estimated hydrogen’s share in global final energy in 2050 would be far smaller than that — just 2% to 3%. This is not to say there won’t be a market for hydrogen production in B.C., just that it will be on a smaller scale to serve domestic markets.
One hydrogen production proposal in B.C. that does appear to be moving forward is a $472 million project in North Vancouver. HTEC plans to build and operate a plant that will capture and liquefy 15 tonnes per day of hydrogen produced as a byproduct at a sodium chlorate plant in North Vancouver. The project recently received $49 million from the federal government’s Strategic Innovation Fund. The hydrogen would be used to supply HTEC’s hydrogen distribution and fuelling network. If there is a lesson here, it’s that there is a future for hydrogen as a low-carbon energy source for hard-to-abate sectors, but policymakers need to dial back expectations and focus on what is achievable.
