B.C.’s Hopes for a Hydrogen Economy Are Under Threat – Here’s Why
B.C.’s hydrogen economy is facing significant challenges that threaten its clean energy leadership—from stalled infrastructure to market uncertainty—raising critical questions about Canada’s low-carbon future. FOI release suggests that electricity and transportation woes are partly to blame.
Documents released through a freedom of information request reveal that B.C.’s former energy minister was informed last September that at least seven “large-scale hydrogen projects” were being cancelled or paused due to issues including electricity supply, high costs, and transportation.
The end of one of those plans — Fortescue’s Project Coyote — has since been made public. Still, the documents list six more projects that have been quietly put on hold, including a Prince George clean hydrogen project that was publicly announced by Premier David Eby last January.
All told, the documents outline serious threats to B.C.’s aspirations of becoming a leading hydrogen producer — including a lack of domestic demand, an “unprecedented” need for electricity, and uncertainty surrounding the transportation of volatile chemicals by rail through First Nations’ land.
Over the past six months, at least seven large-scale hydrogen production projects have paused development or been canceled due to a range of issues, according to a briefing note from September 2024, which was subsequently provided to Energy Minister Josie Osborne.
The government of British Columbia will need to take more decisive policy actions to support hydrogen production and use in order to establish a thriving hydrogen economy in the province.
Creating jobs and delivering cleaner air’
The briefing note was part of a package released earlier this month in response to a Freedom of Information (FOI) request from a business.
Hydrogen’s potential as an environmentally friendly alternative to fossil fuels has generated global excitement.
It can be produced from domestic resources, including natural gas, biomass, and wind or solar power. And when used as fuel to power anything from cars to ships to buildings, hydrogen produces zero to negligible amounts of greenhouse gases — although it has been criticized for the significant amount of energy required to produce it.
The B.C. government has adopted hydrogen as a key component in its efforts to achieve net-zero emissions by 2050, developing a strategy to accelerate the production and use of renewable and low-carbon hydrogen and position itself as a world leader in the growing hydrogen economy.
In pursuit of that goal, Eby traveled to Prince George last January to announce a project led by Chilliwack-based Teralta Hydrogen Solutions, which aims to power a Canfor mill with hydrogen produced as a byproduct from a nearby Chemtrade sodium chlorate production facility.
“Our work is creating jobs and delivering cleaner air across the province. B.C.’s hydrogen strategy has paved the way for this project to move forward,” Eby said in a news release issued at the time.
Teralta and its partners, Chemtrade and Canfor Pulp, are leaders in combating climate change through innovative solutions that reduce carbon emissions, create good-paying jobs, and foster healthier communities.
But according to the FOI documents, that project has since been paused.
“Chemtrade ceased sodium chlorate production due to local mill closures, which means that no byproduct hydrogen is being produced on-site,” the documents state.
A Teralta spokesperson told CBC News that, although the project itself was successful, the closure of the Canfor mill and Chemtrade’s decision to cease sodium chlorate production in Prince George made it no longer viable; therefore, the project has been put on hold indefinitely.
‘Not cost competitive with its alternatives’
The briefing note to Osborne lists five other significant projects that have been paused:
- MIXT Energy (McLeod Lake Indian Band) and Mitsubishi’s $5 billion green hydrogen and ammonia production project for export on the Kerry Lake reserve near Prince George.
- Shell Canada’s Aurora Hydrogen project for green hydrogen production, intended for domestic use, near Port Moody.
- TC Energy’s green liquid hydrogen export project in northwest British Columbia
- Kanata Clean’s blue hydrogen production project for export in northwest B.C.
- NorthRiver Midstream’s blue hydrogen production project for domestic use in Taylor.
The documents cite specific concerns for each project, including “electricity availability,” “lack of domestic demand,” and “transportation of ammonia.”
A separate briefing note sent to Eby last March raises concerns about the demand for electricity from “numerous proposed industrial projects at various stages of development that are requesting over 150 megawatts,” including a series of hydrogen projects.
“The growth in new industrial customer interconnection requests, both in number and magnitude, requires a broader consideration of how B.C.’s clean electricity resources are managed,” the premier was told.
New policy approaches are needed to strike a balance between industrial competitiveness and electrification in other sectors of the economy while maintaining affordable rates.
The briefing note to Osborne states that while a requirement for large load customers to contribute costs for incremental generation and transmission infrastructure is considered necessary to protect ratepayers from cost increases, it renders many large-scale hydrogen projects uneconomical.
Osborne was also informed that B.C. “has not developed a stable domestic market for green hydrogen, primarily due to the high cost of adopting both hydrogen fuel and hydrogen technologies.”
The document lists examples of “funding programs and incentives” for potential producers. Still, it concludes that “even when currently available incentives are combined, green hydrogen production remains cost-competitive with its alternatives in both domestic and international markets.”
‘Significant risk to human health and the environment’
The challenge of transporting hydrogen is a constant theme in the documents included in the FOI release.
One of the most efficient ways to move hydrogen is by chemically combining it with nitrogen to produce ammonia, which can be shipped by rail or boat and then “cracked” back into its separate components at the final destination.
“The use of ammonia as a hydrogen energy carrier is considered more energy-efficient and utilizes globally established infrastructure,” Eby was informed in an information document written last July.
However, when not handled correctly or if it is spilled, ammonia can pose a significant risk to human health and the environment due to its flammability, acute toxicity, and negative impacts on aquatic ecosystems.
The same document states that the governments of B.C. and Alberta have been in trilateral discussions with Ottawa — which has jurisdiction over interprovincial rail lines — regarding issues such as safety, liability, and engagement with Indigenous communities.
“Transporting ammonia by rail across B.C. will require consultation with communities and 26 First Nations along the proposed corridor,” Eby was told.
“However, rail operations in Canada have a complex and challenging past. Often, expansion of the railway network across the country meant land dispossession and undue hardship for First Nations communities along its corridors.”
‘What’s necessary is an energy corridor’
CBC reached out to representatives of the projects listed as “paused” in the briefing note.
In a statement, TC Energy confirmed the end of its plans.
“In 2023/2024, we conducted a pre-feasibility study on liquid hydrogen production,” the company told CBC.
The assessment revealed that production costs exceeded market price targets, resulting in the decision not to proceed with the opportunity.
In an email exchange, Kanata Clean confirmed that its project is paused — as opposed to cancelled — citing both the lack of natural gas capacity in Prince Rupert and the transportation of ammonia as issues.
Ultimately, what is necessary is an energy corridor through the province that ends at Prince Rupert, which would include an LNG pipeline and a hydrogen/ammonia pipeline,” said Mark Marissen, spokesperson, in an email.
To make hydrogen projects like this one a reality in B.C., the energy corridor needs to be included in the province’s top priorities for expediting, as it would significantly help diversify our markets away from the American market.
Kanata Clean CEO Robert Delamar suggested that the challenges facing hydrogen projects should be a key issue in the upcoming federal election.
“We’d like to see an Indigenous Energy Corridor running from northwest British Columbia to eastern and northern Canada, with pipelines as a core feature of the corridor,” Delamar wrote in an email.
“Just saying in a federal election that Canada should diversify its trade obfuscates the reality that this is a multi-generational, multi-party policy failure. We need real, concrete solutions, quickly.”
Former Liberal environment minister Barry Penner reviewed the FOI documents; he says they show the NDP government’s enthusiasm for hydrogen projects is at odds with reality.
“If you just take a look at this briefing note, it reveals that the plan is not working out as expected so far,” said Penner, who now leads the Energy Futures Institute. This organization advocates for energy policy considerations that include reliability and affordability.
I didn’t see any indication of projects that are moving ahead. At best, some have been paused; others have been canceled outright. It’s quite a list, so yes, it isn’t very disappointing, but it’s not surprising.
In a statement to CBC, a spokesperson for the province noted that hydrogen “is a new industry, and many proponents and governments globally are still figuring out how to develop the sector best.”
“Despite the actions taken by the Province, some proponents have had to make difficult commercial decisions based on several internal and external factors,” the statement said.
The province states that it remains committed to its hydrogen strategy and will introduce new regulations for hydrogen facilities next week to streamline permitting and operational requirements for hydrogen manufacturing facilities.
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