Documents suggest B.C.'s hydrogen plans under threat as uncertainty halts 'large-scale' projects

CBC

27-03-2025

Documents released through a freedom of information request reveal that B.C.'s former energy minister was told last September that at least seven "large-scale hydrogen projects" were being cancelled or paused because of issues including electricity supply, high cost and transportation.
The end of one of those plans — Fortescue's Project Coyote — has since been made public, but the documents list six more projects that have been quietly put on ice, including a Prince George clean hydrogen project publicly launched by Premier David Eby last January.
All told, the documents outline serious threats to B.C.'s dreams of becoming a leading hydrogen producer — including lack of domestic demand, an "unprecedented" need for electricity and uncertainty around moving 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 cancelled due to a range of issues," then energy minister Josie Osborne was told in a briefing note in September 2024.
"The government of B.C. will need stronger policy action to support hydrogen production and use to successfully establish a hydrogen economy in B.C."
'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 critiqued for the large amount of energy it takes to create.
The B.C. government has embraced the role of hydrogen in hopes of achieving net-zero emissions by 2050, developing a strategy"to accelerate the production and use of renewable and low-carbon hydrogen and be a world leader in the growing hydrogen economy."
In pursuit of that goal, Eby travelled to Prince George last January to announce a project led by Chilliwack-based Teralta Hydrogen Solutions 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 their partners, Chemtrade and Canfor Pulp, are leaders in fighting climate change through creative solutions that lower carbon emissions, create good-paying jobs for people, and build 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 no byproduct hydrogen is being produced on site," the documents say.
A Teralta spokesperson told CBC News that while the project itself was successful, the closure of the Canfor mill and Chemtrade's decision to stop producing sodium chlorate in Prince George meant it was no longer viable, so the project has been put on hold indefinitely.
'Not cost competitive with its alternatives'
The briefing note to Osborne lists five other major project that have been paused:
MIXT Energy (McLeod Lake Indian Band) and Mitsubishi's $5-billion green hydrogen and ammonia production project for export on Kerry Lake reserve near Prince George.
Shell Canada's Aurora Hydrogen green hydrogen production project for domestic use near Port Moody.
TC Energy's green liquid hydrogen export project for northwest B.C.
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 sounds an alarm about the demand for electricity from "numerous proposed industrial projects at various stages of advancement 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 balance industrial competitiveness with electrification in other sectors of the economy, all while keeping rates affordable."
The briefing note to Osborne says 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 told that B.C. "has not developed a stable domestic market for green hydrogen, primarily due to the high cost of adoption of both hydrogen fuel and hydrogen technologies."
The document lists examples of "funding programs and incentives" for would-be producers, but concludes that "even when currently available incentives are stacked, green hydrogen production is not cost competitive with its alternatives, both in 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 of moving hydrogen is by chemically combining it with nitrogen to make ammonia, which can be shipped by rail or boat and then "cracked" back into its separate components at a final destination.
"The use of ammonia as a hydrogen energy carrier is considered more energy efficient and uses globally established infrastructure," Eby was told in an information document written last July.
"However, when not handled properly, or spilled, ammonia can pose significant risk to human health and the environment due to its flammability, acute toxicity and negative impacts to aquatic ecosystems."
The same document says the governments of B.C. and Alberta have been in trilateral discussions with Ottawa — which has jurisdiction over interprovincial rail lines — over issues like 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, leading to the decision to not move forward 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's necessary is an energy corridor through the province that ends at Prince Rupert, which would include an LNG pipeline and a hydrogen/ammonia pipeline," spokesperson Mark Marissen said in an email.
"To make hydrogen projects like this one a reality in B.C., this energy corridor needs to be included in the list of the province's top priorities for expediting, given that this would help us to diversify our markets from the American market in a big way."
Kanata Clean CEO Robert Delamar suggested that challenges facing hydrogen projects should be a federal election issue.
"We'd like to see an Indigenous Energy Corridor running from Northwest BC to Eastern (and Northern) Canada, with pipelines 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 Initiative, an organization calling for energy policy considerations to include reliability and affordability.
"I didn't see any indication of any projects there that are really moving ahead. At best, some have been paused, others have been cancelled outright. It's quite a list, so yes, it's disappointing, but it is 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 best develop the sector."
"Despite the actions that have been taken by the Province, some proponents have had to make difficult commercial decisions, based on a number of internal and external factors," the statement said.