Much of the hype over hydrogen in Newfoundland and Labrador has subsided, and the harsh realities facing this nascent industry are casting a cloud of uncertainty over plans to dot the landscape with hundreds of wind turbines and construct hydrogen plants from Stephenville to Argentia.
Some have downsized their multi-billion-dollar projects or are exploring alternative business cases for a wind energy farm, while others have been granted extensions by the provincial government for the millions owed to the treasury for Crown land reserve fees.
“I’m the first one to say that things were certainly very hot and heavy, but there’s a reality to this,” said Energy Minister Andrew Parsons.
And one expert who studies the production, conversion and use of energy tells CBC News that so-called green hydrogen is still far too expensive, and is a decade away from being commercially viable, at least without big subsidies.
“The economics would be a challenge,” said Amit Kumar, a University of Alberta professor.
‘Not maturing at the rate expected’
Projects have stalled because of high production costs, sluggish markets, access to financing and the challenges of building the infrastructure.
“The green hydrogen/ammonia market is not maturing at the rate expected. Policies, pricing and pipelines are not yet ready to support market development,” World Energy GH2, which was promising to develop Canada’s first commercial green hydrogen and ammonia project on Newfoundland’s west coast, wrote in a statement to CBC.
World Energy GH2 says it remains committed to developing Project Nujio’qonik, and are “looking at other opportunities to develop renewable energy in the nearer term.”
It’s a sobering outlook for an industry that once held so much promise.
But the company that imports and distributes most of the fuels consumed in the province, and once owned the province’s only oil refinery, says it’s forging ahead with a unique approach to delivering clean energy to Europe.
North Atlantic Refining Limited (NARL) is proposing to develop what it’s calling a green energy hub at the Port of Come By Chance in Placentia Bay, which for decades has been closely linked to the crude oil-based, greenhouse gas-emitting fuels that keep our vehicles and planes running, and many of our homes heated.
Don’t mention the word ammonia
Unlike the five other projects that are on the drawing board, you won’t see the word ammonia in NARL’s plans.
Of the six wind-hydrogen projects being considered in the province, five of them propose to convert hydrogen into ammonia as a method of storing and transporting this energy source to European markets.
But NARL plans to ship hydrogen across the Atlantic Ocean using a process called “liquid organic hydrogen carriers,” (LOHCs), which allows the hydrogen to be shipped in a liquid form.
“We have done our assessments and we have made a decision to go in a different direction,” Jeff Murphy, vice-president of capital projects for NARL, told CBC News.
Looking for more? Here’s how the LOHC process works:
Green hydrogen is made by using renewable energy to power electrolysis, which is the splitting of water molecules.
This hydrogen will be blended with a clear, flammable and pungent liquid called toluene in a new hydrogenation facility to be constructed at Come By Chance, and converted into methylcyclohexane.
The liquid is handled similar to gasoline, can be stored for long periods, and can be transported via ship.
Once the product reaches Europe, the hydrogen is separated from the toluene at a dehydrogenation facility.
The hydrogen is then delivered to the customer — typically large industrial end users such as refineries and steel manufacturers — and the toluene is shipped back to Come By Chance to start the cycle again.
Murphy said the the LOHC process is preferred by NARL because the ammonia mode of transport is “not as technically mature.”
The team at NARL is moving ahead with an ambitious schedule. The company intends to submit its project to the province for environmental scrutiny later this year, make a final investment decision in the first half of 2026, and begin commercial operations by the first quarter of 2029.
“We have a thriving business, and we’re looking to reinvest some of the profits from that existing business into our own wind-to-hydrogen project,” Murphy added.
Minister says there’s hope for hydrogen
Despite the mixed results, Parsons said “there is still hope” for a hydrogen industry.
All six proponents are continuing to engage with the provincial government, and “tens of millions” in fees have been paid to reserve the hundreds of thousands of acres of Crown land that have been set aside for the wind-hydrogen industry, he said.
Parsons could not say how much money in land fees was outstanding, but said the government is willing to work with the companies to give them more time to secure agreements with investors and continue pre-development work.
“That is the challenge right now with the sector, no different than we’ve had challenges when it comes to oil and gas, mining, you name it,” said Parsons.
Two companies, Everwind and Toqlukuti’k Wind and Hydrogen Ltd., have had their land reserves reduced by a combined total of 132,000 hectares.
A statement from Everwind said the company is in “advanced discussions” with potential hydrogen customers in Germany.
“Our lead customers are in Europe, where governments continue to invest in hydrogen infrastructure and implement regulations that mandate green hydrogen adoption,” reads the statement.
NARL can deliver hydrogen at a good price, says Murphy
Jeff Murphy, meanwhile, is confident that NARL will soon be supplying hydrogen to Europe.
“We believe that we’re going to be able to deliver hydrogen at a cost that is very competitive with what the market is dictating in Europe today,” he said.
North Atlantic plans to develop a 320-megawatt wind energy farm on a height of land near Sunnyside, overlooking Bull Arm, Trinity Bay, powered by 47 massive turbines, and a 25-kilometre transmission line. This renewable energy will be used to power a plant capable of producing 30,000 tonnes of so-called green hydrogen annually at the Port of Come By Chance.
The plant will be built on the same site as North Atlantic’s logistics terminal, which includes a docking facility for oil tankers and a tank farm with a storage capacity of 4.3 million barrels of various forms of crude and refined fuels.
NARL imports and distributes about 60 per cent of the province’s gasoline, diesel and jet fuel at this facility, and believes its existing infrastructure and expertise will give it a competitive advantage in a very challenging marketplace.
North Atlantic is also hoping to tap into the provincial electricity grid for “supplemental power” from Newfoundland and Labrador Hydro, Murphy explained.
Community engagement underway
Murphy said millions of dollars have so far been invested to study the winds in the area, carry out engineering studies to determine development and operating costs, undertake environmental studies, and consult nearby communities such as Sunnyside, Arnold’s Cove, Come By Chance and Southern Harbour.
“For the most part, things have been positive,” Murphy said of the feedback during public meetings, adding that concerns raised in Sunnyside led to design changes with the transmission line.
Murphy said company officials have been in talks with prospective hydrogen customers in Europe, and he’s confident that North Atlantic will be signing a contract with a buyer very soon.
“We know that those contracts are out there,” he said.
But it’s an uphill battle for proponents like NARL, according to Prof. Amit Kumar.
He believes there will eventually be a transition to green hydrogen, which is produced from renewable electricity like wind and hydro. But for now, he said the most viable option is “blue” hydrogen, which is produced from natural gas and methane, and the emissions are captured and stored underground.
Kumar said blue hydrogen is roughly three times cheaper than green hydrogen.
“Green hydrogen production technology is improving. But my sense is it is still going to take about 10 years to become economical,” said Kumar.
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