Atlantic Canada is emerging as a potential green hydrogen and ammonia export hub as developers look to tap the region’s significant wind power resources, with political support at both the provincial and federal level.

Four world-scale hydrogen/ammonia export projects in Nova Scotia (NS) and Newfoundland & Labrador (NL) are leading the pack, with more expected as provincial governments look to accelerate the buildout of both onshore and offshore wind power capacity.

“Atlantic Canada is a unique region to develop a [green] hydrogen industry for many reasons,” Michelle Robichaud, president of the New Brunswick-based Atlantica Centre for Energy, told Hydrogen Economist. “It has significant land left to develop onshore wind projects, considerable space at shallow depths to develop offshore projects, and some of the highest and most consistent wind speeds in the world for onshore and offshore projects respectively.”

“Nova Scotia is well-positioned to become a world leader in green hydrogen” Rushton, minister of natural resources and renewables

The region also has robust energy and industrial export infrastructure that acts as the eastern gateway between central Canada, the US and European energy markets through a network of engaged and supportive regional port authorities which are willing to assist in developing both domestic and export markets, she added.

Provincial governments are “focused on accelerating the siting and development of new large-scale onshore and offshore wind energy resources as a foundation for clean hydrogen production,” Robichaud said. In addition, both NS and NL have a workforce that is experienced in developing offshore projects.

As a result, Atlantic Canada has a large number of potential sites to develop world-scale green hydrogen/ammonia projects, with NL and NS especially well-placed due to their untapped onshore and offshore wind potential. Potential hubs in the two provinces include the Halifax region and Cape Breton in NS, and multiple locations in eastern and western NL.

Concerns over energy security among major importers such as the EU since Russia’s invasion of Ukraine in early 2022 are also driving the development of Atlantic Canada’s green hydrogen supply base.

“Energy security is a major driver of global interest in clean hydrogen as an energy carrier, especially in the EU,” Brian Murphy, senior analyst for hydrogen and low-carbon fuels at information provider S&P Global Commodity Insights, told Hydrogen Economist.

40% – Top rate investment tax credit

After the gas supply shock of 2022, the EU is looking for new and clean energy sources with reduced geopolitical risk. As part of this effort, EU officials have travelled to potential export regions, including Atlantic Canada, to confirm the bloc’s interest in importing clean hydrogen. “These actions were a strong demand signal that helped to accelerate development on the supply side in NL and NS,” Murphy said.

This, in turn, led the Canadian government to sign a joint declaration of intent to establish a Canada-Germany hydrogen alliance in August 2022, while the NL government to sign a memorandum of understanding (MOU) with the Port of Rotterdam in May to support the export of green hydrogen to the Netherlands.

Federal backing

Canada’s emission reduction targets are also helping to drive the green hydrogen push. The federal government is supportive of the development of the industry for both domestic and export markets as part of its efforts to meet its Paris Agreement targets.

In March, the government included an investment tax credit for hydrogen production based on lifecycle carbon intensity in its 2023 federal budget. The maximum support covers 40% of eligible project costs if carbon intensity is below 0.75kg of CO₂/kg of hydrogen produced, while the minimum covers 15% of costs for projects with a carbon intensity of 2–4kg of CO₂/kg of hydrogen produced.

The investment tax credit “is an extremely important signal to investors”, while “other new investment tax credits to encourage development of clean energy and transmission infrastructure will complement the growing hydrogen sector,” Robichaud said.

In addition, the Canadian government has streamlined the regulatory process for offshore renewable energy projects in Atlantic Canada by expanding the mandates of the newly named Canada-Nova Scotia Offshore Energy Regulator and the Canada-Newfoundland and Labrador Offshore Energy Regulator  from just oil and gas, according to Robichaud.

Ministerial perspectives

“NS is well-positioned to become a world leader in green hydrogen,” Tory Rushton, the province’s minister of natural resources and renewables, told Hydrogen Economist.

“We are attracting major investments in both offshore wind development and in our budding green hydrogen industry,” he said. “There are several hydrogen developers who have publicly expressed interest in export projects, such as EverWind and Bear Head. Both of these companies are actively hosting community meetings and have received environmental approvals. And one of them, EverWind, is still expecting [the first phase of] its Point Tupper project to be online by 2025.”

Andrew Parsons, NL’s minister of industry, energy and technology, is equally bullish about his province’s green hydrogen potential. It granted in August the right to pursue development on provincial Crown land to four green hydrogen/ammonia exports projects: EverWind’s Burin Peninsula, Exploits Valley Renewable Energy, Toqlukuti’k Wind and Hydrogen and World Energy GH2’s Project Nujio’qonik.

“It is important to note that the call for bids did not award any land,” Parsons told Hydrogen Economist. “Successful bidders were simply provided the opportunity to apply for Crown land and will still undergo the existing Crown land referral process, which includes a referral to environmental assessment for projects over 1MW.”

First past the post?

The path to a commercial operation date (COD) for projects in NL is not straightforward, and it is difficult to predict which ones will be first past the production post.

“Nearly every clean hydrogen or ammonia project globally is ‘first of a kind’ in one way or another, and thus current projects are receiving extra scrutiny in the development process,” said Murphy. “In addition to proving new technologies and navigating new regulatory regimes, developers are working to agree on long-term offtake contracts to secure project financing.”

“Negotiating these contracts is proving to be a major challenge in the absence of a liquid market with standard pricing mechanisms, resulting in project delays. In the face of these broader market challenges, it is difficult to say with confidence whether a particular project has a leg up in the development process.”

Paul MacLean, the managing director of Bear Head, acknowledged exactly this point. “We have had to push back first production for the first phase of our project by a year to 2028 because potential customers in Europe are not willing to agree to offtake contracts before then,” he told Hydrogen Economist. “I should add, even though we are a Europe-focused project, we have been getting inbound calls from potential customers in Asia, but this would not push first production forward again.”

Separately, World Energy GH2—an affiliate of Boston-based renewable fuels producer World Energy—has pushed back the timeline for the first phase of its Project Nujio’qonik by two years because offtakers are not going to be ready to accept product until 2027.

In contrast, the first phase of EverWind’s multi-phase Point Tupper project is still on track for first production in 2025, according to the company’s CEO, Trent Vichie, with the hope of signing firm offtake contracts with buyers in the first half of 2024. EverWind has signed multiple international offtake MOUs for the project, including with German utilities Uniper and E.On. The company is targeting a COD of 2027 for its Burin Peninsula project.

---

Author: Vincent Lauerman