Tom Rose felt like he was in a blockbuster movie when, on August 23, 2022, a cavalcade of black Suburban SUVs pulled into his town of Stephenville, Newfoundland, and disgorged the chancellor and vice-chancellor of Germany, the prime minister of Canada and a mass of other dignitaries. Standing in the receiving line, the 52-year-old mayor and former strawberry farmer took in a moment that he now believes may go down as one of the most significant in Newfoundland history.
In an industrial hall next to the Stephenville airport, Prime Minister Justin Trudeau and Chancellor Olaf Scholz signed an agreement to boost Canada’s production of green hydrogen for the German market, aiming for exports to begin by 2025. With the stroke of a pen, Stephenville went from being a dot on the map of western Newfoundland to the potential epicentre of a new cleantech industry.
“I kind of thump my chest,” Rose says, on the phone from the mayor’s office. “Stephenville has had its ups and downs. Now we’re on the cusp of an economic boom.”
The 2022 Canada-Germany Hydrogen Alliance kicked off something of a gold rush. Major players in the clean-energy sector flocked to Canada’s East Coast in search of optimal sites for green hydrogen production and export. Their criteria: high wind to generate electricity, industrial facilities to produce hydrogen and a serviceable port for shipping. Boston-based biofuels company World Energy already had its eye on Stephenville and the gusty west Newfoundland coastline.
In June 2023, the company’s Canadian affiliate – World Energy GH2 – purchased the port of Stephenville. Under the banner of Project Nujio'qonik (Mi'kmaw for “where the sand blows”), it laid out plans to build three wind farms on the rugged mountains surrounding St. George’s Bay and to convert the town’s decommissioned pulp and paper mill into a hydrogen-processing plant. In August 2023, the nascent project was one of four to receive provincial approval to apply for Crown land.
Project Nujio'qonik is now gunning to become Canada’s first commercial producer of green hydrogen. It was greenlit by government regulators this month after clearing environmental hurdles. But getting the megaproject off the ground has come with a fair share of obstacles – from local roadblocks to regulatory question marks to undeveloped infrastructure – and some experts maintain that Canada’s hydrogen industry should learn to walk before it tries to run.
World Energy GH2’s resolve remains firm. “We’re one of the ‘lighthouse projects’ being watched by international investors,” says Sean Leet, the company’s managing director and CEO. “And the global potential for green hydrogen is massive.”
We’re on the cusp of an economic boom.
- Tom Rose, mayor of Stephenville, Newfoundland
In its 2023 Global Hydrogen Review, the International Energy Agency cites a nearly 3% increase in hydrogen use over the previous year. Canada is part of that trend, producing some four million tons of hydrogen annually, according to Amit Kumar, Canada Research Chair in Assessment of Energy Systems at the University of Alberta. It’s mainly used as feedstock for industry – oil refining and the production of steel, methanol and ammonia for synthetic fertilizer.
The vast majority of hydrogen produced in Canada – as in the world – is derived from natural gas through a process called methane steam reforming. It produces significant carbon dioxide emissions: if they are captured and sequestered, the hydrogen is labelled blue; if they’re released, it’s called grey.
But Germany, with its net-zero aspiration for 2045, wants hydrogen in its cleanest form – green hydrogen – which is made by using renewable energy to power electrolysis, the splitting of water molecules. No fossil fuels are involved. The energy-dense, emissions-free hydrogen that results is what Germany intends to use to power its entire chemical, steel and cement industries. And because only a fraction of that demand can be met domestically, Germany is shopping around for other sources in Scandinavia, North Africa and Canada.
Pump up the green
Canada’s ambitions are aligned. The federal government’s 2020 Hydrogen Strategy sets out to make Canada “a major exporter of hydrogen and hydrogen technologies” and foresees up to 30% of the country’s end-use energy coming from green hydrogen by 2050. PM Trudeau has been discussing the possibility of a trilateral clean hydrogen market with Mexico and the United States. In an effort to spur on investment, the government launched a Clean Hydrogen Investment Tax Credit in 2022, which offers up to 40% in tax reimbursements, calibrated to the carbon intensity of the production method, and is also considering a subsidy that would match the market price of green hydrogen to that of grey, creating an incentive for buyers. In February, World Energy GH2 secured a $128-million federal loan for Project Nujio'qonik.
But Kumar questions the logic of jump-starting green hydrogen production in Canada when the technology is still so young. Like many others, he’s critical of the practice of transporting hydrogen in the form of ammonia – the current solution for long-haul shipping from Canada to Europe – as it introduces major losses in energy efficiency. Kumar believes better carrier methods are on the horizon.
Furthermore, because the infrastructure for large-scale production – the turbines, transmission lines and electrolyzers – has yet to be built, Kumar estimates the cost of green hydrogen production to be three times that of blue hydrogen. He says Canada would be wiser to focus on the latter for now. “In 10 to 15 years, green hydrogen may be cost-competitive,” he says. “It’s not there yet. Why should Canadian taxpayers be paying for exports to Germany?”
I get in trouble for being so optimistic. But how often does someone come along and offer to invest billions of dollars in your region?
- Jasen Benwah, chief of Benoit First Nation
The answer may be: because Germany is willing to pay. When the Canada-Germany Hydrogen Alliance was signed, Germany was reeling from Russia’s throttling of gas exports to Europe following its invasion of Ukraine. Scholz’s government, a coalition of Social Democrats and Greens, was anxious not only to accelerate the country’s decarbonization process but also to put its energy security on a more solid footing.
“Like Russia, this country is blessed with natural resources,” Scholz said shortly after arriving in Canada on his three-day visit in 2022. “The difference is it’s a reliable democracy.”
Sean Leet is confident in Germany’s commitment. In January, he travelled to the north German town of Wilhelmshaven, whose deep-water port will be one of the first to receive green hydrogen shipments, to join a network of companies that will be in the market to process, transport and buy Project Nujio'qonik’s product. While Leet says the 2025 timeline won’t be met, he hopes production at the Stephenville plant will begin by early 2026; shipping schedules will depend on sales agreements with German buyers, who await clarity on government subsidies and tax breaks as well as the completion of pipeline infrastructure.
Jasen Benwah, chief of the Benoit First Nation, one of several bands in the St. George’s Bay area, is not bothered by all the contingencies. “I get in trouble for being so optimistic,” Benwah says. “But how often does someone come along and offer to invest billions of dollars in your region?”
World Energy GH2 estimates that the first phase of its project will create 2,200 construction jobs, 400 operations jobs and 4,200 indirect jobs. It also plans to invest in the local workforce, establishing a wind-industry training program in partnership with the Qalipu First Nation, Newfoundland’s largest Mi'kmaw band, and the Netherlands-based DOB Academy.
It’s music to the ears of many in a region that has weathered its fair share of blows: the closing of a major U.S. Air Force base in 1966, the Abitibi pulp and paper mill in 2005 and the downturn in the fishery. The population has been in steady decline since the 1970s; Benwah says all six of the schools on the Benoit First Nation are at risk of closing. Like many, he has spent a good chunk of his adult life commuting to job-rich Alberta, where, for 13 years, he managed a lodge for workers on the oil patch – 18 days in, 10 days out – leaving his wife and six kids behind. He describes the lifestyle as soul-destroying.
“Do we want to continue living on handouts or to become an economic generator?” he asks rhetorically, adding that the majority of his 1,500-strong nation shares his support for the project.
Not Sheila Hinks. The 58-year-old fisherwoman lives on the craggy Port au Port Peninsula, where World Energy GH2 plans to erect 155 turbines. Last winter, Hinks and a group of fellow protesters spent more than a week blocking an access road to a wind testing site. The road’s construction, they claimed, had caused contamination of a brook that runs parallel to the road and serves as a secondary water supply. And Hinks says that the road was so muddy that ATVs couldn’t get through, preventing locals from accessing the firewood that many use to heat their homes in winter.
“We want them to leave our peninsula alone,” Hinks says on the phone from the home where she raised a son who, now 33, travels back and forth to Alberta for work. Her group’s Facebook page – No Windmills on the Port au Port Peninsula – has more than 600 members. “We’re concerned about the drinking water, the wildlife and our total way of life,” she says.
Last November, Newfoundland and Labrador’s environment minister, Bernard Davis, asked World Energy GH2 to provide a second environmental assessment, after reviewing the company’s original 4,000-page report. Davis asked for more precision on water use and monitoring, baseline data, the project’s potential and cumulative effects, as well as mitigation, contingency and emergency-response plans.
The thoroughness of the process has Jasen Benwah persuaded that any environmental disruption will be temporary and greatly outweighed by the project’s benefits. “It’s not like they’re building a mine or fracking,” he says. “It’s green energy.”
Mayor Tom Rose sees it much the same. “Not everyone likes change,” he says. “But this is going to bring our families home. And we’ll have a role in helping the world.”
Naomi Buck is a Toronto-based writer.
