Prince George, B.C., hydrogen project plans put on hold

An Australian-based minerals company is withdrawing from a project in Prince George, B.C., that would have been a key part of the province's plan to scale up production of hydrogen and reach net-zero emissions. 

Fortescue announced its decision in a letter dated Sept. 26, posted by the B.C. Environmental Assessment Office this month, saying the Coyote Hydrogen Project was no longer "commercially viable."

"We have decided to put on hold our Project Coyote in Prince George until we are able to secure more favourable power pricing and availability," Fortescue North America president and CEO Andrew Vessey wrote in the letter. 

The hydrogen facility was set to be one of the largest in Canada, and would have put B.C. on track to massively scale up production of the low-emissions fuel. An industry analyst says the project's pause underscores significant gaps in the province's plan to become a world leader in production of low-emissions hydrogen. 

The provincial government is in caretaker mode for the election and did not respond to requests for comment. 

When burned or used in a fuel cell, hydrogen does not produce carbon emissions. But while the element has shown potential to be a low-emissions fuel, it takes significant amounts of energy to produce. 

When it's made using renewable energy, as was proposed in Project Coyote, the fuel is considered "green hydrogen" — viewed by many as an environmentally friendly alternative to fossil fuels.

In 2021, B.C. became Canada's first province to announce a strategy to boost hydrogen production. It aims to become a net exporter of the fuel by 2050, and identifies green hydrogen production as a significant part of its plan to achieve net-zero emissions provincially. 

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Minister of Energy, Mines and Low Carbon Innovation Josie Osborne announced a pilot project that would see six heavy-duty fuel-cell trucks on the road by 2023, with the goal of replacing diesel-powered trucks to reduce emissions from the transportation sector.

The Coyote Hydrogen Project in Prince George would have produced 140,000 tonnes of hydrogen and 700,000 tonnes of ammonia per year. The project also promised to bring 250 jobs to the city during construction, and more than 100 permanent jobs once it was in operation. 

But the facility would have required 1,000 megawatts of hydropower capacity to operate — about 91 per cent of the planned capacity of the Site C dam, or enough to power the equivalent of 450,000 homes per year. 

According to Fortescue's September letter, it determined obtaining that amount of power at an affordable price wasn't possible in B.C.

"While Fortescue will continue to maintain a portfolio of other projects for the future, our financial discipline always comes first," a Fortescue spokesperson added in an email to CBC News. "We will never do projects that are not currently economically viable."

The company is still pursuing green hydrogen projects in Australia, the United States, Norway and Brazil.

Industry researchers, local government optimistic

Speaking with Daybreak North on Wednesday, Prince George Mayor Simon Yu agreed the hydrogen project would have required a significant amount of green electricity.

"We would not be able to meet 100 per cent of that."

Still, he said he remains optimistic that Prince George could become a hydrogen hub in northern B.C., if the province can increase renewable power generation.

"This project might still be viable," Yu said.

Stewart Muir, CEO of resource advocacy group and non-profit Resource Works, agreed Prince George could still be a good future site because of its proximity to major highways and rail lines, and access to skilled workers.

"They're geographically at a great location, and they have a manufacturing base," he said. "Their ties to the forest industry has given them a lot of the skills they need."

But first, Muir said, the province will have to significantly increase the amount of renewable energy it makes available to hydrogen projects. 

B.C. Hydro says the province already needs to boost its grid to meet near-future needs.

The utility company estimates provincial power demand will increase 15 per cent by 2030, thanks to population growth, industrial development, electric vehicles, heat pumps and an increase in people working from home. That increase does not include additional demands, such as hydrogen plants.