Proposed wind project in western Newfoundland gets $128M federal development loan

World Energy GH2 has secured a federal loan to get its wind-to-hydrogen megaproject off the ground on Newfoundland's west coast. 

Federal Labour Minister Seamus O'Regan on Wednesday in Ottawa announced $128 million in what's called a credit facility loan agreement for Canada's first commercial green hydrogen-ammonia facility.

"Wind and hydrogen present a very real opportunity for us, because the world is looking for renewable energy. That is a fact, and the markets are going in that way and the money is going that way," O'Regan said.

"We are here today because World Energy GH2 is in a hurry. We need to get this project off the ground and signal to the world we are in the green hydrogen game now. That's the urgency that you need to have in this industry."

Credit facilities are a type of pre-approved loan that allow a borrower to access money on an ongoing basis rather than applying for a new loan each time, similar to a line of credit.

In July 2022, chairman John Risley told CBC News that World Energy hadn't asked the provincial government for any financial support and had no plan to ask the federal government either. 

Risley did say the company would file an application with the Canada Infrastructure Bank, which lends money to projects such as the west coast wind-hydrogen proposal.

"I don't doubt we will be making an application to them. But we've not applied to either government, either provincial or federal, for any grants and we don't intend [to]," Risley said at the time. 

WEGH2 expects the first phase of the project to create 2,200 direct construction jobs, 400 operations jobs, and 4,200 indirect jobs. The company expects to produce hydrogen by the end of 2025, with at least 328 wind turbines on the Port au Port Peninsula and in the Codroy Valley.

A yet to be built hydrogen-ammonia plant is planned for Stephenville with production expected in early 2026. World Energy bought the port of Stephenville in June 2023. 

In August 2022 during a visit to Stephenville, N.L., by Prime Minister Justin Trudeau and German Chancellor Olaf Scholz, Canada and Germany signed an agreement to invest in hydrogen, establish a "transatlantic Canada-Germany supply corridor" and start exporting hydrogen by 2025.

World Energy CEO Sean Leet told reporters after the announcement that the 2025 timeline will be difficult to meet.

"But we're working hard to fulfil the requirements under the agreement. Right now we're determining when the infrastructure on the optics side will be ready, and that will determine, ultimately, when we'll be able to ship," he said. "We'll align our schedule according to that."

Federal Rural Economic Development Minister Gudie Hutchings said Wednesday the offshore wind industry will be worth $1 trillion by 2040.

Optimism while in limbo

But the west coast project remains in limbo as it navigates the provincial environmental impact process.

In January WEGH2 submitted an amendment to government for its initial environmental impact statement submitted in August. The amendment is currently subject to public and government review with a deadline of March 20 for public comment and a provincial government decision on April 9. 

Still, some west coast residents remain optimistic that Wednesday's announcement is a step closer to the boost they're hoping will revitalize the region.

"Fifty per cent of our population is 60 and over, so there's not many young people left here and we haven't seen infrastructure development on any kind, really, since the '70s," Peggy White, chief of the Three Rivers Mi'kmaq Band, told CBC News shortly after the press conference.

"So having jobs and the ability for our children to move home, that will be a significant thing for us and hopefully this project will bring some much needed money into our communities."

Jasen Benwah, chief of Benoit First Nation on the Port au Port Peninsula, has been cautiously optimistic about the project since its inception.

Benwah said the project will be a much-needed kick-start for the people and their communities. A high priority for him, he said, is protecting the environment but he acknowledges that in order for the project to go ahead, construction is needed, and that will result in some disruption of ecosystems.

"If it's going to happen, let's make sure it happens right and the smallest footprint possible and the smallest impact as possible and in the end it all works out for the benefit of our region," he said. "That's my wish." 

Not all residents are on board, with some holding protests over the last two years to push back against the potential development. 

Duran Felix has concerns about the project's location and the scope. 

"When you consider that they decided not to do a federal environmental assessment, under which it clearly falls, this just goes to show you how willing the government is to overlook environmental concerns and the concerns of residents to further their own goals," he said. 

In October, Federal Environment and Climate Change Minister Steven Guilbeault announced the project doesn't warrant designation under the federal Impact Assessment Act.

Once complete, Project Nujio'qonik is expected to produce roughly 210,000 tonnes of green hydrogen per year — about 1.2 million tonnes of green ammonia. The first phase is expected to produce about 400,000 tonnes of green ammonia for export.

The federal Crown corporation Export Development Canada is administering the financing for the project. The financing is provided through the government's Canada Account, which an official described as "a mechanism at the government's disposal to facilitate transactions it determines to be in the national interest." 

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