FOURNIER: Canada’s green hydrogen gamble, energy solution or subsidy trap?

Since the 2020 “Great Reset,” green hydrogen (H₂) and ammonia (NH₃) have been pitched as clean-energy solutions to bypass China’s dominance over lithium battery materials and revolutionize electricity storage from intermittent wind and solar generation.Green hydrogen, produced by splitting water via electrolysis using wind and solar power, is said to avoid reliance on lithium, cobalt, and rare earths — core inputs in lithium-ion battery energy storage systems (Li-BESS) — which face high capital costs and manufacturing constraints.Because wind and solar often produce electricity when demand is low and fail to deliver when demand is high, they are not dispatchable. This intermittency creates supply–demand imbalances that require storage solutions such as green hydrogen or Li-BESS..However, hydrogen’s low energy density, high leak rate, and challenges in long-distance transport and storage limit its practicality.Ammonia (NH₃), synthesized via the Haber–Bosch process, offers a denser and more stable carrier of green hydrogen for shipping and industrial uses. In 2023, ammonia production consumed four per cent of global natural gas, underscoring its industrial role.Still, both technologies suffer from thermodynamic inefficiencies.Round-trip efficiency—the full cycle of H₂ and NH₃ production, storage, transport, and conversion back to electricity—hovers around 30 to 40 per cent for hydrogen and just 15 to 25 per cent for ammonia. That means 3 to 6 megawatt-hours (MWh) of intermittent wind and solar generation yield just 1 MWh of dispatchable power..With production costs for green hydrogen ranging from US$3 to $8 per kilogram — driven by fluctuating electricity prices and high electrolyzer capital expenditure (CAPEX) — the business case is weak without subsidies. By comparison, Alberta’s natural gas-based hydrogen is estimated at $1 to $1.80 per kg.To bridge the gap, the U.S. Inflation Reduction Act of 2022 offered a 30 per cent investment tax credit (ITC) and a US$3/kg production tax credit (PTC) for green hydrogen. That fuelled an estimated US$31.4 billion in tax rebates for wind and solar in 2024 — a 21-fold increase since 2015.However, a July 7, 2025, executive order from the Trump administration aims to end those subsidies, signalling a sharp policy turn..Canada, unable to match the U.S. PTC, introduced a 40 per cent Clean Hydrogen ITC and offers additional support through the Clean Fuels Fund and the Canada Growth Fund.Former prime minister Justin Trudeau’s dismissal of LNG exports to Europe in favour of a “trillion-dollar” green hydrogen plan marked a defining shift.In Atlantic Canada, conceptual projects such as Spirit of Scotia and Nujio’qonik, backed by generous subsidies, aim to export ammonia to Europe. But their viability hinges on unsustainable financial incentives and an uncertain geopolitical environment..Green Hydrogen International’s Spirit of Scotia proposal in Nova Scotia plans 500 gigawatts (GW) of offshore wind to produce 43 million tonnes of hydrogen annually — about half of today’s global hydrogen production. The plan requires 200 GW of water electrolyzers (compared to just 5 GW installed worldwide in 2024), with a CAPEX of $6.345 billion per GW. The project’s total cost: $1.27 trillion. If it proceeds, even in part, it will likely unfold over decades.For perspective, Alberta’s total electricity consumption averages around 10 GW.Similarly, Project Nujio’qonik in Newfoundland and Labrador, led by World Energy GH₂, aims for 4 GW of onshore wind to produce 280,000 tonnes of hydrogen and 1.6 million tonnes of ammonia annually. The price tag: $15 billion. With environmental impact assessments approved in April 2024, the project awaits a final investment decision later this year..Canada’s regulatory landscape supports these ventures. Bill C-49, effective as of 2025, streamlines offshore wind approvals in Atlantic Canada.But as of July 13, 2025, no binding off-take agreements for green hydrogen or ammonia have been signed. EverWind Fuels holds non-binding memoranda of understanding (MoUs) with German companies to export 1 million tonnes of ammonia annually, but no firm contracts have materialized. Other proposals like Bear Head and Hy2gen also lack confirmed buyers.A January 2025 study in Nature warned that global green hydrogen ventures would require between US$800 billion and $2.6 trillion in annual subsidies and carbon trading revenue to remain viable—far beyond energy sales alone.The thermodynamic and economic realities raise a fundamental question:Are these projects producing energy, or harvesting subsidies?Canada’s reliance on public funding risks driving up energy prices, with taxpayers underwriting speculative projects such as Spirit of Scotia and Nujio’qonik. Meanwhile, geopolitical concerns persist. China’s dominance over clean-tech manufacturing — including wind turbines, solar panels, and electrolyzer components — undermines the argument that green hydrogen reduces reliance on authoritarian states.Fiscally minded Canadians must scrutinize the true nature of these ventures. Their massive capital demands could reshape not only our energy mix, but our long-term trade relationships with a geopolitically sensitive superpower.

FOURNIER: Canada’s green hydrogen gamble, energy solution or subsidy trap?

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