Natural Resources Committee on April 30th, 2026

[Derek Estabrook]

Thank you for the question.

Broadly speaking, the biggest obstacle is that the key markets for green hydrogen exports from Atlantic Canada are in western Europe. Countries such as Germany, the Netherlands and Belgium want green hydrogen, but not at any price.

Price has become a key barrier, at least in the short term, and that's specifically what the Canada-Germany hydrogen auction is intended to address by enabling large offtakers in Germany to purchase hydrogen derivatives at a cost they can justify. The Canada-Germany hydrogen auction through H2Global is really a critical policy mechanism to kick-start the sector and get it going.

[Richard Martel, Conservative, Chicoutimi—Le Fjord, QC]

Does that call into question the viability of export chains in the short term?

[Derek Estabrook]

Thank you for the question.

Like most emerging energy sectors, it requires support to get off the ground because the economics are challenging until you achieve economies of scale and the technology gets better. That is where we are with the hydrogen sector today. It's where the wind and solar industries were 15 or 20 years ago. I don't see this sector being any different. In order to get costs down, we have to be prepared to start relatively small and provide the support required to make projects economical. As we start to scale, the costs will come down.

Also, it's important to remember that, for green hydrogen production, about two-thirds of the cost is the cost of renewable electricity. As the cost of onshore wind, solar and other types of renewable energy comes down, the feedstock that goes into hydrogen production also comes down, which automatically makes the cost of green hydrogen production significantly lower.

[The Chair, Liberal, Terry Duguid]

Thank you, Mr. Estabrook.

Ms. McKelvie, welcome to the committee. You're up for five minutes.

[Jennifer McKelvie, Liberal, Ajax, ON]

Thank you, Mr. Chair.

When I was put on the natural resources committee, my first thought was that I hoped we talked about hydrogen. Lo and behold, on day one, we're talking about hydrogen. I am very excited about the possibilities around that, and about having witnesses here from the east coast specializing in green hydrogen and from western Canada specializing in blue hydrogen.

I will note that I think it's unfortunate that we don't have anybody from the critical minerals industry in Ontario or the nuclear industry who can speak to that white-type of hydrogen produced by radiolysis, which we have both in the reactors and deep inside the earth. Hopefully, we can get some submissions written in that regard.

With that, Mr. Estabrook, you did a great job summarizing some of the potential uses of hydrogen in industry. In terms of the pathways to net zero, we know heavy-duty vehicles and airplanes are going to be some of the hardest to decarbonize and move forward on, so there is a lot of opportunity there.

I am really hoping you can speak, big picture, to the opportunities we have for green hydrogen in Nova Scotia and throughout the Atlantic region in particular alongside the wind west project.

[Derek Estabrook]

Thank you for the question.

Are you asking about Nova Scotia specifically, not other regions of Atlantic Canada?

[The Chair, Liberal, Terry Duguid]

Mr. Estabrook, we're going to pause you for a second there. We're having a little audio problem.

Can you unplug and plug in your mic?

Thank you, colleagues, for your patience.

Go ahead. We stopped the clock.

[Derek Estabrook]

The Province of Nova Scotia, like the federal government, has a target to achieve net-zero emissions by 2050. In order to achieve that target, we will have to decarbonize almost every energy use sector, including the ones we've talked about. We also have heavy transportation. We have trains. We have a significant marine sector in Nova Scotia, especially in the fishing and seafood sectors. Many of those larger commercial fishing vessels will be very difficult to decarbonize with batteries alone for a whole bunch of reasons that I won't get into right now. It's safe to say that we will need other forms of low-carbon energy. It could be hydrogen fuel cells. It could also be low-carbon liquid fuels that are derived from hydrogen, such as green methanol, which would be a very good option in a container ship or ferry. Those sectors will be important.

While we don't have a significant industrial base in Nova Scotia compared with some other parts of Canada, we do have some heavy industries here. They will also need to decarbonize. The energy applications that need to be decarbonized in Nova Scotia, the rest of Canada and globally are generally the same. The only difference is that Nova Scotia is a smaller province, so the magnitude is a little bit lower. In some ways, that makes Nova Scotia an attractive place to start. For example, we can develop a relatively small heavy-trucking hydrogen corridor and it doesn't have to cost a lot of money.

I want to come back to a point that Mr. Lakeman made about the defence sector. The defence sector is very important in Nova Scotia. It's home to the east coast navy. It will be home to the new Canada patrol submarines. Those submarines, when they're operating underwater in stealth mode, will operate on hydrogen fuel cells. Nova Scotia will have to start developing the hydrogen supply chain that will be required in the defence sector. That as well is an important opportunity here.

[Jennifer McKelvie, Liberal, Ajax, ON]

Could you speak to the production of hydrogen and the opportunities that are available through Nova Scotia, both domestic as well as export, in particular with new projects like wind west and other sources of electricity you have coming online that can help you ramp up this production?

[Derek Estabrook]

In the short term, I'd say over the next 10 years or so, I think almost all the renewable electricity used in the production of green hydrogen for domestic use and export will come from onshore wind, not offshore wind. That's purely economic. You can produce onshore wind for $60 or $70 per megawatt hour. The cost of offshore wind will likely be two or three times that cost. Given that renewable electricity is the number one input cost in green hydrogen production, I think it will be 10 or 20 years or more before it's economical to produce green hydrogen here with offshore wind.

[The Chair, Liberal, Terry Duguid]

Thank you, both.

Mr. Simard, you have the floor for two and a half minutes.

[Mario Simard, Bloc, Jonquière, QC]

Thank you very much.

I want to go back to the conversation we were having earlier.

Mr. Estabrook, you just said that we need to think about these energy technologies over the long term. Yes, that's the case. I completely understand that.

When hydrogen is made, there's still a loss of energy. That means a lot of time will go by before it's possible to deploy enough wind turbines to produce electricity to make green hydrogen.

Based on the discussions I have had with other people, I believe that, in the meantime, the key is to develop the market. If we want to develop the market in the short term, we have to have some form of infrastructure, even if we're talking about short loops.

If the government were to prioritize something, what type of infrastructure should be developed as quickly as possible to facilitate the deployment of hydrogen?

My question is for both of you, Mr. Estabrook and Mr. Lakeman.

[Derek Estabrook]

You're raising a really important challenge in that, unlike electricity where the value chain has existed for 100 years or more, in the hydrogen sector, generally speaking, at least in Atlantic Canada, the hydrogen supply chain does not exist yet. In order to develop a project, at minimum you need hydrogen production. Then you need a way to transport the hydrogen from the point of production to the point of end use. We've already talked about the importance of trying to make that distance as short as possible. If it's going into the transportation sector, then you need refuelling stations to put the hydrogen into the vehicles, and then you may also need hydrogen storage.

It's complex and expensive, and you have to build every link of that value chain simultaneously. You can't put a truck on the road using hydrogen either in a dual-fuel vehicle or in a fuel cell until you build that entire value chain. It is one of the biggest challenges the sector faces, globally and here.

[The Chair, Liberal, Terry Duguid]

Thank you.

Mr. Ruff, welcome to the committee. You have five minutes.

[Alex Ruff, Conservative, Bruce—Grey—Owen Sound, ON]

Thank you, Chair.

I have a question for both of you.

A couple of years ago, I was meeting with the Canadian Hydrogen Association. I'm assuming you're both members. One of the main asks in 2024 was for an update on the national hydrogen strategy. When I look online, the last thing I can find is from two years ago, the progress report.

Considering the rapid changes and evolution in your sector, are you still seeking any clarity from the Government of Canada or any updates on the national hydrogen strategy?

[The Chair, Liberal, Terry Duguid]

You can both answer.

[Brent Lakeman]

I would be happy to start.

It's very important that we have supportive federal programs. We certainly work closely with the Canadian Hydrogen Association on their submissions. One of the points that I think we've made in the past has been that we focus a lot on some of the production incentives, which are certainly important, but it's still the early days. We're working to develop markets, including being ready for the export markets, but making sure we have demand-based incentives as well for these earlier projects. In some cases, that might be much less costly to government, because it is very much the early days, but we do still need some support, whether it's the trucking corridors to use the hydrogen fuel cell or dual-cell vehicles, or other end-users.

I think that's going to be one of the messages. We have great incentives today, but sometimes they're a little more focused on the production side. We also need to focus on the end-use side, because the benefits of production don't always get passed through to the end-user, as we've seen in the transportation sector.

[Derek Estabrook]

I would add that the strategy should more explicitly reference the export opportunity and clarify that. We talk a lot about hydrogen, but from an export standpoint, it's really a feedstock that gets converted into ammonia, methanol or sustainable aviation fuel. The strategy should clearly outline the role of those fuels.

I don't believe that the hydrogen strategy referenced the defence sector or the important role that hydrogen can play in energy security at all when it was developed. Those important opportunities have evolved significantly over the last couple of years.

[Alex Ruff, Conservative, Bruce—Grey—Owen Sound, ON]

Thank you.

I'll turn to you now, Mr. Estabrook, specifically, on green hydrogen. I have Hydrogen Optimized in my riding. I'm assuming you're aware of who they are. There's huge potential for that organization to be a world leader with their RuggedCell water electrolysis system, up to the gigawatts scale. One of the challenges obviously with green hydrogen is the electrolysis process and the amount of energy you need to produce green hydrogen.

You talked about wind. The last time I talked to that company, they were talking of potential partnering opportunities down on the east coast, because you can turn that into ammonia and transport it, and that basically stores it.

Can you speak a little bit more about the energy requirements from not only wind but nuclear as well? In my neck of the woods, we have the Bruce Power nuclear facility. The problem with nuclear energy is that they're producing it all, but again, how do you store it? I think converting it is an option. Where are we sitting on this?

[Derek Estabrook]

From an energy standpoint, you need 50 to 60 kilowatt hours of electricity to produce one kilogram of hydrogen through electrolysis. Where those kilowatt hours of electricity come from doesn't matter. An electron is an electron. Whether that electron is produced from coal, nuclear, wind, solar or hydro, it all works the same in the electrolyzer.

The challenge is that if you want the hydrogen to be clean, the electricity has to be clean. It can be wind. It can be solar. It can be hydro. Nuclear is also another interesting option because it is baseload power. Using any surplus nuclear power production capacity, especially late at night, could be a very attractive option in the provinces that have that available as baseload power.

[The Chair, Liberal, Terry Duguid]

Thank you.

Mr. Guay, you're going to wrap us up with five minutes.

[Claude Guay, Liberal, LaSalle—Émard—Verdun, QC]

Mr. Lakeman, the spring economic update proposed making enhanced oil recovery an eligible use under the carbon capture, utilization and storage ITC. Recognizing that, in clean hydrogen carbon intensity calculations, how does this change your hub's project mix or economics if you're taking that into consideration? Can it make your activities even more financeable or viable? Can it help Canada overall in being more competitive?

[Brent Lakeman]

I think the changes to allow for enhanced oil recovery will be a positive net impact on the sector as it moves forward, certainly for the CCUS sector. The “U” is the utilization. Having a revenue stream really will support these projects, because one of the challenges that we've seen has been that you need that carbon credit value to be up to that significant level, probably over $100 or over $130. If you can achieve some additional revenue stream from the utilization and if that could be put towards the overall project economics, that's a good thing.

The hydrogen projects that are under construction currently in our region are using CO2 hubs. Those are not EOR hubs. Those are for straight CO2 storage, so I can't comment on whether any of these recent developments will change the strategies of those hydrogen companies to work with those hubs for the long-term storage. Again, I think with EOR demonstrating that CO2.... Some of it does get recycled, but ultimately, if we can store that in that geological formation during and after the EOR project, then it will have a very positive outcome.

[Claude Guay, Liberal, LaSalle—Émard—Verdun, QC]

We can end with a question for both of you. Part of our automotive strategy included $1.5 billion for the charging and hydrogen refuelling infrastructure initiative, and that includes the building of additional hydrogen charging stations. Do you feel that this sends a signal that the Canadian government is serious about hydrogen and the increasing demand for it and will help us become a serious hydrogen producer?

Mr. Estabrook, do you want to start?

[Derek Estabrook]

Yes. In order to deploy trucks or other commercial vehicles like buses with either hydrogen fuel cells or dual fuel engines, you need the refuelling infrastructure. You need those stations.

What's interesting about hydrogen is that the best applications are in heavy transportation, not in passenger vehicles or light-duty vehicles. The easiest way to start is with heavy trucks and buses that return to base at night. You think of a transit bus. It's operating on an urban route. They fuel up in the morning. They're out on the route all day. They come back at night to the same place. You only need one fuelling station for that. It's the same as heavy trucks that have a route and then come back to a depot at night.

Refuelling those types of heavy transportation vehicles is a lot more feasible than trying to build a network of fuelling stations from coast to coast, as we're experiencing with battery electric vehicles as well. It's not hard to do, but it's really complicated.