Natural Resources Committee on April 30th, 2026

[The Chair, Liberal, Terry Duguid]

Thank you, Mr. Estabrook.

Mr. Lakeman, you're now up for five minutes.

[Brent Lakeman, Executive Director, Edmonton Region Hydrogen Hub]

Good afternoon, and hello.

My name is Brent Lakeman. I'm the executive director of the Edmonton Region Hydrogen Hub, and I would like to thank the standing committee for this opportunity to contribute to your deliberations on the topic of energy exports.

While I recognize the scope of the committee is significantly broader than just the exports of clean fuels like hydrogen, it is important for the committee to have an appreciation of the challenges and opportunities related to the export of hydrogen to global markets, which were identified in the Canadian hydrogen strategy.

The Edmonton region of Canada plays a very strategic role in Canada's hydrogen economy. Our region has been producing hydrogen for heavy industry applications, like oil refining and upgrading, chemicals production and fertilizer production, for over 30 years. The Edmonton region is home to world-leading, low-carbon hydrogen production projects, starting with the Quest project, which was supported by federal and provincial governments more than 10 years ago.

Through projects like this, our region's leaders identified the opportunity we have to play a major role in the future hydrogen economy. Their vision positioned our region as home to Canada's first hydrogen hub over five years ago. Since then, the region has seen final investment decisions being made on some of the largest low-carbon hydrogen production projects in the world. These projects are enabled by Canada's low-cost natural gas; our carbon capture, utilization and storage infrastructure; and our experienced and innovative workforce.

The Edmonton Region Hydrogen Hub looks to build on this track record by creating the conditions to accelerate the use of hydrogen across a diverse range of sectors, including commercial and municipal fleets, heat and power opportunities and emerging industries. The hub serves as an ecosystem convenor, a systems integrator and a policy advocate.

Our partners are the economic development agencies from the region, Alberta's Industrial Heartland Association and Edmonton Global, but also the Edmonton International Airport, which is advancing hydrogen use across the airport ecosystem, and Alberta Innovates.

Our mandate is to build enabling conditions for increased hydrogen use within the Edmonton region across a range of sectors, and we also work closely with our partners to connect domestic producers to export markets. The hub realizes that to de-risk future investments in hydrogen supply and demand, exports need to be part of the equation, just as domestic use of hydrogen is critical for de-risking international export projects.

Several hydrogen companies have also explored the production of hydrogen for export markets. Over the past seven to eight years, the focus has been on the conversion of hydrogen into low-carbon ammonia, or blue ammonia, to serve the Japanese and South Korean markets. These projects were being explored with key players from these markets, such as Japanese trading houses, as well as power production companies looking to blend ammonia into their generation facilities in Asia.

These ammonia export projects, however, have not proceeded due to the complexities and costs associated with transporting ammonia safely out of our region by rail to the port of Prince Rupert. Ammonia, however, is just one pathway for export of our region's clean fuels. Leading global companies, like Kawasaki Heavy Industries, believe liquid hydrogen has several advantages over other clean fuels like ammonia, and it's developing the technologies needed to ship liquid hydrogen across the Pacific Ocean. It's also developing the technologies needed to move liquid hydrogen from the point of production, like the Edmonton region, to the Pacific coast ports.

In fact, just last week at the Canadian Hydrogen Convention in Edmonton, Kawasaki entered into a memorandum of understanding with the Edmonton Region Hydrogen Hub, Alberta's Industrial Heartland Association and Edmonton Global to explore how we can put in place the critical infrastructure to get some of the world's lowest-cost low-carbon hydrogen to the markets that need it the most. Realizing this opportunity, which is intended to serve the post-2035 Japanese market, requires that we start preparing today.

Today, we're realizing the benefits of the LNG investments that started in the 1980s to build the specialized ships and port infrastructure needed to move this product. Establishing the necessary hydrogen supply chain infrastructure from point of production to our export terminals will also take time and require strong and coordinated support from government and industry.

Before concluding, I would like to highlight other ways that hydrogen hubs can support the export of cleaner fuels to global markets.

While we need to get our products to export terminals on the west coast, the east coast and, eventually, even to northern ports like Churchill, we also need to ensure our shipping of products to these ports by trucks and by trains is undertaken in a low-carbon manner. The Edmonton Region Hydrogen Hub is working with other hubs to make these connections to ensure our transportation corridors can utilize hydrogen and other clean fuels. We've launched a western Canada hydrogen corridors initiative to do just that. The hub is working with global leaders like Hyundai Motor Company to bring its fuel-cell truck technologies to our major transportation corridors.

We're working with Canada's CPKC to show that Canada's Ballard fuel cells can be used to decarbonize freight rail, and we're bringing hydrogen-diesel dual-fuel technologies developed by Edmonton-based Diesel Tech Industries onto Canadian highways, offering an innovative and low-cost alternative for getting hydrogen used by our transportation fleets.

In closing, Canada is being identified by leading hydrogen-consuming nations, like Japan and Korea, to be a supplier for their energy needs. Today and in the future, hydrogen will play a key role in global market segments like transportation and heavy industry. It will also play a role in how we get our products across Canada so that they can be sent to export markets with a low-carbon intensity footprint.

Hydrogen hubs play a key role in helping to de-risk hydrogen projects, identify future demand and ensure that Canada is working to advance critical enabling infrastructure.

I appreciate having the opportunity to speak to the standing committee and would be happy to answer your questions.

[The Chair, Liberal, Terry Duguid]

Thank you, Mr. Lakeman.

Now, we will begin our round of questions for the second panel.

Mr. Rowe, we're going to start with you for six minutes.

[Jonathan Rowe, Conservative, Terra Nova—The Peninsulas, NL]

I'll start my first question close to home with Mr. Estabrook.

German officials came to Newfoundland a few years ago, and Canada and Germany jointly pledged $600 million to a wind turbine and hydrogen project. Lately, I've seen some CBC articles that say they're waiting on more federal funding decisions for exporting hydrogen.

Do we need federal funding decisions from this government, or is Germany also going to be pitching in? Should the Canadian government be subsidizing energy for other nations? It seems a bit backwards to me.

[Derek Estabrook]

Thank you for the question.

First, I'll clarify something. I believe the $600 million you're referencing is the money that Germany and Canada committed to the H2Global auction. This is a two-sided auction process. Back in 2024, the German government and the Canadian government each committed approximately $300 million in funding to essentially be a contract for difference.

Project developers for green hydrogen export in Canada will be able to bid in, and the suppliers that bid the lowest price will be successful in that auction. Then, a second auction will happen in Germany for customers for that green hydrogen or its derivatives, and the customers who bid the highest amount will be successful. The money in the $600-million pot will be used to bridge that gap between the lowest supply price and the highest demand price. That is the way the auction is intended to work.

There was a second part to your question. Should Canada be subsidizing energy that's going to Germany? That's an important question. I would frame this by saying that this money will kick-start the green hydrogen export sector in Canada. It's an important investment to get the early market developed. Once the market gets going, the goal is for it to become self-sustaining. Like the wind, solar and battery industries, it's hard to get these markets going quickly enough and scaling up rapidly enough to become self-sustaining without that initial support.

[Jonathan Rowe, Conservative, Terra Nova—The Peninsulas, NL]

We see that in other industries like mining and oil and gas. Where I see the difference is that—I'm hoping someone's going to prove me wrong—I don't think we're getting any royalties from the hydrogen that's produced from wind turbines or solar farms. We're not getting any royalties from that, as a federal government, to pay or bid down those initial incentives. I don't understand how the Canadian taxpayer is going to gain anything by subsidizing an industry that's providing energy to foreign nations. I'll leave that there.

I have a question a bit farther away from Mr. Lakeman's region. I went to the energy expo in Edmonton, and there was a lot of excitement. Big things are happening with hydrogen in Alberta. I saw diesel trucks that had diesel engines converted to use hydrogen. There was a lot of other stuff there for that. It was amazing.

I'm always surprised that the province with the most oil and gas, and the most natural gas, has used its resources to be the leader in hydrogen, and other provinces in Canada, which often scream the loudest about the environment or scream the loudest against oil and gas, against the oil sands, have not done what you have done in Alberta to lead in that way. To me, that's a bit hypocritical. I think it's amazing that you have done that.

I'd like you to expand on where you see yourself in the next few years.

[Brent Lakeman]

We're in a very fortunate position in our part of Alberta, particularly the Edmonton region. We provide the vast majority of Alberta's hydrogen that's being produced. Alberta is by far the largest producer in Canada when you look at the industries that it supports.

Our advantage is that we have a large industrial offtake right there. That's the starting point. These are industries that need hydrogen for their processing and now, increasingly, low-carbon hydrogen coupled with carbon capture and storage opportunities. We have experience now. We've been doing it for 10 years at a commercial scale, and not many parts of the world can say that. We're very proud of that, and we're continuing to improve.

The other part of it is that technologies that were put in place 10 years ago are wonderful, but they're improving. We're doing better and better. Now it's about unlocking new markets for the hydrogen. That's where we are. There are some challenges, of course, in how we unlock those markets and new sectors such as heavy-duty transportation. What is the driver for it? We're spending a lot of time looking at that and at what the role of government is as we advance hydrogen use applications.

The point is to advance this industry. Canada has a huge opportunity, certainly my part of Canada does. What's that coordinated process? We have federal and provincial incentives that are very strong in Alberta, but we also need certainty. What does that carbon market look like as you advance hydrogen use in new sectors? It is somewhat dependent on carbon policies and things like the Canada-Alberta MOU. That plays a critical role in moving things forward so that we have the certainty and we understand the value of carbon credits as we move forward.

We see huge opportunity for Canada and huge opportunity for Edmonton, not just in heavy-industry applications but as we look at new applications and new areas like data centres and defence.

[The Chair, Liberal, Terry Duguid]

Thank you, Mr. Rowe.

Thank you, Mr. Lakeman.

Mr. Hogan, you have six minutes.

[Corey Hogan, Liberal, Calgary Confederation, AB]

Thank you, Chair.

Mr. Estabrook, I know you said that your region is closer to Hamburg than Calgary geographically, but on behalf of Calgarians, let me just say that we hold you close and we feel grateful to share so many bonds with your region. Of course, one of those bonds is that both of our regions have immense opportunity for hydrogen.

Canadians have an abundance of energy options. There's not going to be one winner in the energy conversation. I think that is something we hear time and time again at this committee and is something I certainly agree with. There will be different solutions for different use cases.

Mr. Lakeman began to go down this road. I'd like to ask you both this question, and maybe we'll start with you, Mr. Estabrook. For our report, I wonder if you can expand on some of the use cases hydrogen is best situated for.

[Derek Estabrook]

Thank you, Mr. Chair.

I assume that you're asking about use cases both in Canada and in export markets.

[Corey Hogan, Liberal, Calgary Confederation, AB]

Absolutely. Because this is an export study, I might even be export-focused for the purposes of this conversation.

[Derek Estabrook]

The good news is that I think the best applications in other parts of the world are the same applications as in Canada. I think any jurisdiction, globally, that has ambitious emission reduction goals is going to need other sources of clean energy besides electricity.

One of the sectors that is a best use case for low-carbon hydrogen and its derivatives is heavy transportation, as Mr. Lakeman mentioned. Hydrogen fuel cells provide long-haul trucks with the amount of torque, the range and the short refuelling times that are required for those long distances, as well as other types of heavy long-haul transportation. You'll think of trains and marine vessels—especially large ones. Once you get beyond the range of what you can realistically achieve with a lithium-ion battery, hydrogen fuel cells become very important. That's one sector.

A little bit further down the road is the aviation sector. While it may be possible to decarbonize some small, short-haul flights with battery electric technologies, for long-haul flights—think across the ocean—we're likely going to need some combination of sustainable aviation fuel that is made from hydrogen and/or fuel cells. There's actually an organization in Canada called H2CanFly that has support from several large players in the aviation sector. It's doing work in that area right now to figure out how to decarbonize aviation.

Another important sector is industrial applications, especially heavy industry that needs high temperatures. Whenever you need combustion to make things like steel, bricks or aluminum, it's very difficult to do it with electricity. You really need to combust something. That's why natural gas or even coal is important in that sector. In the long term, you can burn green hydrogen or blue hydrogen for those types of industrial facilities.

[Corey Hogan, Liberal, Calgary Confederation, AB]

I want to give Mr. Lakeman a chance to get in.

Also, I'll congratulate you, Mr. Lakeman, while I have the mic, on the MOU with Kawasaki. I think it's another example of how it's an exciting time to be in energy in Canada right now.

I'm wondering if you can answer that question, and maybe also throw in your view.... You talked a bit about markets and how we can serve markets. What are those markets looking for? Are we competing on price? Are we competing on carbon? How do you see that evolving in the future?

[Brent Lakeman]

Sure, I'm happy to.

Mr. Estabrook gave a great overview of the key end-use sectors for hydrogen. I can't add a lot. We certainly have been starting with heavy industry—again, refining chemical production, where it's already been used for decades. Then we'd look at new sectors and industrial sectors as well. You mentioned sustainable aviation fuels. Glass and cement are a couple of other ones. We don't necessarily have.... We have a cement plant that's decarbonizing, but not through hydrogen. It's through carbon capture and storage. In other jurisdictions, that may be the case, like with glass manufacturing as well.

A couple that didn't get mentioned.... You may have mentioned rail. Certainly rail has been a big success story here with the CPKC locomotive program. It started in Edmonton and Calgary, expanded across British Columbia and I think it's now expanding into the United States. That's an ideal heavy-duty transportation application for hydrogen that we can build off of for sure.

There were a couple that weren't mentioned. We know that the defence sector is looking at its own energy requirements, and it thinks hydrogen can play a very significant role. There are some unique applications around drone technologies and other military applications. I think some of the Canadian hydrogen expertise could well be applied in defence. Data centres still seem to be a little on the expensive side for using hydrogen, but I think there may be some niche applications for hydrogen with data centres, particularly for the backup power requirements that a data centre may have. I think those are some additional ones to round it out.

Your question was on the markets internationally. We're certainly focused mainly on the Asian markets—really, Japan and South Korea. They certainly want a secure, stable provider. The main comment I would make is security of supply.

[The Chair, Liberal, Terry Duguid]

Thanks so much.

Mr. Simard, you have the floor for six minutes.

[Mario Simard, Bloc, Jonquière, QC]

Thank you very much, Mr. Chair.

Mr. Estabrook, I'm going to start with a small friendly correction. In your answer earlier, you said that industrial sectors need hydrogen in their processes. You highlighted the aluminum sector by saying that electricity doesn't make it possible to produce heat. Where I'm from, in Saguenay—Lac‑Saint‑Jean, we have been making aluminum with hydroelectricity for more than 100 years. The electrolysis process happens mainly with aluminum. I'm noting that in a completely friendly way.

I would like to tell you that I'm open to the use of hydrogen. I had many discussions about this with the former minister of energy and natural resources, Mr. Wilkinson. I remember very well that we even had a meeting with the people from Siemens, who told us that the governments might be ready to accept a higher production cost by providing subsidies to pay for it. That may be a good deal. You explained your auction method. The market has to be developed properly, so I completely understand that.

However, the people from Siemens said that the governments would never want to take on one thing, which was the technological cost. The people from Siemens told us this because they didn't believe in the possibility of making hydrogen with carbon capture and storage strategies. You will understand what I mean. The idea would be to produce hydrogen from gas, and there would be a carbon capture and storage strategy alongside it. They told us that if the production cost and the technological cost were combined, the total cost would be too high for it to become a worthwhile energy molecule.

I'd like to hear your comments on that specifically

[Derek Estabrook]

Thank you for the question.

I don't want to put Mr. Lakeman on the spot.

Your question was specifically about carbon capture and storage associated with blue hydrogen production. That's not an area where Atlantic Canada has had much focus. Our focus has been almost exclusively on the production of green hydrogen through electrolysis.

[Mario Simard, Bloc, Jonquière, QC]

I'm sorry, I'm off my game.

Mr. Lakeman, I'd like to let you answer that question. Forgive me, I have a cold, and I'm not all there.

[Brent Lakeman]

I'd be happy to try.

Carbon capture and storage or blue hydrogen is how we're seeing not all of the hydrogen produced in our region but the significant majority of it. That would probably be considered the most low-cost way to get to a low-carbon hydrogen outcome.

We're very fortunate to have world-class geology in the western Canada sedimentary basin. I have been involved in studies that have looked at other parts of Canada and storage potential, which does exist. It exists in Ontario and parts of Quebec—that's my understanding—as well as Atlantic Canada, but it doesn't necessarily have the maturity and all the characterization that has been done. That's really important as we move towards these projects. It's about having a deep understanding of the geology. You're going down two kilometres and having it actively characterized. That's the starting point.

We're seeing some technology innovation, as I mentioned. We're able to understand the geology and how carbon capture can work using AI technologies, for example, to continue to drive down the cost.

I think this was mentioned earlier: What the market is looking for is low-cost hydrogen. They're somewhat agnostic on whether it comes in blue, green or any other colour of the rainbow. They are looking for carbon reductions.

[Mario Simard, Bloc, Jonquière, QC]

Thank you very much.

Mr. Estabrook, I'd like to go back to the previous discussion you had.

I see two main challenges: infrastructure and exports.

The people I talked to about hydrogen said that, first of all, the best solution was to think about it in terms of short loops. It would be used in a network very close to where it would be produced.

Before we think about exporting, shouldn't we think about developing infrastructure to use hydrogen in short loops?

[Derek Estabrook]

Thank you, Mr. Chair.

You are correct on the cost. To transport hydrogen is quite expensive and using it as close as possible to the source of production is optimal. I would also say, though, that exporting hydrogen and using it domestically are not mutually exclusive. I think there are opportunities to do both successfully.

I will reference the Strait of Canso area in Nova Scotia, which is very close to the proposed location for the EverWind fuels green ammonia export project, as well as the sustainable aviation fuel project of Nova Sustainable Fuels. While these projects are focused on producing hydrogen derivatives for export, once they are in production there are local industries that can also use those sources of hydrogen.

Specifically, the Strait of Canso region has just completed a feasibility study to determine how hydrogen and its derivatives can be used in that local area. In the Strait of Canso, there's a coal-fired power generating station. There's a wallboard plant. Port Hawkesbury Paper has a large pulp and paper facility there. They are all very large energy users that could really benefit from that hydrogen. Frankly, they would benefit from a lower cost to use that hydrogen than that same hydrogen that's converted to ammonia and then exported.

[The Chair, Liberal, Terry Duguid]

Thanks to both of you.

Mr. Martel, you have the floor for five minutes.

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

Thank you, Mr. Chair.

Mr. Estabrook, under the current economic conditions, would hydrogen really become competitive without massive financial support from taxpayers?

[Derek Estabrook]

Thank you for the question.

It depends on what you mean by “compete”. If you're asking if it can compete with legacy fossil fuels, either oil or natural gas, I think the answer to that question in the short term is no. However, for jurisdictions that are focused on rapid decarbonization, we can only get so far with electricity directly. If we want to decarbonize sectors that are difficult to decarbonize with electricity, we're going to have to look at other options, and hydrogen and its derivatives become the best option for some of these other sectors.

Secondly, I would say that in many parts of the world, the 80% of countries in the world that are dependent on imported fossil fuels, energy security and resiliency are almost more important than decarbonization for them right now. They are really aggressively looking at how they can either diversify away from imported fossil fuels or, over the longer term, transition away from them.

Similarly, they're not so much looking at what the cost is of a barrel of oil or a gigajoule of natural gas. They're saying that if those aren't viable options, either for energy security reasons or for emission reduction reasons, they're really only looking at what is the best low-carbon option. In many sectors, hydrogen and its derivatives are their best option.

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

Canada has signed hydrogen export agreements with Germany that have fairly close deadlines, but no significant volume of hydrogen has been delivered.

What are the main obstacles that explain this discrepancy between the announcements and the reality?