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Josie Osborne, B.C. minister of energy, mines and low carbon innovation, speaks during an announcement at the Tsleil-Waututh Nation, in North Vancouver, B.C., on June 15, 2023.DARRYL DYCK/The Canadian Press

The B.C. government is backing the concept of producing hydrogen despite concerns about whether there will be enough electricity supplies for new industrial customers.

While British Columbia is blessed with hydroelectricity, generated mostly by BC Hydro, provincial Energy Minister Josie Osborne said she is well aware of the challenges that will arise from increased demand from aspiring hydrogen exporters such as Australia’s Fortescue Ltd. FSUMF

“Being able to export to countries that are looking to decarbonize their energy systems, like Japan for example, is an opportunity that we don’t want to pass by,” Ms. Osborne said in an interview.

Fortescue is keen to produce “green hydrogen” in Prince George, B.C., for domestic consumption and for exporting to Asia, using ammonia as the carrier for hydrogen exports. Green hydrogen is the cleanest version of hydrogen, but it requires huge amounts of renewable energy such as hydroelectricity.

The B.C. government views green hydrogen as having economic potential, Ms. Osborne said. “British Columbians want to see these kinds of investments and they want to see our energy be used to create jobs and benefits for communities, and that’s not cryptocurrency mining.”

She made the comments three months after a leaked memo showed her privately wondering about ways to gain “some leverage with companies like Fortescue.”

Stephen Appleton, Fortescue’s country manager in Canada, said a transmission line of only one kilometre is required for the company to connect its planned Coyote hydrogen project in Prince George with BC Hydro’s Williston substation.

While Fortescue is hoping to win regulatory approval for its Coyote plans in B.C., the company is also examining other options, including in the U.S. Pacific Northwest. In October, the Biden administration announced regional programs to create seven hydrogen hubs across the United States, with US$7-billion in funding.

In her interview with The Globe and Mail, Ms. Osborne said she recognizes the need to balance power supply and demand. “It’s an important consideration and it’s definitely challenging when you have a handful of projects that are proposing to use more energy than is being created right now,” she said. “It’s really important that we’re having these conversations with companies like Fortescue and understanding what their goals are.”

Last month, the B.C. government unveiled BC Hydro’s 10-year capital plan for investing $36-billion for new infrastructure and boosting supplies of electricity in the province, or 50 per cent higher spending than previously planned.

Statistics from B.C.’s Energy Ministry show that while BC Hydro’s Powerex Corp. trading subsidiary was a net importer of electricity last year, BC Hydro was a net exporter when measuring the past five years from 2019 to 2023.

BC Hydro has plans to expand wind and solar for generating electricity, notably from independent power producers contributing to the grid. “The call for power by adding wind and solar into our system makes us more resilient to climate change,” Ms. Osborne said.

Still, critics warn that BC Hydro’s water levels at key reservoirs are currently at below-average levels.

Barry Penner, chair of the recently formed advocacy group called Energy Futures Initiative, said in a statement that the low snowpack underscores the Crown corporation’s vulnerability to being forced to import electricity from the United States.

“We could be self-sufficient. But years of underestimating growing demand and a lack of diversification has left us dependent on others,” said Mr. Penner, who served as a provincial cabinet minister when the BC Liberals, now named BC United, were the governing party.

B.C. Premier David Eby’s NDP government will be seeking re-election in October.

Industry proponents of green hydrogen say there is only a small amount of emissions during production, compared with higher levels in blue hydrogen, which is derived from natural gas and requires carbon dioxide to be captured and stored. The usage of hydrogen itself doesn’t emit CO2.

Other energy proposals in B.C. include one from the McLeod Lake Indian Band, which envisages producing both green and blue hydrogen.

Fortescue is eyeing shipments of ammonia through a new export facility being designed to handle lower-carbon commodities.

Fortescue plans to transport ammonia by rail, using Canadian National Railway Co.’s tracks from Prince George to Trigon Pacific Terminals Ltd.’s new export facility, which is slated to open in 2027 at the Port of Prince Rupert on the West Coast.

Trigon’s $163-million project is dubbed “Berth 2 Beyond Carbon,” or B2BC. The federal government is contributing $75-million toward B2BC’s construction.

Fortescue would produce green hydrogen under a process known as water electrolysis, in which hydrogen is captured as fuel after being split from oxygen.

The company expects that it will require 900 megawatts of power capacity for the electrolysis process for hydrogen and another 100 megawatts for ammonia synthesis.

For perspective on how much power that represents, the $16-billion Site C hydroelectric dam in northeastern B.C. will add 1,100 megawatts of capacity when fully completed.

Geoscientist David Hughes wrote a wide-ranging report, released earlier this month by the Canadian Centre for Policy Alternatives, to draw attention to the challenges ahead in tackling climate change. There is an array of measures designed to help attain net-zero emissions by 2050, but Mr. Hughes cautions that green hydrogen is expensive to make and there is a lot of energy lost in the production process.

Fortescue’s goal is to have output of 140,000 tonnes a year of green hydrogen and 700,000 tonnes a year of green ammonia.

The company is seeking regulatory approval from the B.C. Environmental Assessment Office for its Coyote project, which would be built on the Willow Cale industrial site in Prince George.

The location is on the traditional territory of the Lheidli T’enneh First Nation.

Australian billionaire Andrew Forrest, the founder and executive chairman of Fortescue, travelled to Prince George in September and met Dolleen Logan, the elected chief of the Lheidli T’enneh.

Fortescue’s Coyote project would create economic benefits and generate jobs for Indigenous people, Ms. Logan said in an interview last week in Vancouver, after she spoke at the Globe Forum 2024 conference on sustainable business.

“I think the membership likes to see us moving forward in some form and not being stuck,” she said. “They still want to see our nation grow.”

BC Hydro chief executive officer Chris O’Riley said Indigenous participation will be an important component of plans for the North Coast Transmission project that would run along the existing route of the B.C. line between Prince George and Terrace.

He said BC Hydro is committed to the Indigenous co-ownership model for the North Coast twinning. Industry experts say it could take eight years before the project is completed.

“We’re making good progress and I don’t really want to speculate on the timeline,” Mr. O’Riley said in an interview. “We recognize the imperative to get that line done as quick as we can and we’re working hard at that.”

The North Coast twinning project would help decarbonize production of liquefied natural gas, critical minerals and hydrogen, according to K’uul Power, a non-profit corporation that is seeking to foster collaboration between First Nations and BC Hydro.

“The green energy sector absolutely needs as much power as it can get,” said Wesley Sam, elected chief of the Ts’il Kaz Koh First Nation and chair of K’uul.

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