If Newfoundland hydrogen companies pivot, government says it will collect royalties

Despite a lagging market for green hydrogen, the Newfoundland and Labrador government says it still plans to collect royalties from the province's nascent renewable energy industry.

Steve Crocker, minister of industry, energy and technology, says his department is keeping a close eye on developments in the industry and will come up with an appropriate royalty regime if any of the proposed wind-powered hydrogen operations pivot to focus exclusively on wind energy.

He also said the province's Crown power utility would weigh in if any of the companies are pitching to supply the province's power grid.

"This is a resource that, at the end of day, belongs to the people of Newfoundland and Labrador," Crocker said. "No different than we did for wind to hydrogen, we would certainly do for any other wind-type proposal."

Newfoundland and Labrador has a "fiscal framework" in place to collect royalties and benefits from proposed projects on Crown land that would use electricity generated by wind power to produce hydrogen. The benefits include fees for Crown lands, a $4,000-per-megawatt wind-electricity tax and water royalties that would kick in once the projects have recovered their costs.

The framework is specific to projects using wind power to produce hydrogen.

Six companies have reserved Crown land to develop green hydrogen projects in the province, but not all of them are up to date in paying fees they owe the government, The Canadian Press reported in June.

Last month, executives from some of those companies told an energy conference in St. John's, N.L., that they were eyeing wind-energy projects as the market for green hydrogen lags. The companies hope to use wind to generate electricity to produce hydrogen products, and then sell them to buyers in Europe.

It's been tough to secure binding agreements with buyers that would make their projects viable, the executives said.

In the meantime, several said they were eager for an expected call for renewable energy from Newfoundland and Labrador Hydro.

Jill Pitcher, a spokesperson for the utility, said N.L. Hydro expects to release an expression of interest for renewable energy "within the next couple weeks."

"Discussions on royalties or benefits would take place during the [expression of interest] process," Pitcher said in an email.

Crocker said his department has not received any "formal correspondence" from green hydrogen companies saying they intended to deviate from their wind-to-hydrogen plans. Any changes would have to be approved by the provincial government, he added.

The province is holding nearly 4,000-square-kilometres of Crown land in reserve for the six companies proposing wind-to-hydrogen developments on the island of Newfoundland. So far, one project — World Energy GH2's $16-billion project in western Newfoundland — has cleared the province's environmental assessment process. Three others are in the midst of it.