‘The time has finally come’: Canadian hydrogen fuel cell companies take off after working in the dark for years


Companies playing in the hydrogen fuel cell space have yet to capture the public imagination – but that could change soon

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Few people noticed this week when Vancouver-based Loop Energy Inc. announced that a German freight company could order 20 of its hydrogen fuel cells for use in a fleet of electric trucks.

The potential order from German company Rheintal-Transporte GmbH & Co.KG, which is to be phased out over the next two years, hardly suggests a green energy revolution.

“The numbers are not that massive,” said George Rubin, chief commercial officer of Loop at the Financial Post. “You mean 10 trucks here, 20 trucks there.”

But he added: “What you’re seeing right now are kind of the green shoots of this app, the first users coming in, and that’s why the numbers aren’t huge.”

After 20 years of research and development, Loop Energy is finally starting to market its patented eFlow hydrogen fuel cell technology. In February, the company raised $ 100 million in an initial public offering on the Toronto Stock Exchange, which was priced at $ 16 each.

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While market conditions appear favorable, the past few weeks have been turbulent for the company, with its share price falling from $ 17.20 on March 1 to $ 12.67 on Friday morning.

For many, the question of hydrogen cell technology, which is trying to catch up with lithium-ion battery electric vehicles as a viable means for a zero-emission vehicle, is whether it will take off or go extinct?

“It’s kind of the start of the adoption curve,” Rubin said. “When you think about it, especially in the context of all the complexities of introducing hydrogen – the fuel has to be there, the fuel and the infrastructure has to be developed… we’re almost like where the electric battery vehicles were 10 years ago.

The hydrogen fuel cells are located at Ballard Power Systems Inc.'s facilities in Burnaby, British Columbia.
The hydrogen fuel cells are located at Ballard Power Systems Inc.’s facilities in Burnaby, British Columbia. Photo by James MacDonald / Bloomberg Files

Of course, unlike battery-electric vehicles, where Tesla Inc. produces cars that win rave reviews for their quality and craftsmanship, companies that play in the field of hydrogen fuel cells have yet to captivate the market. public imagination.

In Canada, Vancouver has become a hub for hydrogen fuel cell companies, home to Loop Energy and the much larger Ballard Power Systems Inc. The two companies are targeting heavy-duty applications such as freight trucks, rail, ships and aviation, which they believe represent a more ideal use case for hydrogen fuel cells.

Like Loop, Ballard benefited from favorable market conditions. The stock had climbed to $ 52.33 per share in early February, from around $ 14.26 per share a year earlier, although it has slipped in recent weeks, trading at $ 28.60 on Friday.

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Over the past year, the company has entered into a joint venture agreement with Weichei Power Co., a Chinese state-owned engine company, in which the government has set a goal of bringing one million vehicles to fuel cell on the road by the middle of the next decade. Earlier this month, it filed a base shelf prospectus, announcing it could look to raise an additional $ 1.5 billion in the coming weeks.

Still as a technology, hydrogen fuel cells remain vague to the general public.

Rubin from Loop touted hydrogen fuel cells as a functional combination for diesel trucks, only with lower emissions. They won’t replace batteries so much as they will prolong their use, he said.

“If you need to store a lot of energy in the vehicle to, say, drive 800 kilometers, to pull a heavy load, or if you have a bus full of heavy people that has to leave on a cold day in winter, you have to needs a lot of energy on board to maintain the functionality of the vehicle, ”said Rubin,“ and the battery as a mechanism for storing that energy tends to get quite bulky, quite heavy.

This limits the amount of cargo you can store, the range of the vehicle and its functionality.

Hydrogen fuel cells can serve as a charger for the battery, he added.

In January, two BMO Capital Markets analysts, Jonathan Lamers and Kimberly Berman, released a report asking if “the time has finally come” to use hydrogen fuel cells in medium to heavy transportation.

There are obstacles, including the need for government policies to fund the necessary refueling infrastructure.

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A second major challenge is the decarbonization of hydrogen production. Although hydrogen, the most abundant element on earth, does not release CO2 when burned, it is only as clean as the energy needed to produce it.

There are at least three categories, including gray hydrogen, the most common, which is produced from natural gas; blue hydrogen, also produced from natural gas but when excess CO2 is captured and stored; and green hydrogen is produced using renewable energy.

Hydrogen tanks in Germany.
Hydrogen tanks in Germany. Photo by Alex Kraus / Bloomberg Files

Despite these obstacles, Lamers and Berman concluded: “Fuel cell technology… is in our view the primary alternative to diesel commercial trucks, particularly in the long-haul freight segment, and can enable a number of markets to expand. public transport buses that cannot be replicated by battery electric at this point.

Jonathan Cocker, partner in law with Borden Ladner Gervais LLP in Toronto, which specializes in environmental markets, said hydrogen as an energy source is poised to experience major growth as part of Canada’s current national strategy.

Launched in December 2020, the strategy predicts that hydrogen could grow to account for about 30% of Canada’s total end-use energy by 2050, and Cocker has suggested it could see billions of dollars of government investments and tax incentives over the next five years.

There are still many questions about hydrogen as a source of energy, including how to transport it and how to produce it cleanly, he said.

“We don’t have enough infrastructure and capital commitments to say that hydrogen is here to stay,” Cocker said, but added, “there is very little chance of decarbonising the economy. without hydrogen. “

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An in-depth report on The Logic’s innovation economy, presented in partnership with the Financial Post.

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