A clean fuel facility planned for Terrace, B.C. will be using renewable energy to produce up to 50,000 tonnes of hydrogen at full capacity, and have carbon capture equipment in place to offset emissions.

Oakville, Ont.-based Source3 Energy X Inc. and the Skeena Industrial Development Park will be collaborating on the Skeena Clean Hydrogen Hub, according to a memorandum of understanding signed in July.

The hydrogen will be made using electrolysis powered by a wind farm (called green hydrogen) and natural gas (blue hydrogen) from the province. Synthetic fuels and sustainable aviation fuel are also expected to be produced.

It is a “natural progression” for a renewable energy developer to dive into synthetic fuels and hydrogen, Source3 Energy X CEO Ayaz Khokhar told Sustainable Biz Canada in an interview.

The company is a sibling of Source3 Energy Inc., which has developed, financed and engaged in mergers and divestitures for renewable energy projects around the world, including Canada. Source3 Energy has developed and financed 1.7 gigawatts worth of projects, Khokhar said.

The Skeena Clean Hydrogen Hub

The Skeena Industrial Development Park is a joint venture between th City of Terrace and the Kitselas First Nation intended to host industrial developments.

Source3 Energy was attracted to B.C.’s excess hydropower, supportive regulatory framework and high local demand, Khokhar explained.

The hydrogen hub will produce equal proportions of hydrogen from green and blue sources starting 2026. Production is expected to range from 25,000 tonnes to 50,000 tonnes per year, and ramping up over time.

The hydrogen is expected to be used to decarbonize transportation and difficult-to-abate industries such as steel refining and mining operations. “The (hydrogen) industry itself is in transition. It has the right momentum,” the CEO said.

Drop-in fuels such as synthetic diesel and synthetic natural gas that can replace fossil fuels are also expected to be made.

Carbon capture equipment will be installed to offset the greenhouse gas emissions. The captured carbon will be shipped to markets in Asia or stored in Alberta’s heartland, Khokhar said. An equipment provider heas not yet been finalized.

The price tag for the hub is expected to be over $1 billion. Source3 Energy X is working with private equity firms, a major Canadian utility and European developers to acquire the funding, which will come in the form of project financing in equity and debt.

Series A funding for Source3 Energy X has been closed, which will be announced in October.

Source3’s hydrogen clusters in Canada

Source3 Energy X has plans to establish two hydrogen fuel clusters on the east and west coasts of Canada.

On the East, it is developing Project Taqamkuk in coordination with the Miawpukek First Nation of Newfoundland and Labrador. More details will be announce in mid-November.

In B.C., it plans to build a hydrogen facility on a former Fortescue site in Prince George. There too Source3 X Energy is negotiating with the local First Nations. There is “huge appetite” for blue ammonia in Asia, so the company is commencing a study for the site to explore natural gas-based production paired with carbon capture.

Additionally, Source3 Energy X expects to expand to Ontario to produce synthetic fuels and hydrogen.