As the movement towards a cleaner future continues to accelerate, industries across a wide spectrum are pressing on with green initiatives in order to meet net zero carbon emissions by 2050.
Enter green hydrogen, which is hydrogen that is produced by renewable energy or from low-carbon power. Green hydrogen produced by the electrolysis of water is under 0.1 per cent of total hydrogen produced and holds an incredible amount of potential in meeting renewable energy demands. At present, however, most of the hydrogen produced worldwide is gray — meaning it is produced from natural gas.
In other words, where green hydrogen uses purely renewable sources, other methods of hydrogen production use fossil fuels, which account for 96 per cent of overall hydrogen production.
As the shift towards reducing net zero carbon emissions continues to advance, green hydrogen will become a dominant force in reaching that goal. In 2021, it is estimated that the green hydrogen market was valued at US$1.83 billion and is projected to surpass roughly $89 billion by 2030, growing at a compound annual growth rate of 54 per cent during the forecast period.
Notably, the green hydrogen market is focused on investing in implementing procedures that will reduce production costs and improve overall infrastructures.
Headquartered out of Brossard, Quebec, Charbone Hydrogen is the only pure-play green hydrogen producer listed on the TSX Venture Exchange, having gone public in May of this year.
The company is still relatively young — founded in May 2019 — but has a promising future ahead as it looks to produce green hydrogen from hydropower generation facilities.
The only pure play green hydrogen producer in Canada
At present, the company has an established sales and distribution network with one of North America’s largest gas distributors in Superior Plus.
Through the partnership, Superior Plus will supply and distribute green hydrogen to Superior’s commercial and industrial clients. The partnership aims to make hydrogen fuel affordable and convenient for companies looking to reduce carbon emissions by using green energy sources.
“This exclusive supply arrangement with Superior is a highly important milestone for Charbone and sends a positive market signal that our modular and scalable regional hub concept works in the new hydrogen market sector,” Dave B. Gagnon, chairman and CEO of Charbone, said in a press release “The agreement will allow both parties to produce, develop, sell and distribute green hydrogen throughout an extensive network in North America and will offer Canadian industries and others, a new clean energy solution alternative to start the energy transition now”. Charbone also received approval from the “Ministère de l’Environnement et de la Lutte contre les changements climatiques” of Quebec, the certificate of environmental authorization to produce up to 5.5 MW green hydrogen at the Sorel-Tracy CHARBONE Hydrogen facility for the phase 1, 2 and 3. The company said the project has also already received preliminary on-site civil works construction permits from the municipality of Sorel-Tracy.
“What an exciting moment for the CHARBONE team and our shareholders to see the start of the construction of this first, 100% green hydrogen facility in Quebec and most probably in Canada, fully dedicated to replacing the gray industrial hydrogen actually used in the process gas market” said Dave Gagnon, CEO and Chairman of CHARBONE. “I’m really proud of our team, which has worked hard since the last 30 months to get this project on track and start construction.”
In an interview with the Market Herald, Stephane Dallaire, head of corporate finance at Charbone, said that the company is advancing its efforts in order to obtain the ECO-responsible certification with the Eco Responsible Program, which he said should be received in Q3 or Q4 2022. He also said that the Company expects to receive its B-Corp. Certification by Q1-2023. As such, this would make Charbone one of the first green hydrogen producers in Canada to receive the certification.
Similarly, through the acquisition of small hydropower plants and Charbone’s management team’s ability to optimize production, the company will be able to ensure stable revenue streams while investing, developing and producing green hydrogen for a wide range of industries and, in the future, transportation.
“Part of [Charbone’s] strategy is getting cheap power,” Dallaire said. “We are looking to buy small plants to support the growing green hydrogen market.”
Additionally, Charbone has also executed a memorandum of understanding with Port Hawkesbury Paper to build the first green hydrogen production facility at the Port Hawkesbury Mill Site in Nova Scotia.
Charbone is expected to be responsible for sourcing renewable energy through separate discussions with local power producers. It is currently expected that Charbone will be responsible for the sale and distribution of its green hydrogen in the Maritime provinces.
Furthermore, Charbone recently signed a lease agreement with the city of Selkirk, Manitoba to bring the provinces first green hydrogen regional hub “one step closer to reality”.
“This is great news for the City of Selkirk,” Johannson said, “We pride ourselves on our efforts to reduce Greenhouse Gas emissions, to integrate climate change into our daily business and to be greener in every way possible. Having Charbone see what we’re doing in Selkirk and like what we have to offer, is fantastic. We have been encouraging sustainable development and attracting new businesses to Selkirk which will help grow the economy and potentially provide hundreds of new local jobs. It’s great news for the city and our citizens.”
The focus on smaller markets
Dallaire said that the company is the first in Canada to have a strategy that pairs green hydrogen and hydropower together by acquiring small hydropower plants and controlling capacity in order to produce green hydrogen.
“What [Charbone] is looking to do today, we’re looking for small hubs near growing markets,” he said, adding that the company will be targeting bigger markets as the markets give it the opportunity.
Dallaire explained that focusing on smaller markets gives the company a competitive advantage in the green hydrogen power space because one of the key challenges in the market is how green hydrogen is transported.
In addition to being produced, green hydrogen needs to be transported and then stored where it’ll be consumed. As such, Dallaire said that developing green hydrogen in small markets near growing hydrogen markets will reduce transportation issues. He further added that the cost of transporting green hydrogen is another factor to consider, especially when it comes to the markets Charbone is wanting to target.
Dallaire exemplified that transporting compressed green hydrogen from one of the company’s hydrogen plants in Quebec beyond mid-Ontario and northeast of New York, would not be feasible economically. He said this is because the most compressed green hydrogen that can be transported is 250 kilograms. In addition to the cost of compressed green hydrogen, the cost of transportation would make it impossible to be profitable.
“That’s why it’s very important for [Charbone] to be very close [to distribution hubs],” he said.
The benefits of green hydrogen
Despite the challenges when it comes to transporting green hydrogen — at least for the time being — there are a lot more benefits to green hydrogen than meets the eye. Dallaire said that green hydrogen has zero emissions and that its by-product is oxygen.
“Green hydrogen is the future,” he said, “hydrogen — especially from water — is the most abundant element on the planet.”
In other words, hydrogen is the most abundant chemical element in nature while green hydrogen only emits water vapor and leaves no residue — meaning it doesn’t produce any emissions whatsoever.
Some of green hydrogen’s other key benefits are that it’s 100 per cent sustainable and versatile. Green hydrogen can be used for a wide range of use cases, in everything from commercial and industrial to mobility use cases. Green hydrogen can also be used with fuel cells in order to power electricity, including electrical vehicles and electronic devices.
That being said, despite its wide range of use cases and benefits, green hydrogen has yet to be used at a broad scale, which Dallaire said is because of its cost — although that will change with time and education, particularly as Charbone makes its presence known in the green hydrogen space.
The management team
Dave Gagnon, chairman and CEO
Dave Gagnon is a climate technology entrepreneur with more than 25 years of experience. His vision and his skill in establishing strategic partnerships have enabled him to develop a number of businesses internationally, each of which has been engaged in high-profile projects with both public and private entities. Mr. Gagnon is also a pioneer in the establishment and implementation of corporate values centred around the concept of sustainable development, having articulated and adopted policies in this field that would later become common practice throughout many industries.
In early 2000, Mr. Gagnon founded AAER, Canada’s only original equipment manufacturer (OEM) of utility-scale wind turbines (1.5 MW and more), partnering with and transferring the technology from leading European wind turbine manufacturers. Mr. Gagnon was instrumental in bringing on board major private and institutional North American investors. To develop its activities, AAER took over a decommissioned Hyundai car factory in which it builds a nacelle assembly plant as well as a wind blade manufacturing facility, for which AAER developed a unique know-how in high-tech composite materials.
Further to the tender for 2000 MW of wind energy issued by the province of Quebec in 2005, AAER’s wind turbine was qualified through the Hydro-Quebec due diligence review process. Over 2400 MW in projects using AAER wind turbines were submitted to Hydro-Quebec by leading developers like FPL (Florida Power and Light), Skypower Ltd, Algonquin Power and Utilities Corp., Ventus Energy Inc. and TransCanada Energy Corporation. Several communities and clients such as the US Marine Corps and Hyundai Heavy Industries purchased AAER wind turbines. In Europe, AAER entered into a partnership with Valorem, one of the most important French renewable energy developers. Under Mr. Gagnon’s management, AAER built out a North American supply chain, enabling the successful conversion of a number of companies to the wind industry.
Daniel Charette, COO
Daniel Charette is a renewable energy veteran and an entrepreneur who has been managing many sustainable energy companies for over 30 years. In the early days, when the Canadian wind energy sector began to be seen as a viable solution, he became a recognized executive within the renewable energy market.
In 1998, he was appointed Director of Manufacturing by Danish wind turbine manufacturer NEG Micon A/S to set-up the first Canadian wind turbine nacelles assembly plant. From 1999 to 2002, he established Canada’s first regional center for operations and maintenance of wind turbines for America’s largest wind farm. From 2002 to 2005, he acted as NEG Micon A/S’s National Sales for Canada and for Vestas Systems A/S. In 2005, he went on to Brookfield Renewable Partners LP where he acted as Business Development Manager for the Renewable Energy Division.
In 2006, he joined AAER as Senior Vice-president. AEER was the first pure play Canadian wind turbine manufacturer. Following the acquisition of AEER Inc. by Pioneer Power Solutions Inc., he became President of Pioneer Wind Energy Systems Ltd. He then went on to the Canadian subsidiary of NRG Systems, Inc. where he became Director of Operations for the tall-tower manufacturing and installation division. From January 2015 to February 2016, he acted as Project Manager at Leader Resources Services Corp. for the construction of wind, solar and storage energy projects.
Stephane Dallaire, CFO and head of corporate finance
Stephane Dallaire is an executive manager with over 25 years of experience in leading financial operations, private equity investments, mergers and acquisitions and asset dispositions in high technology, entertainment, telecom, information technology, solar and energy technologies. He has participated in financial and strategic partnerships at the international level, where he played a key role implementing and delivering high growth solutions for large institutions.
Mr. Dallaire has spent many years in the renewable energy sector as an Investment Manager at HydroQuébec – Capitech from 2001 to 2002, and as Chief Financial Officer and Executive Vice-President of Corporate Development at ICP Solar Technologies in 2003. From 2014 to 2018, he was a Managing Partner at Towerlook/Fidenti Global Partners, a boutique investment firm in Montréal as well as Chief Executive Officer of Platinum Corporation, an EHR software Corporation.
Furthermore, he has demonstrated expertise in financial valuation, venture capital and private equity at Société Générale de Financement du Québec from 1998 to 2001, after which, he acted as independent advisor from 2004 to 2013 and helped companies increase their value and improve their corporate performance.
The investment opportunity
As of the time of this writing, Charbone Hydrogen has a market capitalization of C$11.40 million a share price of $0.24, 46.52 million total shares and 47.26 million shares outstanding.
With green hydrogen poised to be a game changer when it comes to decarbonizing the environment, Charbone is at the forefront of this innovation as it strives to provide both the cleanest and best technologies available from worldwide sustainable leading suppliers.
As a newly listed company on the TSX Venture Exchange, Charbone is the first green hydrogen company listed and is striving to be the first Canadian green hydrogen facility with production expected to begin in Q4 2022.
Putting it simply, Charbone is reshaping the green evolution and, as the market begins to gain traction, investors won’t want to miss out.
FULL DISCLOSURE: This is a paid article produced by The Market Herald.