In-Depth
Fibre fuel: Canadian company looks to create hydrogen from marginalized wood

Two Canadian business magnates – one from the world of forestry and another the energy sector – have put their heads together for a new venture with a grand vision to see carbon air capture made economical in Canada by using the carbon concentrating power of trees to produce negative-emissions hydrogen. 

B.C. born and based Brian Fehr and Alberta’s Ian MacGregor are behind Hydrogen Naturally, a start-up that is planning to build natural air capture (NAC) hubs across North America, which will turn low value carbon-rich forestry residuals into hydrogen while permanently sequestering the carbon, creating the world’s largest carbon-negative fuel producer.

MacGregor is the founder of Calgary-based North West Capital who conceived and built with partner, Canadian Natural Resources, Canada’s first diesel refinery in decades at a cost of more than $10 billion. The refinery included the world’s largest blue hydrogen plant – hydrogen produced from natural gas, supported by carbon capture and storage (CCS) – as well as a dedicated CO2 pipeline called the Alberta Carbon Trunk Line. 

Fehr is the former sole owner of BID Group, a global sawmill equipment manufacturer. He now leads Brian Fehr Group, with companies across North America in renewables, mass timber, and construction services.  

Under their respective companies of Peak Renewables (Fehr) and North West Capital (MacGregor), together with a project team with decades of experience in the natural resources sectors, the entrepreneurs are creating a new hydrogen and CCS industry within the forest sector. 

Hydrogen Naturally’s recipe combines the carbon capturing power of trees with sequestration directly at the hydrogen production plant, creating a carbon negative fuel, Fehr says. 

“We are going to take marginalized fibre – like the waste or slash that typically gets left behind in the bush, the fibre that may have gone to a pulp mill in the past, and milling residuals where we can get them – and we’re going to pelletize it and we’re going to gasify it to create green hydrogen,” he says.

Fibre to fuel

The company’s concept starts at the harvest roadside. Hydrogen Naturally plans to begin its process collecting forestry residues – the marginalized fibre in Western Canada that is typically either piled and burned (per government regulation to prevent wildfires), or collected and sent to pulp mills, pellet plants or bioenergy plants. They’re not going to be picky, though; any leftover fibre residuals from wood products milling are fair game.

Those residues will then be pelletized for easy transportation to a centralized Hydrogen Naturally production plant. At the plant, pellets will be put through an enclosed gasification process and downstream separation to produce pure carbon dioxide and hydrogen. The carbon dioxide will then be compressed into a super-critical liquid and piped into a sequestration well underground for permanent storage.

The company estimates with an input of 600,000 tonnes per year of wood pellets to the first phase of a four-phase facility, they will produce 40,000 tonnes of hydrogen per year, and permanently remove a million tons of CO2 from the atmosphere. The hydrogen is ready as an “ultra green,” negative-emissions input for any industrial process that uses hydrogen – such as refineries, fertilizer plants, and chemical plants or as a transportation fuel.

Whatever the end use, the result is a carbon-negative fuel that the company has coined as Bright Green Hydrogen, which it says is “greener” than green hydrogen – hydrogen produced by electrolysis from renewable energy – and, after factoring in the value of the carbon-negative attributes, will cost around the same as blue hydrogen.

“There is far too much fibre left in the bush to be burned as slash or left to rot. Trees are burning in forest fires every year, and it’s getting worse,” Fehr says.

“With Hydrogen Naturally, we can turn it into a pellet and produce a fuel that is good for the economy. We can also capture and sequester the carbon that’s captured from the air and ends up in the wood pellet. And then, on top of that we can replant those trees so they become productive trees instead of marginal trees. That makes the hydrogen we produce carbon negative. That’s a game changer.”

Photo: Alberta Wildfire/Government of Alberta handout, May 15, 2023.

Canada’s historic wildfire season has underscored this critical solution set H2N offers. A century of fire suppression has built up an unnatural volume of fuel in Canada’s forests. Foresters have, for years, drawn attention to the need to reduce the catastrophic wildfire risk through landscape fire management, including forest fuel reduction through harvesting treatments. A challenge for industry is making those treatments economic.

H2N will provide incentives for harvesting contractors to haul out more residual fibre from the bush. Fibre that used to be slash and left in the woods can now be cleaned out and processed.

The company can also turn decadent wood – beetle killed, fire killed, and so on – into profitable pellets. Fehr notes the forest regenerates faster and wood that would otherwise contribute to the build-up of fuel in the forests is removed.

Project scope

With the majority of Western Canada’s current wood pellet production shipped to utilities overseas, Fehr says their hydrogen hubs will create a new, reliable market to keep wood pellet production and use local to North America. “It’s taking the pellet industry that is right now shipping overseas and turning it into a North American industry,” he says.

Hydrogen Naturally is eyeing four production plants, or hubs, in North America, beginning with the Alberta industrial heartland north of Edmonton. Each Hub will create 160,000 tonnes of hydrogen and store four million tonnes of carbon dioxide per year.

Last year, the company signed an agreement with Fort Nelson First Nation in B.C. to build their first pellet plant there, primarily using fibre that is controlled by the Nation.

Peak Renewables currently owns two sawmills in B.C. – in Vavenby and Galloway – as well as a finger joint plant in Cranbrook, B.C., an OSB plant in Prince Albert, Sask., and a wood pellet plant in Fort Nelson, B.C.

An integral component to the company’s success is First Nations partnerships, Fehr says.

“Peak Renewables is a company that was built to have ownership in forest products and bioenergy facilities – some of them will be 25, 35 or 45 per cent. The ones in Canada will all have First Nations ownership. We’re working on equity positions for First Nations in the towns that we work and we are very, very proud of that,” he says.

Project status

H2N has completed the first stage of pre-project planning and has identified candidate sites in the heartland area for Hub 1. Front-end engineering is progressing and will accelerate to full momentum by year end. Hydrogen offtake discussions are underway with many seeing the benefits of having a scaled supply of carbon-negative fuel offset emissions from conventional fuels.

“As with many projects Peak and North West embark on, the final investment decision is made at the same time when the founding investment is made; we finish what we start,” MacGregor says.

Because the H2N project straddles two industries that in the past have had little to do with each other, he says there is an excitement building within the federal, Alberta and B.C. governments regarding the benefits that such a partnership can bring.

H2N is using proven technology throughout the natural air capture process to react quickly to the targets governments are working hard to reach, MacGregor says. “We are using technology we have used before at scale, just in a new way and if we are going to hit net zero we need a carbon-negative solution now.”

While several forms of carbon removal are now being proposed, Hydrogen Naturally sees the cost of concentrating carbon as the major hurtle to making scaled air capture affordable. “Wood fibre is 50 per cent carbon thanks to the sun, we can’t squander this,” MacGregor says.

With Canada’s forest industry in a state of transition, most notably in British Columbia where government policy is limiting access to old-growth forests and legislating Indigenous rights to forest land, forest companies are integral to healthy change, Fehr says.

A big part of that change is a focus on using 100 per cent of the tree. Hydrogen Naturally can be a part of the solution, he says.

“Ian and I are very excited. We think we’re on to something really big, and it’s all about bioenergy,” Fehr says. •