Ontario Doubles Down On Hydrogen For Energy As Countries Leave Table

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Ontario’s love affair with hydrogen was always going to be an expensive fling. But now it’s turning into a full-blown marriage—despite all the warning signs from older, wiser jurisdictions that have already filed for divorce. The province is doubling the Hydrogen Innovation Fund to $30 million, a tidy sum that could otherwise buy a fleet of electric buses, upgrade grid infrastructure, or—heaven forbid—actually reduce emissions in the next five years. Instead, Ontario’s taxpayers, via the Doug Ford Conservative government, are throwing money at a hydrogen dream that’s already wheezing its last breath in places like Norway and Australia, both of which were miles ahead into the hydrogen for energy dead end and are now backing slowly out, with wallets lighter and eyebrows permanently raised.

Let’s rewind the tape. Ontario’s hydrogen flirtation formally began in 2022, when the government released its Low-Carbon Hydrogen Strategy, proclaiming the province would be a “North American leader” in hydrogen production, storage, and end-use. The document was a masterclass in aspirational fluff—brimming with ambitious targets, vague frameworks, and a parade of buzzwords about innovation and energy independence. It was a political press release dressed up as policy, with next to no serious techno-economic modeling behind it. The assumptions embedded in the strategy bordered on magical thinking: that green hydrogen costs would rapidly decline, that hydrogen would become a competitive fuel for heating and transport, and that Ontario would be able to export surplus hydrogen despite no infrastructure or demand.

One of the glaring failures of the strategy was its treatment of hydrogen as a Swiss Army knife of decarbonization. Rather than targeting the handful of hard-to-abate industrial sectors where hydrogen might make economic and technical sense—such as steel or fertilizer—the strategy proposed blending hydrogen into natural gas grids for heating, using it in long-haul trucking, and even injecting it into gas turbines for electricity generation. Each of these use cases has been studied to death by serious analysts globally, and the consensus is clear: hydrogen is woefully inefficient for most of them. Burning hydrogen for heat wastes electricity. Using it in transport competes poorly with batteries. And injecting it into natural gas systems creates new safety, materials compatibility, and emissions challenges. These weren’t just innocent oversights. They were policy decisions made in full view of decades of scientific literature and recent international experience.

What’s worse is how many stakeholders looked the other way—or actively enabled the fantasy. Enbridge, Canada’s natural gas and pipeline behemoth, was a vocal supporter of blending hydrogen into distribution networks, which conveniently extends the lifespan of its assets and business model. The utility industry at large had every reason to play along: hydrogen blending meant continued justification for capital expenditures, rate-base growth, and infrastructure protection in a world slowly moving toward electrification. Meanwhile, local manufacturers and construction firms nodded enthusiastically at pilot project funding, even if none of the projects had viable long-term economics. The universities and research institutions, many of which rely on provincial funding and partnerships, stayed largely silent rather than raising technical red flags. This wasn’t just a failure of policy design—it was a systemic failure of governance and institutional responsibility.

Then came the Niagara Falls pilot, the most tangible product of the 2022 strategy—a 20 MW electrolyzer under development next to the Sir Adam Beck hydroelectric plant. In theory, it would use clean electricity to make green hydrogen. In practice, it exposed just how unmoored the strategy was from basic logistical and commercial realities. There was no nearby industrial customer for the hydrogen. There was no pipeline. There was no refueling infrastructure. So, the plan became to truck the hydrogen—at great expense and emissions—over 150 kilometers to Halton Hills to be burned in a natural gas peaker plant. That’s taking zero-carbon electricity, converting it into a leaky, hard-to-handle gas at 70% efficiency, trucking it using diesel semis, then burning it in a combined cycle plant at 55% efficiency. Best case scenario, you get back 30% of your original energy—after spending a fortune. That’s not decarbonization. That’s a Rube Goldberg machine powered by taxpayer money.

The Niagara pilot wasn’t an aberration—it was the logical outcome of a strategy built on wishful thinking and captured by vested interests. It prioritized announcements over outcomes, ribbon-cuttings over rigorous analysis. And now, instead of reassessing, Ontario is doubling down—throwing good money after bad, while the rest of the world quietly backs away.

The doubling of the fund announced in March 2025 is a baffling move, especially considering the lessons pouring in from countries that sprinted down this road years ago. Norway, not exactly a climate slouch, recently restructured its entire industrial decarbonization strategy to pivot away from hydrogen for energy. Their highly publicized hydrogen ferry—the MF Hydra—has been hit with supply issues and rising costs and now gets hydrogen transported in diesel trucks from 1,300 km away, and their dreams of piping blue hydrogen from offshore fields to Germany have quietly evaporated in the cold North Sea air. Norway has seen the light: hydrogen is a boutique solution, not a cornerstone of energy systems.

Australia provides another stark cautionary tale. At one point, Canberra dreamed of turning the sun-drenched Outback into a hydrogen export juggernaut, sending green molecules to Japan and South Korea. The marketing sizzle was real. But then came the receipts. The $750 million Port Pirie green hydrogen plant was shelved in early 2025, citing sky-high capital costs and no guaranteed buyers. Around the same time, Queensland’s flagship Central Hydrogen Project asked for an additional billion dollars in government support before being axed altogether. Australia, once the poster child for green hydrogen exports, is now focusing on domestic green industry instead—especially green iron and ammonia, where hydrogen use actually makes sense.

And here’s where Ontario’s strategy really begins to look like a slow-motion car crash. Australia and Norway were at the front of the hydrogen line and have now taken their losses and walked away. Meanwhile, Ontario—never a global leader in hydrogen tech—is just getting warmed up. The province talks about protecting jobs and sparking innovation, but $30 million could electrify a lot of school buses or build megawatts of solar-plus-storage that actually lower bills and emissions. Instead, it’s being sprayed across pilot projects with no clear off-take, no commercial scaling path, and no independent lifecycle emissions accounting. Remember, hydrogen leaks and has a GWP20 37 times worse than carbon dioxide.

There’s also the inconvenient fiscal reality. Electrolytic hydrogen from clean electricity clocks in at $5 to $9 per kilogram in Canada right now when it’s done at all, usually the high end. That’s before transport, storage, and conversion losses. Blending it into a gas turbine system for electricity generation yields perhaps 30–35% round-trip efficiency—less if you include trucking emissions and liquefaction losses. We’re burning $100 of electricity to get $30 of it back, just so we can slap a green sticker on a grey problem. That’s not innovation. That’s thermodynamic malpractice.

The hydrogen lobby loves to frame this as an investment in the future, but the real future—the fiscally responsible one—is already emerging elsewhere. Direct electrification is cheaper. Heat pumps are rolling out across Ontario homes. Battery-electric buses are slashing operating costs for transit authorities. Grid modernization and demand response offer 5-to-1 payback ratios. Hydrogen, in contrast, continues to guzzle public money with all the grace of a Hummer in a downtown bike lane, at least the ones that still exist after the Ford government, again, decided to pay firms like Stantec to rip them up.

Ontario is choosing to ignore the lessons from countries that moved faster and failed harder. It’s romanticizing a molecule that makes sense as an industrial feedstock for refining oil, ammonia production and maybe green steelmaking. Everything else is a mirage—especially long-distance exports and residential heating. This isn’t just a bad bet. It’s a failure to read the room, the market, and the math.

There’s still time for Ontario to back out of the cul-de-sac. But every million spent now on dead-end hydrogen pilots is a million not spent on scalable, shovel-ready, low-emissions solutions. The world has moved on. The province just hasn’t checked the rear-view mirror—or the bill.

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