Crofton, Vancouver Island

A possible second site at the former Domtar pulp mill, making hydrogen on Vancouver Island for Island customers. It is under consideration; no decision to buy the site has been made.

23,953kg of hydrogen a day
$30Moperating profit a year
$4.68average cost to make a kg, sold at $6.50
-122carbon score of the wood-waste process. It removes more CO2 than it emits, which pulls the site average below zero.

Why Crofton

A closed pulp mill that already has grid power, a deep-water port, a gas line and wood-waste handling, close to the Island's ferries, navy base and mills.

See the detail

PDEC is a network of sites. Each site serves the customers near it, and the sites work together.

Vancouver Island geography

Making hydrogen on the Island supplies Island customers directly. Deliveries do not need a barge across the Strait of Georgia.

Infrastructure already built

A 138 kV grid connection, a 61.5M m³/yr water licence, a deep-water dock, a FortisBC gas pipeline and biomass handling are all on site. The site is already developed.

Independent economics

Crofton and Burrard each pay their own way. Savings from running them together are a bonus.

Proposal

The same three production methods as Burrard, sized to serve Vancouver Island from the Island instead of barging hydrogen across the Strait.

See the detail

Three ways of making hydrogen, all running from day one. Each uses what the site already has.

PEM Electrolysis

Share: 50%

Output: 11,453 kg/day

32 MW on the BC Hydro 138 kV connection. The grid is 98% clean.

Methane Pyrolysis

Share: 30%

Output: 7,500 kg/day

~7.5 TPD Ekona xCaliber on the existing FortisBC pipeline. Also makes solid carbon.

Biomass + BECCS

Share: 20%

Output: 5,000 kg/day

~5 TPD from coastal slash piles (logging waste). With BECCS, it removes more carbon than it emits.

Production and revenue

Power, gas and wood waste go in. Hydrogen, fuels made from hydrogen and co-products come out, and each earns money.

Read left to right: what goes in, how the hydrogen is made, what comes out, and who buys the hydrogen. Some hydrogen is made into e-fuels (methanol, bio-LNG, renewable diesel); that margin shows as its own product. Band widths are revenue in millions of CAD a year; yellow bands are hydrogen.

Grid power, natural gas and forest residues feed three processes. Hydrogen and its co-products earn $101.8M a year.

Economics

Crofton earns about the same as Burrard and pays back PDEC's share of the build in about five years.

$30Moperating profit a year
$161MPDEC's share of the build cost
See the detail

Phase 1 base case. All figures in CAD.

Pathway economics

Pathway Share Output (kg/day) Gross LCOH Net LCOH
PEM Electrolysis50%11,453$4.46/kg$4.46/kg
Methane Pyrolysis30%7,500$5.50/kg$2.50/kgafter carbon sales
Biomass + BECCS20%5,000$4.00/kg$2.30/kgafter biochar and stored carbon
Blended100%23,953$4.68/kg$3.44/kg

Capex

$485M
Phase 1 capex
All three processes, all costs, 25% contingency
$161M
Net after ITC
40% Clean H2 ITC (refundable), plus grants and tax offsets
$21.0M
EBITDA with no subsidies
Still positive if every subsidy is removed

PDEC revenue (base case, per year)

H2 sales (8.74M kg at $6.50/kg blended price)$56.8M
BC Low Carbon Fuel Standard credits$9.0M
Solid carbon byproduct$8.2M
Clean Fuel Regulations dispensing credits$5.2M
BC OBPS credits$5.0M
District heat$4.5M
Grid services$3.0M
Oxygen byproduct$2.8M
Sequestered CO2 credit$2.6M
E-fuel margin$2.0M
Property tax abatement$1.5M
Pyrolysis cogeneration power$0.7M
Biochar byproduct$0.5M
Total PDEC revenue$101.8M
Plus diesel savings kept by customers (above the $6.50/kg price)+$37.4M
Plus social value (lower carbon and health costs)+$67.7M
Total value created per year$207.0M

PDEC revenue is what PDEC earns. Diesel savings go to customers and social value goes to the public. Both come on top of PDEC's sale price.

Environmental impact

58.9M
litres of diesel replaced/yr
Across Vancouver Island customers
157,904
tonnes of CO2 avoided/yr
Like ~34,327 fewer cars
Negative
average carbon intensity
From biomass with BECCS

Customers

BC Ferries, the navy at Esquimalt, Island transit and local industry. Island demand is larger than what Phase 1 would make.

See the detail

At PDEC's $6.50/kg blended price, Vancouver Island customers could use about 38,500 kg/day, more than Phase 1 makes. These are estimates from fleet sizes. No contracts are signed.

Marine & ferry

BC Ferries Route 6, a possible first pilot, with its terminal at the mill gate. MV Coho. Canadian Coast Guard Pacific. Industrial marine users.

Transit & road

Cowichan Valley Regional Transit (its Duncan depot is ready for natural gas buses, CNG). Victoria Regional Transit. Heavy fleets of the CRD, CVRD and RDN regional districts. Mosaic forestry trucks. BC Emergency Health Services (BCEHS) and Island Health.

Industrial

Western Forest Products in Chemainus (hydrogen blended into kiln fuel). Catalyst Paper in Port Alberni. Coastland Wood. FortisBC gas blending.

Defence, federal & flagship

GVHA Ogden Point cruise terminal: a hydrogen power barge could replace the $159M shore power project that was dropped. CFB Esquimalt. CFB Comox. CCG Pacific. DFO, RCMP, ECCC.

Price is the barrier. Operators switching to batteries are turning down hydrogen at its $16.50/kg retail price. PDEC sells at $6.50/kg on average ($5.75 at the gate, $7.625 delivered). That is 60% below retail and about 13% below the diesel it replaces, so hydrogen comes out ahead. PDEC builds the supply, and demand follows.

First Nations

Local First Nations are offered an ownership stake from the start, and the site is planned with them, not around them.

See the detail

The Crofton site is on unceded Quw'utsun territory. Halalt, Cowichan Tribes, Penelakut and Lyackson hold interests in it. Indigenous partnership is built into the project from the start.

Cowichan 2025 decision

Cowichan Tribes v. Canada (AG), 2025 BCSC 1490, is the first Canadian ruling to recognize Aboriginal title over privately owned (fee-simple) land. It changes how any industrial land purchase in BC has to be structured.

Equity partnership

The goal is 25-49% Indigenous ownership, financed through the federal $10B Indigenous Loan Guarantee Program and BC's $1B Equity Financing Framework. Kruger Kamloops and Hydrogen Naturally Fort Nelson are precedents.

How we engage

Dr. Matt Murphy (UVic Gustavson, Balance Co-Lab) leads the relationship, following free, prior and informed consent (FPIC) protocols. Decisions on water and the weir go through the Cowichan Watershed Board. PDEC will not buy the site without an agreement that meets DRIPA.

Community

Jobs and tax revenue come back to a town that lost its mill, and Crofton village keeps a secure water supply.

See the detail

The mill closure put ~500 people out of work and took away the area's largest taxpayer. Whatever replaces it has to deal with jobs, taxes and the village water utility.

Jobs

About 55 full-time operations jobs once Phase 1 is running (from the model's staffing budget). There are also construction jobs, and ongoing indirect jobs in feedstock supply, maintenance and shipping. Mill workers' skills in process control, trades and power systems carry straight over to hydrogen.

Municipal tax base

Putting the site back into industrial use restores North Cowichan's largest single tax payment. The aim is for the site to again be the main local employer and taxpayer.

Village water utility

Domtar's commitment ends on Dec 31, 2026. PDEC proposes a funded handover to the right municipal body, agreed three ways with the CVRD and North Cowichan. PDEC would not run the utility long-term.

Cowichan Lake weir

PDEC proposes handing the weir and the water licence to the Cowichan Watershed Board. PDEC would buy its water under a commercial supply agreement.

Site infrastructure

Most of what a hydrogen plant needs is already on the site.

See the detail

Crofton is an existing industrial site. Decades of heavy-industry equipment and connections are still in service.

Electrical

Two dedicated 138 kV BC Hydro lines end at the site, ~9 km from Vancouver Island Terminal. No new substation to pay for.

Water

~61.5M m³/yr licensed on the Cowichan system. The Phase 1 electrolyzer needs <1% of that. The limit is seasonal drought.

Marine terminal

Three Panamax-capable berths on Shoal Island (136-163m length, 9.2-10.8m depth). Barges can link Crofton with the mainland site.

Natural gas pipeline

A FortisBC high-pressure pipeline is on site. It feeds pyrolysis, so no new pipeline or permit is needed.

Biomass handling

The mill ran on ~87% biomass energy, so bunkers, conveyors and dryers are already there. They can be adapted to make hydrogen from biomass.

Zoning & land

107 hectares (264 acres) of waterfront mill land zoned heavy industrial (about 121 ha with surrounding lands, per North Cowichan). North Cowichan's Official Community Plan (OCP) supports marine and industrial use. No rezoning needed.

Risks

The main risks at Crofton, and what PDEC does about each one.

See the detail

Click any card for detail on how PDEC handles each risk.

Environmental remediation

68 years of kraft pulp making. Under BC's Environmental Management Act (EMA), liability is absolute and retroactive. Cleanup is estimated at $40-85M. PDEC would handle it with indemnities, cleanup in stages under an Approval in Principle (AiP), pollution legal liability (PLL) insurance, and separate project companies that contain the risk.

Water licence transfer

The Water Sustainability Act (WSA) puts river flows for fish and nature first, and the Cowichan Watershed Board shares oversight. PDEC would monitor flows over several seasons and reuse wastewater. Seawater desalination (SWRO) is the drought backup.

Indigenous consent (critical path)

Since the 2025 Cowichan ruling, an Impact Benefit Agreement (IBA) that meets DRIPA is needed before construction debt. PDEC would offer 25-49% Indigenous ownership through the Indigenous Loan Guarantee Program (ILGP), follow FPIC protocols, and not buy the site without an agreement.

BC Hydro interconnection

The mill made much of its own power (load displacement). BC Hydro's CBLI System Impact Study confirms the grid can deliver the capacity. With three processes, PDEC does not rely on electrolysis alone.

Village water utility deadline

Handover is due Dec 31, 2026. PDEC would agree a transition plan with the CVRD and North Cowichan and fund the move. The utility would sit in a separate project company.

Supply chain lead times

Electrolyzer stacks take 18-24 months to arrive, and specialized transformers about the same. PDEC would order early, with part payment before the final investment decision (FID), and use two suppliers where it can.

Status

Under consideration. PDEC is studying the site with the community; no purchase decision has been made.

See the detail

Under consideration today. Early work is underway. Building would start in 2028, in phases.

Phase 0

2026-2027

Work with Nations toward an IBA. BC Hydro CBLI study. Phase I/II environmental site assessment (ESA). Water flow monitoring. Letters of interest from customers. Plan the village water handover.

Phase 1

2028-2030, about $485M

Final investment decision (FID). Build all three processes: 32 MW PEM, 7.5 TPD pyrolysis and 5 TPD biomass with BECCS. BC Hydro upgrades. Start-up. First customers (Route 6 pilot, CVRT, WFP).

Phase 2

2030-2032

More customers (Victoria Transit, CFB Esquimalt, CCG, GVHA cruise terminal barge). Start barge runs to the mainland. Grow by-product sales.

Phase 3

2033+

Both sites run as one network. Green industrial products at export scale. More federal and defence commitments.

What PDEC needs next

Four contracts lock in the economics before anything is built. If you could sign one of them, or help find who will, a short call is the next step.

  • Customer contracts

    Fleet, marine, port and industrial hydrogen buyers. They commit to buy a set volume at $6.50/kg, and the price never drops below $5.20/kg.

  • Off-peak power

    BC Hydro. A supply agreement at about 5.5 cents a kilowatt-hour, with the plant running when power is cheapest.

  • Carbon buyer

    Makers of steel, batteries, tires and building materials. They buy the solid carbon left when the plant splits natural gas, at $1,000 a tonne or better.

  • Anchor volumes

    Transit, ferry and port operators. Committed volumes that keep the plant running at 85% of capacity.