Can Québec’s Rocks Solve Hydrogen’s Cost Problem?

In an interview with Energi Media, chief financial officer Stéphane Dallaire said the company hopes to obtain hydrogen from the ground within the coming months. Commercial production remains a goal, not an established operation.

The venture faces a problem familiar to hydrogen developers: producing the gas is only part of the challenge. Competitive costs, affordable delivery and customers willing to commit will determine whether the technology becomes a business.

Electricity Drives the Cost

Dallaire, who participated in an earlier green hydrogen venture, said electricity remains a major obstacle for production using electrolysis, which separates water into hydrogen and oxygen.

His example was straightforward: electricity priced at five cents per kilowatt hour, multiplied by consumption of 60 kilowatt hours per kilogram of hydrogen, produces an electricity bill of three dollars per kilogram. That excludes other production and delivery expenses.

Those were illustrative assumptions, not a verified cost estimate for a particular facility.

Electricity prices also influence whether industrial customers can afford to switch. In an earlier Energi Media interview about industrial electrification, economist Chris Bataille described the potential to alternate between natural gas and hydrogen in steelmaking: “So, you know, for half the day you could run on gas, the other half the day you could run on electricity-based hydrogen. But it all depends on the price of electricity, of clean electricity.”

Dallaire argued that incentives remain important to closing the price gap between electrolytic green hydrogen and hydrogen produced from fossil fuels.

Production Close to Customers

Transportation adds another constraint. Dallaire said developers should produce hydrogen close to where it will be consumed, reducing the expense and complications of moving it over long distances.

That approach shapes Vema’s interest in industrial activity near its hydrogen source. He identified synthetic aviation fuels, methanol and smaller industrial applications as potential markets.

Choosing those markets matters because hydrogen faces competition from direct electrification. In a January 2025 Energi Media interview, Columbia University energy researcher Anne-Sophie Corbeau explained: “And we can say that in many sectors let’s say for example, heavy duty transport, you know, you have a very tough competition between hydrogen and electricity. And a few years ago, hydrogen was leading, and now, you know the electricity solutions, batteries, et cetera, are catching up.”

Her comments concerned hydrogen’s broader market prospects, rather than Vema’s process.

Hydrogen From Rock

Vema’s process differs from electrolysis. According to Dallaire, the company drills into suitable rock and uses water, pressure and a catalyst to accelerate reactions that release hydrogen.

The process requires energy for heating water and maintaining pressure, he said, but avoids using electrolysis to split water.

In an earlier Energi Media interview, Vema CEO Pierre Levin described the transition the company was attempting: “We have been taking samples, tested the samples in the lab. So we have evidence that you can produce economic amounts of hydrogen from those samples in the lab. We are now moving from the lab to in-situ.”

Those laboratory results were the company’s account. Dallaire’s subsequent interview did not establish a demonstrated commercial production cost, sustained flow rate or independently verified emissions footprint.

A New Role for a Mining Region

Dallaire presented the pilot as an opportunity to bring new economic activity to a region associated with asbestos mining. The location offers suitable resources and land associated with former mining activity, he said, alongside support from municipalities and other agencies.

He also discussed data centres as a possible market, but did not announce a completed commercial supply arrangement during the interview.

For now, the decisive step is demonstrating hydrogen production at the pilot. Building a viable business would then require dependable output, competitive delivered costs and committed customers.

Québec’s rock may offer a different route through hydrogen’s cost problem. The pilot must now show whether that promise holds underground.