Abstract
A transition to an energy system that capitalizes on Canada's renewable energy potential is the safe, resilient, and secure way forward. The returns on investment of a continued adherence to a hydrocarbon fuel system are diminishing and the benefits to the Canadian economy are overstated. New investments in old technologies, even under the presumption that such infrastructure can support emerging hydrogen technology, is not prudent. Investment in circular fuel technology is needed. Circular fuels, produced using renewable power and their own by-product as a feedstock, address the key bottleneck in the development of renewable power: intermittency and distribution. Using electricity to produce fuels, such as aluminum and iron, provides a mechanism whereby clean energy can be strategically stockpiled and/or distributed around the world, enabling Canada to establish itself as a leader in the global trade of renewable power.
The Canadian economy is under monumental pressure due to the volatile policies of its main trading partner. In this context, the Canadian government has proposed that Canada address this economic crisis by becoming a twenty-first century “energy superpower”. So far, this approach has been focused on expanding legacy technology in the form of oil and gas pipelines. While this may provide a short-term benefit, it overlooks the future of true energy security and economic sovereignty. This brief presents important insight, from an engineering perspective, which policymakers must understand in order to make prudent and rational decisions about Canada's energy future. A particular focus is given to how metals, as circular fuels, can forge a pathway that would turn Canada into a future-proof energy superpower.
Energy is fundamental to human security. All infrastructure, the very foundation of decent living standards, depends on reliable access to affordable energy. The ability to provide the basics for health (e.g., sanitation systems, water purification, power to hospitals), civic systems (e.g., traffic lights, communications), and human comfort (e.g., heating in winter, cooling during heat waves) relies on predictable access to affordable energy. However, a decent standard of living and human security also requires unpolluted air and waterways, reliable agricultural systems, and long-term sustainability. Despite this, approximately 82% of primary energy consumed globally currently comes from non-renewable and polluting sources such as coal, oil, and gas. 1 In Canada, over two-thirds of our primary energy comes from finite resources. 2 It is therefore understandable that federal Canadian policy continues to lean into these existing structures, despite the demonstrated harm to human health and the natural environment, as well as the finite nature of these resources.
Canada is well positioned to develop the technologies needed to meet the energy demands of the modern world without relying on fossil fuels. Recent research in the field of circular metal fuels shows that there is great potential for the Canadian economy because both the necessary natural resources and technological know-how exist domestically. By leveraging these assets, Canada can quickly become a leader in the provision and trade of clean energy that supplies Europe and other international markets. Investments and policy supports would strengthen the Canadian economy, provide reliable power to European allies, and reduce the dependence on US-Canada trade relations. Canada is therefore at a crossroads: it can either embrace new technologies and become a real twenty-first century energy superpower, or remain a fossil in the energy industry and maintain the vulnerabilities that entails.
Canada's energy sector
Globally speaking, Canada is a small player in the coal, oil, and gas world, producing 1% of the world's coal, 4.7% of its gas, and 6.3% of its oil in 2024. 3 Although domestically oil and gas are framed as the backbone of the Canadian economy, the aggregate contribution of the energy sector is just 7% of gross domestic product (GDP). 4 Oil and gas extraction (NAICS 211) accounts for approximately 3% of Canada's GDP. 5
At the same time, the costs associated with the use of carbon-based fuels are mounting. The 2025 wildfire season in Canada was the second worst in history. 6 The negative economic impact of the 2023 wildfire season, the worst season on record, has been estimated to be approximately 1% of GDP. This figure does not include the costs to fight the fires, the economic impact of evacuations, the increased health costs related to poor air quality, or losses to the natural world and agricultural lands. 7 It should also be noted that the 1% figure cited above is an average, and the regional differences in impact ranged from less than 1% to 74%. Considering the high risk, small gains, and large costs associated with continued use of fossil fuels, the transition to a new energy system is needed.
Canada is in the enviable position of having more renewable energy potential than is required to meet domestic needs. 8 There is high potential for onshore wind power throughout the prairies and offshore wind power on both the east and west coasts. Solar potential is significant in southeast Alberta, southern Saskatchewan, southwest Manitoba, and western Ontario. Canada's Atlantic coast has some of the highest tidal energy potential in the world, and its Pacific coast has the potential for high–temperature geothermal (the kind needed to produce electricity efficiently). In one study, Canada's renewable energy potential was estimated to be 50% higher than demand. 9 In another, the solar potential of approximately two-thirds of marginal land in Canada was shown to be adequate to meet the share of Canada's annual energy demand which is currently met by hydrocarbon fuels. 10
The potential supply of renewable energy in Canada is not the problem. The main challenge with realizing the renewable potential of wind, water, and solar (WWS) energy is that these sources are intermittent and have large seasonal variation, and the location of the potential resources are often far from population and industrial centres. For energy to serve its fundamental purpose, that is, to assure a secure and decent standard of living, it must be reliable and accessible. In its primary form of most WWS energy falls short.
To bridge the temporal and geographic gaps between energy availability and energy demand, energy storage is needed. Energy storage can take many forms, and the optimal choice is based on a number of factors including duration of storage, portability, and charge/discharge cycles. For example, batteries are good for situations where relatively small amounts of energy need to be made portable (e.g., electronics, passenger vehicles) for relatively short periods of time (e.g., on the order of days). This policy brief will focus on long- duration energy storage (on the order of months to years), the type of energy storage needed to resolve seasonal variability.
Storing energy in chemical bonds is the best way to store energy for long periods of time and ensure that the energy is available when it is needed. Our current energy system is an excellent example of this: plants use solar energy to form chemical bonds via photosynthesis, thereby forming biomass. The coal, gas, and oil mined today is the result of that process as it occurred in prehistoric times. When gasoline is burned in a car engine (or any fuel in any burner), the energy being released is the result of breaking those chemical bonds that were formed millennia ago.
Similarly, we can use the WWS energy available today to drive processes that form chemical bonds, locking away the energy for use at some later date or some other place. When that energy is needed, we employ another process to break those bonds and release the energy. This is the process of making and using a fuel. When the by–product(s) of the energy–releasing process are part of the inputs for the fuel producing process, the fuel can be categorized as a circular fuel.
Circular fuels are the solution
Historically our energy system has used hydrocarbon fuels to make electricity (e.g., coal- or gas-fired power plants). The low cost of WWS electricity 11 has flipped this, and now it can make economic sense to use electricity to produce a fuel. Whenever and wherever cheap WWS electricity is available, that electricity is used to drive a process that produces a chemical, thereby storing the WWS electricity securely in chemical bonds, a.k.a. as a fuel. By transforming the energy from electrical form to chemical form as a fuel, it is liberated from its time and place of production and can be shipped globally, enabling a trade in clean energy much the same way carbon-based fuels are traded today. The fuel can also be stored locally for use later, even months or years later, as part of a strategic stockpile. When the stored energy is needed, the energy can then be released through an oxidation reaction. To make this circular system work, and therefore sustainable over the long term, the reaction by- product(s) must be collected and used as source material to make new fuel.
Hydrogen is an example of this process: the electrical energy from a WWS source is used to split a water molecule (H2O) into hydrogen (H2) and oxygen (O2):
The energy term shown on the left side of the arrow in Equation 1 is now stored in the bonds of the (H2) molecules shown on the right side of the arrow. When that energy is needed, the hydrogen is either combusted or reacted electrochemically in a fuel cell to release the energy:
Note that the elements on the right side of Equation 2, the products, are the inputs for Equation 1. This is the defining property of a circular fuel. 12
The choice of chemical to use as an energy storage medium must meet several criteria:
13
Reactive: Chemical reactions are how the energy stored in chemical bonds is recovered. The chemical must be reasonably reactive with either air or water. The reaction should also require some effort to initiate; otherwise, the stored energy could be released prematurely or lost over time. Energy dense: The chemical must be energy dense both in terms of mass and volume. This will allow for storage of a lot of energy in a relatively small, light “package”. Safe: Both the chemical and the reaction products must be non-toxic, safe to store, and safe to handle. Abundant: The feedstocks for the chemical must be common and readily available. This helps ensure system and economic feasibility. Sustainable: The processes, feedstocks, and reaction products must not lead to irreversible long-term environmental damage nor rely on finite inputs. Circular: The reaction products form the feedstocks to produce the fuel, thereby closing the loop.
A careful examination of the periodic table reveals that three elements meet all the criteria of a circular fuel: hydrogen, aluminum, and iron.
Hydrogen has received a lot of attention as a potential sustainable fuel. As described in Equations 1 and 2, it can be produced and consumed without any emission of greenhouse gasses or other pollutants. 14 Conversion of the chemical energy to electricity can be done with a fuel cell and, when combusted, can provide the high heat needed for many industrial processes.
However, the fundamental properties of hydrogen prevent it from being a good solution for long-term energy storage. The hydrogen molecule is very small, making adequate sealing of storage vessels difficult. It has a very low energy density, necessitating cryogenic storage and/or compression. Hydrogen has a wide flammability range and, under certain conditions, can form an explosive mixture with air. The hydrogen flame temperature is extremely high, therefore its flame is invisible to the naked eye. With careful safety protocols the latter two properties can be managed.
Although hydrogen can be used safely, its storage and transportation remain a challenge. A topic that has garnered some recent attention is to use existing, or soon to be built, natural gas pipelines for hydrogen in the future. However, the fundamental differences between hydrogen gas and natural gas make this a difficult substitution. Hydrogen's energy density, when pressure and temperature are held constant, is approximately one-third that of natural gas. This means that given the same volume of pipeline, moving energy in the form of hydrogen would mean moving two-thirds less energy. Although blending any amount of hydrogen into the pipeline serves to reduce the greenhouse gas emissions, it also reduces the amount of energy being moved.
The challenges with putting hydrogen through pipelines designed for natural gas do not end at energy density. There are also design and material compatibilities to be considered. Put simply, hydrogen is a very small molecule. Systems designed to seal in natural gas may not adequately seal in hydrogen, leading to loss of the fuel, which could potentially be very hazardous in the event of an accidental ignition. Furthermore, hydrogen molecules can migrate through some materials, leading to hydrogen embrittlement. The change in material properties due to embrittlement can lead to cracking and leaking. Although this is an ongoing field of study, the early findings seem to indicate that hydrogen-compatible natural gas pipelines would need to be designed as such, and retrofitting existing pipelines is not possible.
Another active area of hydrogen research is the development of hydrogen carriers. These carriers include ammonia (NH3), liquid organic hydrogen carriers (LOHC), and metal hydrides. Each of these approaches have major drawbacks, including toxicity (ammonia), low cycle efficiency (LOHC), and high cost (metal hydrides). Producing hydrogen in a distributed manner, when and where it is needed, overcomes the fundamental problem of hydrogen: its low energy density.
Metals are the way forward
The two remaining elements that meet all the criteria of a circular fuel are iron and aluminum. Both can be combusted in air to produce heat, and this heat in turn used to produce electricity in a conventional thermal power plant. 15 Aluminum, under the right conditions, will react with water to produce heat and hydrogen. The idea of using metals as a fuel is not a new one 16 and, owing to their high energy content, metals have been used to increase the energy content in rocket fuels. The fundamental science of the reactions is well understood, and what is needed now is investment in the scaling up and commercialization of the relevant technology.
The process of converting energy from electricity to aluminum is the same one used to produce hydrogen from water: electrolysis. An electric current is run through a bath containing dissolved aluminum oxide (Al2O3). The electricity splits the aluminum from the oxygen:
The efficiencies for both water electrolysis and the production of aluminum are approximately the same. For every unit of electricity used, 0.6 units of energy are stored in the hydrogen or in the aluminum. The advantage of producing aluminum is that its energy density is much higher than that of hydrogen (over eighteen times higher than hydrogen stored at 700 atmospheres of pressure, and over ten times higher than liquid hydrogen). Aluminum is also easier to store and transport, and existing infrastructure and systems can be used.
When aluminum smelters are powered by low-carbon electricity, as is the case with Canadian aluminum, the main emissions are from the consumption of carbon anodes that form carbon dioxide. However, the industry is in the process of adopting inert anode technology that would end the process emissions, rendering the whole cycle extremely low- carbon. 17
When the energy stored in the aluminum is needed, it can be oxidized in air to produce heat:
In Equation 5, approximately half the energy stored in the aluminum becomes heat and the other half is in the hydrogen. The reactivity of aluminum with water allows for the distributed production of hydrogen. 18 Distributed hydrogen production allows for the use of hydrogen, while avoiding the pitfalls discussed earlier in this brief. 19
As with hydrogen, the oxide produced in Equations 4 and 5, aluminum oxide (Al2O3), is the feedstock needed to make aluminum at a smelter. Once the energy of aluminum is extracted, the leftover oxide can be easily collected and returned to the smelter to become new aluminum. The material loop for the aluminum is closed and is expected to remain so, in practice, due to the high economic value of aluminum oxide. The total energy released by reacting 1L of aluminum (either in air or with water) is equivalent to the heat released when 2L of diesel are burned. The difference, of course, is that the by-product of metal combustion is recycled to make new fuel, whereas the by-product of diesel combustion is released to the atmosphere, further driving climate change.
A transition to a circular energy system reliant on renewable primary energy will lead to more persistent employment. Energy jobs based on extractive industries are inherently as finite as those resources. As coal, oil, and gas reserves dwindle, so do the related jobs. Employment based on renewable resources, especially roles in operation and maintenance, are more stable and would contribute to increasing the resiliency of the Canadian economy and energy sector. Many of the skills held by workers in the coal, oil, and gas sector are directly transferable to renewable energy. Transferable skillsets include offshore construction, drilling, logistics, industrial safety, and engineering.
Path to wide-scale deployment of metal fuels
Metal fuels are a promising way forward because they provide a resolution to the main challenges of renewable energy sources: intermittency and low utilization due to a lack of storage. The required infrastructure for a global trade is already in place, and Canada is in possession of the required renewable power resources as well as expertise in all facets of the fuel cycle: metallurgy, metal combustion, and metal-water reactions. However, metal fuel technologies are currently at a low technology readiness level (TRL) and the adoption of forward-thinking policies is needed to allow the technology to grow.
First, and perhaps the most challenging, is the required shift in how Canada thinks about its energy resources. The old mindset that relies on heritage fossil fuels needs to be replaced with a mindset that recognizes that Canada can be a major exporter of renewable energy. A pivot away from the idea that “Canada's energy sector” and “Canada's oil and gas sector” are one and the same is needed. It is critical to recognize that Canada is already a leader in aluminum production and has capacity to increase its production, and that doing so will resolve many of the immediate and long-term threats to Canada's economy and security. Opening the use of our aluminum product as a fuel would increase the client base from one (the US) to any region or country in search of energy from a stable trading partner.
To support the necessary technology development, policies that create an enabling research and entrepreneurship environment are essential. Targeted research funding is needed to support work in key areas. Most metal fuel technologies are approaching the so-called “valley of death” of technology readiness. This is the stage in technology development whereby the fundamentals are well understood and the next step, building the first prototype, is warranted. However, this is the riskiest and, relatively speaking, most expensive step in the path to market. In Canada, there is almost no funding targeted at helping researchers or entrepreneurs span the TRL valley of death.
In tandem with technical development, research into the economic and social aspects of new technology is also vital. Techno-economic assessments, market analysis, and life- cycle assessments are all necessary in order to shape the path of metal fuels. A good understanding of the non-technical components of the energy system will help de-risk the rollout. Energy shifts require major investments and, to justify such investment and support broader policy and market acceptance, there is a need to clearly demonstrate the environmental and social benefits of these fuels.
When taking a future-oriented strategic perspective, an expansion of metal production infrastructure will be required. Since the goal is to open new markets to aluminum and iron as circular fuels, two additional demands will be placed on the existing metal industry. First is the production of metals with specific characteristics (i.e., powders rather than ingots) and, most likely, an increase in smelter/reduction capacity would be required. The second is a means of collecting and returning the oxide by-products to Canadian smelters for re-processing. The latter is key to closing the loop.
For this transition to be feasible, both metal production capacity and transportation infrastructure would need to be expanded and adapted to meet these new requirements. This would require coordinated investment, planning, and policy support over time. If Canada aims to take a leading position in metals as a circular fuel, it must begin preparing this industrial transition now, building on its existing strengths before global markets and competing producers establish their positions.
Conclusions
The uncertain geopolitical landscape means that Canada is facing several interconnected economic and security challenges. These pressures have led Prime Minister Carney to seek out a way to turn Canada into an energy superpower. To succeed in that mission, a fundamental shift in how we think about our energy resources is needed. Transitioning away from finite and ultimately costly carbon-based resource extraction is both economically and environmentally sound. Instead, capitalizing on its abundance of renewable power will serve Canada's interests now and well into the future.
Storing renewable electricity in the form of metals provides several strategic advantages for Canada. Electricity in the form of metal provides a mechanism for both exporting clean electricity and diversifying the customer base for Canadian aluminum and iron. Using these metals as fuel allows Canada to export clean energy in a way that is not currently possible via transmission lines or hydrogen technology. Canadian electricity could be shipped globally to customers in Europe, the United Kingdom, and/or Japan. Offering EU nations a cogent alternative to Russian energy would also increase security in the region. Investing in metal fuel technology and infrastructure today would improve the security of Canada and its global allies, as well as increase the resilience of our energy system.
Access to energy forms the very foundation of security of the person and nation, and Canada stands at a pivotal moment. Continued investment in hydrocarbon technologies undermines long-term energy security as well as posing risks to our economy. Circular fuels are the key to capitalizing on Canada's vast wealth of renewable power. They directly address the challenges of intermittency and distribution while providing a pathway to global trade in clean energy. By investing in these nascent technologies now, Canada would be positioning itself as a global leader providing secure, reliable, clean energy. Within Canada, these investments would pay dividends well into the future in the form of reliable employment opportunities and cleaner environments. Such a transition transcends technology and forms the basis of a resilient, sovereign, and future-facing economy.
Footnotes
Declaration of conflicting interests
The authors declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.
Funding
The authors disclosed receipt of the following financial support for the research, authorship, and/or publication of this article: Dr. Trowell's research is funded by the Natural Sciences and Engineering Research Council of Canada (NSERC), the Canada Funds for Innovation (CFI), and the Ontario Research Fund.
