There is a often a big difference between what a democratic government is legally permitted to do and what they are willing to do. Exercising too much authority can have a negative effect in the polls.
It’s theoretically possible, but it would be a poor choice for that service. The Banff route would need a much higher passenger capacity, more range, and possibly on board amenities. That would argue for a different flavour of railcar. Once the technology matures, hydrogen propulsion is certainly a reasonable goal.