A deal for the Canadian green hydrogen exports to Germany is awaiting Ottawa’s final decision on funding and a ruling from European regulators regarding the project’s competitive viability, as reported by the Canadian Press.
In August 2022, Canada and Germany formalized the hydrogen agreement with former Prime Minister Justin Trudeau, and outgoing German Chancellor Olaf Scholz visited Newfoundland’s west coast to conclude the deal.
In July, Canada and Germany allocated $600 million to the project. The funding is intended to support Canadian companies entering German markets and ensure Germany receives affordable, clean energy products from Canada.
Stephane Lessard, the acting director general for European affairs at Global Affairs Canada, noted during a February 26 panel on German-Canadian trade that certain funding decisions remain unresolved. He also reaffirmed the government’s dedication to the initiative and expressed optimism about its progress.
The project necessitates a competitive auction process, enabling Canadian companies to bid for the opportunity to supply clean hydrogen to Europe. The hydrogen would then be sold to buyers through auctions, a strategy designed to lower its cost.
Since hydrogen prices are currently too high to compete with other energy sources, Canada and Germany have devised this approach to help lower the price.
German Ambassador to Canada Tjorven Bellmann stated at the February 26 discussion that the project is moving forward, but European regulators need confirmation from Canada that the framework ensures sufficient competition.
Under the agreement, Canada will focus on increasing hydrogen production, while Germany will develop a shipping corridor for transporting hydrogen across the Atlantic. Germany’s plans involve transitioning from coal-fired power plants to hydrogen over the next 15 to 20 years, relying primarily on imported hydrogen.
The transition is part of Berlin’s effort to reduce its reliance on Russian energy following Moscow’s invasion of Ukraine.
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