Prime Minister Justin Trudeau responds to a question next to German Chancellor Olaf Scholz during a news conference in Montreal on Monday, August 22, 2022. THE CANADIAN PRESS/Paul Chiasson

Prime Minister Justin Trudeau responds to a question next to German Chancellor Olaf Scholz during a news conference in Montreal on Monday, August 22, 2022. THE CANADIAN PRESS/Paul Chiasson

Canada, Germany sign deal to start hydrogen shipments by 2025

Pact sends message to Russia that its era as a global energy superpower is at risk

Canada and Germany say a new hydrogen pact will kick-start a transatlantic hydrogen supply chain, with the first deliveries expected in just three years.

Prime Minister Justin Trudeau and German Chancellor Olaf Scholz signed the deal on Tuesday in the port town of Stephenville, N.L., where they attended a hydrogen trade show.

The five-page agreement is a “declaration of intent” to create a hydrogen alliance between the two countries.

Canada is largely responsible for ramping up production of hydrogen and Germany will mainly focus on a shipping corridor to transport it across the Atlantic.

While Russia is not named in the agreement, the pact is as much about energy as it is about sending a message to President Vladimir Putin that his country’s era as a global energy superpower is at risk.

Germany is seeking long-term energy replacements for fossil fuels both to meet its climate commitments and to end its energy dependency on Russia.

Natural Resources Minister Jonathan Wilkinson said in an interview Tuesday that there is no doubt this agreement is happening now because of Putin and the invasion in Ukraine.

“We were going to have these conversations about hydrogen because of the energy transition anyway, but we were not going to have them quite so quickly,” he said.

“Almost all of the projects we are seeing in Atlantic Canada have really come about in the aftermath of the invasion. This is part of a strategy for the Germans — and eventually all of Europe — to say, ‘We are not going to be dependent on Russia again.’”

Both governments are clear this agreement will not solve Germany’s immediate desire to wean itself off Russian oil and gas — a necessity as the war in Ukraine has threatened European energy security.

Although Canada currently produces almost no hydrogen that would fit the goals of the agreement, both countries believe a new hydrogen trade corridor can be up and running “well before 2030” and the first deliveries are possible in 2025.

That would require Canadian projects to be reviewed and issued permits, to be built and producing fuel, and to have feasible shipping options developed within three years.

The deal does not say how much hydrogen Canada and Germany think could be shipped by then.

“It is absolutely ambitious, but part of the thing about setting goals is you need to be ambitious to actually force action,” Wilkinson said.

The agreement is being signed in Stephenville because it is the expected future home of a wind-powered hydrogen facility, and is hosting a trade show this week. Wilkinson said projects that use onshore wind power have a shorter time frame than offshore wind, but acknowledges initial production will be quite small.

“I think it’s reasonable to say we can get there within three years but if we don’t make 2025 and it’s 2026, by setting 2025 it’s still a pretty ambitious goal,” he said.

It will also take time for German demand to ramp up, said Wilkinson. That will require infrastructure changes, such as piping upgrades in homes to use hydrogen for heat.

Germany has a noted preference for “green” hydrogen, which is produced by splitting water molecules using electrolysis powered by renewable energy.

But Canada is also looking to produce copious amounts of “blue” hydrogen, the kind derived from natural gas but with the accompanying carbon dioxide emissions trapped with carbon capture and stored back underground.

Currently almost all of the hydrogen made in Canada — about three million tonnes in 2020 — is made from natural gas without carbon capture technology. That type of hydrogen is referred to as “grey.”

Germany isn’t barring blue hydrogen but will not put government money toward it. That said, most of Canada’s blue hydrogen will come from Western Canada, and shipping it to Europe is no more feasible than getting natural gas from Alberta and British Columbia to Europe.

Any blue hydrogen exported from Western Canada will seek American or Asian markets.

The agreement does include a requirement for the two countries to develop a mutually agreed upon method to define “clean, low carbon and renewable hydrogen.”

But it is carefully crafted to note Germany’s preference for green hydrogen while recognizing Canada’s desire that both types are included.

Canada intends to lean on existing funding programs, including the $1.5-billion Clean Fuels Fund, but will put additional dollars on the table when or if needed, Wilkinson said.

—Mia Rabson, The Canadian Press

RELATED: Trudeau questions business case for natural gas exports from Canada to Europe

RELATED: European nations accuse Russia of natural gas ‘blackmail’

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