Photo Credit: Wikimedia Commons

🌿🔋⛽ Government of Canada and Germany Land Arrangement Securing Early Market Access for Clean Canadian Hydrogen 💵

Friday, 12 April 2024 12:00.PM

As Vladimir Putin continues to weaponize energy in his illegal war on Ukraine, Canada is working with European allies to displace imports of Russian oil and gas and fight climate change with clean Canadian hydrogen. Canada can be a world-leading producer and exporter of clean hydrogen and associated technologies, and the federal government is helping to make that happen.

On MArch, the Honourable Jonathan Wilkinson, Minister of Energy and Natural Resources, and Robert Habeck, German Vice-Chancellor and Minister of Economic Affairs and Climate Action, strengthened their commitment to implement a transatlantic hydrogen corridor by signing a Memorandum of Understanding to establish a first-of-its-kind bilateral program. This program will accelerate commercial-scale hydrogen trade between Canada and Germany, secure early access for clean Canadian hydrogen producers in the German market and strengthen our two countries' efforts to fight climate change and enhance energy security. The Minister and Vice-Chancellor were joined by Canada's Ambassador to Germany John Horgan, Indigenous leaders and senior representatives from the Canadian and Germany energy sectors for the signing of this historic arrangement.

With jurisdictions around the world rapidly advancing hydrogen projects to compete in the European market, this announcement will help position Canada as a priority market for Germany to source product, enable Canadian producers to gain first-mover advantage and ensure Canada remains a global leader in the race to supply the world with clean hydrogen.

Under this Memorandum of Understanding, Canada and Germany will work to establish a dedicated Bilateral Window through Germany's H2Global Foundation that will support commercial transactions between Canada's hydrogen producers and Germany's industrial manufacturing and energy distribution sectors. The Canada-Germany Bilateral Window will be administered by the H2Global Foundation and will conduct coordinated supply and demand side auctions that will connect Canadian hydrogen exporters with German buyers to facilitate the completion of commercially binding contracts for the sale of clean Canadian hydrogen and its derivatives within the established timelines.

This MOU delivers on the ambitious commitments made under the Canada-Germany Hydrogen Alliance signed by the two leaders in Stephenville, Newfoundland and Labrador, in August 2022. This alliance includes the shared objectives of catalyzing investments in hydrogen products, supporting the development of secure hydrogen supply chains, establishing a Canada–Germany supply corridor.

Prior to this announcement, Canada has made significant efforts to support the production and export of clean hydrogen. These efforts include the introduction of bold policy initiatives to enable the development of a clean hydrogen export sector in Canada, including the Clean Hydrogen Investment Tax Credit and the Clean Technology Investment Tax Credit; establishing the Canada Growth Fund; and supporting leading hydrogen exporters in Canada with a combined $297 million in export development loans.

The MOU announced today reaffirms Canada's position as a provider of choice to like-minded global allies. It will help secure early market access for competitively priced clean energy products by Canadian industry and ensure good jobs, clean economic growth and emission reductions at home while strengthening energy security abroad.

"Canada and Germany have a long-standing friendship and determination to work together to address climate change, accelerate the global energy transition and strengthen international energy security. Canada has over 100 years of experience in hydrogen innovation and is a global leader in hydrogen fuel cell technology and renewable energy. Today's announcement is a testament to Canada's position as a global supplier of choice for clean energy and will enable the creation of sustainable jobs, clean economic growth, emission reductions and energy security at home and abroad."
- The Honourable Jonathan Wilkinson, Minister of Energy and Natural Resources

"We welcome the progress made in Canada in the development of several renewable hydrogen and ammonia projects. Although some challenges remain, we believe that a joint H2 Global Financing Window can play an important role in closing the remaining price gap. This will support the development of H2 production capacity with the aim of increasing the availability of hydrogen."
- Robert Habeck, Federal Minister for Economic Affairs and Climate Protection

Quick Facts

• The MOU commits Canada and Germany to finalizing the terms and conditions of the Bilateral Window no later than June 30, 2024. Subject to the final terms and conditions and other relevant approvals, the MOU commits Canada and Germany to launching aligned supply and demand auctions in the coming months, through which Hydrogen Purchase Agreements will be secured. These efforts aim to provide the certainty needed to get clean Canadian hydrogen projects built and bring products to global markets rapidly.
• Over 80 low-carbon hydrogen production projects have been announced in Canada to date, representing an economic expression of interest in over $100 billion of potential investment in Canadian jobs dedicated to building out this new clean energy supply.
• Atlantic Canada hydrogen proponents are well positioned to move forward on export opportunities and are internationally competitive. They will use Atlantic Canada's abundant and untapped wind resources and immediate proximity to Atlantic shipping routes to become reliable suppliers of new clean energy exports globally.
  •   In Nova Scotia, the EverWind Fuels Point Tupper project forecasts capital investment of $13.7 billion, for a total gross domestic product contribution of $9.4 billion and government revenue of $2.3 billion.
  •   In Newfoundland and Labrador alone, the province estimates that the four projects that they have selected to move forward in their Crown land bidding process would have an overall economic impact on gross domestic product of $206 billion, create revenue to the province of $11.7 billion and provide peak employment of 11,694 full-time equivalents during construction.
• Germany is a promising market for Canadian clean hydrogen exports. It has announced its intention to import up to 50–70 percent of its hydrogen demand by 2030 as it looks to decarbonize hard-to-abate industrial sectors that cannot be electrified and to cut dependence on imported fossil fuels from Russia.
• Germany is anticipating a growth in hydrogen demand from 55 terawatt hours to 95–130 terawatt hours by 2030, requiring imports to supplement their doubled target of producing 10 gigawatts of electrolysis capacity domestically by the same year.
• H2Global is an instrument established by the German government under which the Hydrogen Intermediary Company enters long-term purchase agreements (e.g., 10 years) with hydrogen producers and sells the hydrogen or its derivatives via competitive sell side auctions using short-term sale contracts (e.g., one year).
• The instrument is meant to enable market ramp-up before commercially viable prices for green hydrogen and ammonia are achieved by bridging the gap between the price at which a producer can sell and the price the market is willing to pay. This type of instrument enables hydrogen producers to secure long-term financing by providing long-term offtake and pricing certainty to help de-risk private investments.

SOURCE: Natural Resources Canada

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