Prime Minister Justin Trudeau, left, shakes hands with German Chancellor Olaf Scholz during the Canadian-German Business Forum in Toronto on August 23, 2022.COLE BURSTON/AFP/Getty Images
The Canadian and German governments have signed an agreement to cooperate on exporting hydrogen fuel to Europe, setting an ambitious 2025 target to begin shipments from eastern Canada, where a facility has yet to be built. only hydrogen production plant.
Prime Minister Justin Trudeau and German Chancellor Olaf Scholz signed the agreement in the western Newfoundland town of Stephenville, near the site of a proposed wind farm project that would boost hydrogen production from electrolysis.
The joint statement of intent makes clear that the agreement is not legally binding and stipulates that it will be up to Canada’s Natural Resources Minister and Germany’s Ministry of Economic Affairs and Climate Action to monitor whether it makes progress on its goals .
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“The participants aim to collaborate closely on all aspects necessary to launch the hydrogen economy and create a transatlantic hydrogen supply chain well before 2030, with the first deliveries by 2025” , says the agreement.
The deal is part of the German government’s effort to become less dependent on Russian fuel supplies by deepening energy partnerships with Canada and other countries. In recent months, as tensions over Russia’s invasion of Ukraine have risen, Moscow has cut natural gas flows to Europe, forcing Germany to prepare for gas rationing.
Canada currently produces about three million tonnes of hydrogen from natural gas per year, according to the federal government’s 2020 Hydrogen Strategy, which places the country among the top 10 producers of the fuel in the world today. The Germans, however, want hydrogen made from renewable energy, and there are a number of projects underway in Canada to meet that demand.
The Canadian-German agreement does not set any targets for volumes of hydrogen produced and does not include commitments for new money to help start exports to Europe by 2025.
Instead, the Canadian government said existing programs, such as the $1.5 billion Clean Fuels Fund and the $8 billion Strategic Innovation Fund’s Net Zero Accelerator Initiative, are being used to help stimulate hydrogen production.
The German government did not put a figure on the financing of this deal, but said in the statement that Berlin would “support domestic importers and consumers of hydrogen and its derivatives.”
Natural Resources Minister Jonathan Wilkinson acknowledged that the planned start date for exports is very aggressive. “It is very ambitious, but it reflects the fact that Germany sees how this can help them in their current context,” the minister said.
He said he expects export volumes in 2025 to “probably be modest.”
Mr. Wilkinson said he is aware of about 15 hydrogen production projects in various stages of development that would be powered by renewable energy such as wind or water. “Our hope is that at least one or two of them will be producing by 2025,” he said.
Dozens of protesters demonstrated at Tuesday’s announcement, many holding signs opposing the proliferation of wind turbines that will accompany a green hydrogen industry in the region.
Most proponents of exporting hydrogen are looking to transport it to Europe by converting it to liquid ammonia before shipping, Wilkinson said. The liquid would turn back into hydrogen after crossing the Atlantic.
When asked how Ottawa and Berlin would keep this deal on track and moving forward, Mr. Wilkinson said one of the main drivers of this effort is Germany’s desire to end its dependence on Russian energy. “Part of it is being driven by the desire to displace Russian gas,” he said.
Mark Agnew, senior vice-president of policy and government relations at the Canadian Chamber of Commerce, said the hydrogen pact is just the beginning of a rigorous effort needed to jump-start exports. “There is still a lot of work to be done between now and 2025, such as permit clearances and infrastructure construction before the first shipments can occur,” Agnew said.
The challenge with joint statements, like the one Canada and Germany have made, is that “they run the risk of being shelved and ultimately forgotten after a few follow-up meetings,” Agnew said. He said regular and transparent reporting on progress will be vital.
Canadian efforts to help Germany cut off Russian energy do not include any funding to build infrastructure that could send liquefied natural gas to Europe, even though Canada is the world’s fifth-largest producer of natural gas.
Mr. Trudeau, who wants to reduce the use of fossil fuels, on Monday questioned the business case for exporting natural gas directly from the East Coast or Quebec to Europe, saying the locations of plants to convert the fuel into liquefied natural gas they are too far from western Canadian sources to be economical.
But the Canadian Gas Association, which represents the natural gas supply industry, said this week that the biggest obstacle to building LNG facilities on the East Coast is regulatory uncertainty. The association said investors cannot be sure when or if the federal government will approve the necessary pipeline infrastructure.
The agreement also says Ottawa and Berlin will set rules defining the carbon intensity of hydrogen so producers can determine what can be called clean, low-carbon or renewable hydrogen.
“The transformation is progressing. Our industry is investing to produce in a climate-neutral way in the future,” said Mr. Scholz.
Klaus-Dieter Maubach, the CEO of the German company Uniper SE, who accompanied Mr. Scholz in the German leader’s visit to Canada, said that a cooperation agreement signed with a producer of hydrogen and green ammonia from Nova Scotia represents a “great starting point for developing hydrogen business in Canada”.
Uniper signed a memorandum of understanding with Nova Scotia-based EverWind Fuels LLC to purchase green ammonia from the company’s planned production facility in Point Tupper, NS. The German company would buy 500,000 tons per year of green ammonia, which can be converted into hydrogen.
“It has to start somewhere,” he said.
He said 70 to 80 percent of the hydrogen Germany will need will have to be imported as it transitions to a greener economy.
Flensburg shipbuilder FSG-Nobiskrug and Canadian shipping company Oceanex were also expected to sign an agreement on Tuesday to build a transport vessel to supply Newfoundland and Labrador. Oceanex currently uses three transport ships to deliver goods to the island every day, from food to raw materials and cars. One of them already comes from the FSG-Nobiskrug plant.
Mineral offers with Volkswagen, Mercedes
In view of the impending shortage of important raw materials for battery production, Volkswagen wants to rely more on Canada. The automaker and the Canadian government signed a memorandum of understanding on Tuesday to secure access to Canadian raw materials for electric vehicle batteries. The letter of intent was signed Tuesday by outgoing VW CEO Herbert Diess and Canadian Industry Minister François-Philippe Champagne.
“We are not opening our own mines, but we want to acquire stakes in Canadian mines and mine operators,” Thomas Schmall, VW’s chief technology officer, told The Globe and Mail. The aim, he says, is to secure volumes and prices through long-term supply agreements. Canada has virtually all the raw materials we need for battery production,” says Mr. Schmall.
VW is investing €20 billion worldwide in the battery value chain. The company will invest a single-digit billion in Canada, as Mr. Schmall.
The company is currently planning six battery cell factories in Europe and another in North America. Mr. Schmall has not yet revealed whether this will be in Canada or the United States.
It’s not the only company with big plans in Canada. Stuttgart-based carmaker Mercedes-Benz AG also signed a letter of intent to buy raw materials on Tuesday. Technology director Markus Schaefer, head of Development and Purchasing, was part of the delegation headed by Mr. Scholz and the Minister of Economy, Robert Habeck.
Mr. Schaefer explained that Mercedes is in the process of dramatically increasing the production of electric vehicles. “That’s why we’re also exploring new ways to responsibly source the raw materials needed for this.” Canada, he said, is a “powerful partner for this.”
Mercedes wants to take advantage of “the potential in the mining and refining segment in Canada, as well as in the area of active cathode precursors.” To this end, Mercedes wants to establish relations with the Canadian mining sector and work closely with the German-Canadian company Rock Tech Lithium Inc.
Rock Tech says it plans to supply Mercedes with 10,000 metric tons of lithium hydroxide annually starting in 2026. The two companies have signed an agreement to that effect.
However, Rock Tech’s lithium mine in Canada is still in the approval process, according to CEO Markus Brügmann. The raw material from which the battery-grade lithium hydroxide will be extracted will initially come from Australia, among other countries, until the Canadian mine becomes operational, and will be refined in Germany.