Canada, Germany commit $600M for hydrogen export in Atlantic Canada
Germany assures it is committed to supporting Canada's clean hydrogen production
The Canadian and German governments are taking the next step to launch Atlantic Canada's hydrogen export industry, announcing a multimillion-dollar commitment Wednesday for projects in Eastern Canada.
Ottawa is investing up to $300 million to support hydrogen exports to Germany, Europe's biggest economy, while the German government is matching the contribution.
"The announcement being made today is a big deal," said Energy Minister Jonathan Wilkinson in Cape Breton, N.S., citing the potential of the investment to create jobs, lower greenhouse gas emissions, and provide energy security for Germany.
"It is a win, win, win."
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The $600-million announcement comes as the war in Ukraine has disrupted the global energy supply.
Russia, a significant supplier of natural gas to Europe, has been accused of holding back supply in retaliation for crippling sanctions imposed by Germany and other Western allies for its full-scale invasion of Ukraine.
"Since the summer of 2022, we have seen many signs that Canada is serious about advancing the clean hydrogen economy," said Karina Häuslmeier, the deputy head of mission at the German embassy in Ottawa.
"Today, I want to assure you that Germany is equally committed."
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Several projects in Nova Scotia and Newfoundland that would convert wind energy into what some call "clean hydrogen" are in the planning stages.
It's hoped these and others will play a significant role in fighting climate change. Unlike other sources of hydrogen that use fossil fuels, these projects would use wind turbines to create hydrogen from water.
Wilkinson has been a driving force behind the federal government's hydrogen strategy, often mentioning that he drives a hydrogen-powered vehicle.
He conceded at Wednesday's news conference, however, that the technology is still too expensive.
He explained to reporters that through an auction process, Canadian companies would be allowed to bid for an opportunity to supply the German market with clean hydrogen.
Canadian hydrogen bought through the process would be then auctioned off again to buyers through what's known as a double-sided auction.
The $600 million that Canada and Germany are providing would be used to close any gaps between the price producers offer and the price that buyers are willing to pay.
"This is an early market development thing," Wilkinson said. "By leading the market, you actually help to create the market and to actually be first to get down the cost curve. And this is what this exactly intended to do."
The development of wind power has shown this can be effective, with Wilkinson pointing out that what's now a "cost-effective way" of powering communities wasn't always the case. Wind-generated electricity is so cheap today because of the German government's support, which allowed the technology to improve and the cost to fall.
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Environmental group concerned
Wilkinson said that he understands Canada is the first country Germany has entered into a contract with to provide hydrogen.
In 2022, Canada and Germany agreed to collaborate to help deal with Germany's energy crunch by establishing a "transatlantic Canada-Germany supply corridor."
At the time, Prime Minister Justin Trudeau called it a historic moment with promises to begin exporting hydrogen by 2025.
At least one Canadian environmental advocacy group was critical of Wilkinson's announcement, with Environmental Defence noting that hydrogen production requires a lot of energy.
"Hydrogen must be turned into ammonia to ship, using even more energy. By the end, approximately 80 per cent of the original energy is lost," said Julia Levin, the organization's associate director of national climate, in a statement.
Levin added the wind energy that's required to produce hydrogen won't be available for local use, which Nova Scotia needs to get off "dirty coal" for its electricity.
"A much better use of new wind power would be to replace coal with clean, affordable wind power," Levin said.
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