Canada, motivated by the need to reduce reliance on Russian energy, has formalized a pact with Germany aimed at propelling the large-scale exchange of clean hydrogen fuel. This agreement, solidified through a memorandum of understanding, will bolster transactions between Canadian hydrogen producers and Germany’s sectors involved in industrial manufacturing and energy distribution. According to Canada’s federal natural resources ministry, this collaboration underscores Canada’s intent to replace Russian oil and gas imports with clean hydrogen, positioning Canada as a leader in clean hydrogen production and exportation.
Hydrogen, a zero-carbon fuel, is primarily used to power significant industrial machinery, heavy vehicles, and for heating purposes. In response to the burgeoning hydrogen economy, Germany introduced the H2-Global project in 2021, employing a “double auction” strategy where the government purchases green fuel from producers to supply industrial consumers at a reduced rate. This agreement marks an extension of the model, with Canada expressing readiness to cover potential losses, though the exact subsidy amount remains unspecified.
Germany’s announcement last month highlighted plans to allocate up to €3.53 billion for the acquisition of green hydrogen and its derivatives between 2027 and 2036, to bridge the price gap between supply and demand. Economy Minister Robert Habeck acknowledges existing challenges but sees a joint H2-Global financing scheme as a critical tool for addressing the pricing disparity.
This strategic alliance follows a 2022 agreement between Canadian Prime Minister Justin Trudeau and German Chancellor Olaf Scholz to create a transatlantic supply chain, aligning policies to foster investment in hydrogen projects, with anticipated Canadian exports to Germany by 2025. Canada has announced over 80 low-carbon hydrogen projects, with one of the inaugural projects experiencing a delay due to the need for European clients to develop specialized infrastructure for handling the fuel.
