Canada's hydrogen export deal to Germany needs funding approval

Canada and Germany's agreement to export green hydrogen from Canada to Germany is pending more federal funding decisions. The project also needs approval from European regulators to ensure enough competition in the market. The partnership between Canada and Germany began with a signing ceremony in August 2022, attended by Prime Minister Justin Trudeau and German Chancellor Olaf Scholz. Both countries agreed to invest $600 million to help Canadian companies tap into German markets and provide Germany with competitively priced clean energy. Global Affairs Canada has indicated that additional funding may be necessary for the project to proceed. The acting director-general for European affairs, Stéphane Lessard, mentioned that key funding decisions need to be finalized. He stated that the government is dedicated to advancing the project but did not clarify if it requires Parliamentary votes, currently blocked by a Conservative filibuster. The project also relies on a competitive auction process for Canadian companies to bid on supplying hydrogen to Europe. Current hydrogen prices are too high to be competitive with other energy forms, prompting the need for this auction to reduce costs. A review process by the European Commission for the auction parameters is ongoing. Canadian officials believe they have addressed all concerns raised by Europe. However, the European Commission is focused on ensuring that government funding does not distort competition in the market. German Ambassador to Canada, Tjorven Bellmann, confirmed that the project is in motion but must meet regulatory standards for competition. Meanwhile, Natural Resources Canada remains optimistic about the competition potential from Canadian producers. This hydrogen initiative is part of Germany’s strategy to replace coal power with cleaner energy over the next 15 to 20 years and reduce reliance on Russian energy. Canada aims to produce green hydrogen, which is considered the most environmentally friendly option.