Berlin, Dusseldorf, Toronto The town in Newfoundland in eastern Canada has just 6,000 inhabitants. But Stephenville is to become the scene for the conclusion of an agreement that may be decisive for Germany in the future. On Tuesday, Chancellor Olaf Scholz (SPD) and Vice Chancellor Robert Habeck (Greens) want to seal a hydrogen alliance there with their Canadian partners.
According to experts, eastern Canada offers excellent conditions for the production of climate-neutral green hydrogen. German companies are very interested. Siemens Energy, Evonik, RWE, the plant manufacturer SMS Group, the electrolyser specialist Thyssen-Krupp Nucera and Uniper, among others, will be present at an exhibition in Stephenville on Tuesday.
The fact that Scholz and Habeck started the trip to Canada together on Sunday afternoon shows how important the North American country could be in the future. The Ukraine war has shifted geopolitical axes. Germany needs to deepen relations with friendly countries to better arm itself against global risks while preserving the prosperity built up through international cooperation.
Hardly any other country seems to be as predestined for this as Canada, which, politically stable, shares western values and, thanks to its prerequisites in the energy sector, is raising high hopes – not just for hydrogen, but also for gas. The latter is not officially a topic of the trip, but according to government circles it will undoubtedly be part of many discussions.
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The German economy also shares the hopes. Scholz and Habeck are accompanied by around a dozen company bosses, including the outgoing Volkswagen CEO Herbert Diess and Siemens Energy boss Christian Bruch. Uniper boss Klaus-Dieter Maubach is also there. “With the expansion of this cooperation, we can hopefully make a contribution to security of supply in Germany,” Maubach told the Handelsblatt.
Final hurdles in Ceta agreements
So far, German-Canadian economic relations have been limited. In 2021, German exports of ten billion euros faced Canadian exports of 6.2 billion euros. In the ranking of Germany’s most important trading partners, Canada only ranks 31st.
But even before the trip, the German traffic light government made it clear that something should change. The European-Canadian free trade agreement Ceta has been in force since 2017 – but only temporarily because many EU countries have not yet ratified it, above all Germany. After the old and initially also the new federal government had been unable to come to an agreement for a long time, the coalition finally pulled itself together in June.
The Ceta ratification has now been initiated and should be completed after certain additional declarations on investment protection have been made. According to Handelsblatt information, there is currently a dissent between the Federal Government and the EU Commission about the statements. It’s about how broad the explanations can be. But the traffic light made it clear that we no longer want to let the ratification fail.
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The importance of German-Canadian cooperation was demonstrated at the latest by the posse surrounding the turbine for the Nord Stream 1 gas pipeline. Russia had used the turbine serviced in Canada as a reason for cutting back deliveries because the component could not be returned due to sanctions. Habeck then campaigned specifically for an exception with Prime Minister Justin Trudeau. Now the turbine is stored in Germany.
No chance of short-term gas
In Germany’s acute energy crisis, however, Canada will probably not be of any direct help. It will still be some time before hydrogen is ready for the market. When it comes to gas, too, Canada is only hopeful. The country has immense deposits. However, there are no terminals on the east coast of Canada that would be suitable for shipping liquefied natural gas (LNG) to Europe. There are plans for the construction, but there is also domestic political resistance.
Even if implemented quickly, the LNG deliveries from Canada would not reach Germany within the next few years. Prime Minister Trudeau said on Friday there was not much Canada could do to help Germany through the coming winter.
The terminal on the west coast still has the best chance of supplying Asia, which could help Germany indirectly. Chancellor Scholz points out that every newly developed gas field in the world helps. Because the price has risen so sharply because large quantities of Russian gas are missing on the world market and there is a struggle for the scarce remaining resources.
>>Read more about this: Why a fast energy deal between Germany and Canada is unrealistic
The federal government is therefore pinning more hope on Canada as a long-term supporter of the transformation of the economy. Green hydrogen is considered the key to decarbonization and is intended to completely replace gas and oil in industry, aviation and heavy goods transport. Green hydrogen is produced using electricity from renewable sources and water through electrolysis and is climate-neutral.
Because the area for the production of wind and solar power in Germany is limited, a large part of the green hydrogen will have to be imported from abroad. Canada is said to play a key role. Experts assume that the first hydrogen deliveries will be possible from there from 2026.
Extensive possibilities for hydrogen
The conditions are ideal, as a study by the consulting firm Adelphi from last year shows. Canada has such a significant potential for electricity production from renewable sources “that in the long term all of its own energy needs can be covered and significant surpluses could be used for the export of green hydrogen,” it says. Canada will possibly be able to export enough to cover more than a third of Germany’s energy consumption.
According to Raffaele Piria von Adelphi, a Canadian-German What
Hardly any other country seems as predestined for an in-depth economic partnership as Canada.
(Photo: Imago Images)
hydrogen alliance great advantages: “As a stable democracy, Canada is an ideal partner from whom Germany could import significant quantities of green hydrogen in the long term,” said Piria. The east of the country with its ports in particular has “immense potential”.
Adelphi has been working for years on behalf of the Federal Ministry of Economics and Technology to prepare German-Canadian cooperation on energy issues, with Piria taking the lead.
In addition to hydrogen, Berlin is also hoping for Canada so as not to become dependent on authoritarian states for certain raw materials, according to government circles. Canada is one of the largest producers of nickel, cobalt and copper in the world. Pierre Gratton, President of the Canadian Mining Association, says: “We can provide Europeans with raw materials that are greener and produced with higher environmental standards than anywhere else in the world.”
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