Toronto When Chancellor Olaf Scholz and Economics Minister Robert Habeck travel to Canada from August 21 to 23, the focus should be on renewable energies and above all on hydrogen. An agreement with the Canadian government is planned to promote the expansion of Canadian hydrogen production – from which Germany as an importing country should benefit.
The trip and the agreement are part of the German government’s efforts to become less dependent on Russian gas supplies by deepening energy partnerships with other countries.
Liquid gas (LNG) from Canada for Germany, on the other hand, should not be an issue on the trip. The prospects for a fast LNG export business from Canada to Germany are thus further dwindling.
The Federal Ministry of Economics says: “In principle, there is interest in Canadian LNG – the companies that trade would have to decide whether there could be deliveries here.”
There are still no LNG export terminals on Canada’s east coast that would be suitable for exporting gas to Europe. And it doesn’t look like that’s going to change in the next few years.
Construction of LNG terminals is not progressing
According to the Zukunft Gas association, the interest of Canadian investors in the construction of LNG export terminals on the east coast is limited. They do not believe that Germany will buy gas in the long term. This has to do with the energy and climate policy of the federal government. “This sends clear signals that Germany wants to phase out the use of natural gas as quickly as possible.”
But only after ten to 20 years can the investment costs for an export terminal be recouped, which according to the gas association amount to around ten billion euros.
The costs for export terminals are ten times higher than for LNG import terminals, which are currently planned on the German coast. Because the gas liquefaction process is technically more complex and requires more energy.
The uncertain investment prospects are also the reason why talks with Qatar about the supply of LNG are not progressing. “Because Qatar would have to expand its expensive export infrastructure in order to be able to satisfy the additional German demand,” writes Zukunft Gas.
“More cost effective for Canada to export to Asia”
Gas importers in Germany are also not currently planning to import gas from Canada. The EnBW group, which has already reserved LNG capacities at the German import terminal currently under construction in Stade, says: “Additional LNG volumes will come from the USA and the Middle East in the future.”
An agreement with the Canadian government is planned to promote the expansion of Canadian hydrogen production.
(Photo: IMAGO/ZUMA Press)
Analyzes by the Energy Economics Institute at the University of Cologne (EWI) show that direct LNG exports to Europe will be limited. “It’s more cost-effective for Canada to export LNG gas to Asia,” says Eren Çam, head of the Energy Commodities Department at EWI.
Canada’s west coast already has export terminals and access to the pipeline carrying produced natural gas from Alberta, also to the west. A corresponding pipeline to the east coast would first have to be built.
What is currently considered the most realistic option is some kind of energy ring swap: “LNG exports from western Canada could have an indirect impact on Europe and lower prices,” says expert Çam. Canadian gas exports could replace US LNG exports to Asia, allowing more US volumes to reach Europe.
Volker Treier, head of foreign trade at the chambers of industry and commerce, says: The construction of LNG terminals on the east coast could also be driven by the prospect of higher prices for gas, which Germany would be willing to pay. “The German economy is willing to pay significantly more for energy to keep German industry running.”
In its business with Canada, Germany relies primarily on hydrogen and less on liquid gas.
(Photo: Reuters)
Louise Comeau, director of climate change and energy solutions at the New Brunswick Conservation Council, recently said that claims that LNG exports would secure Europe’s energy supply are unrealistic. “We’re definitely not going to help Germany meet winter heating needs,” Comeau said.
In fact, in the gas industry, an average of five years is expected from the idea to the operation of an LNG terminal. Canadian LNG investors have yet to officially bury their plans to build export terminals completely.
Pieridae Energy is even considering resuming its plan to build a terminal in Nova Scotia to export liquefied natural gas to Germany, including a possible floating LNG project. But the plans are not really concrete.
Switching from LNG terminals to hydrogen complicated
Even if LNG terminals were built on the east coast, this would not guarantee the export of hydrogen to Germany, which the federal government is counting on in the long term. A hydrogen-capable LNG infrastructure does not yet exist anywhere in the world – and it is a technical challenge.
>> Read here: Alternative to Russian gas: How the German LNG terminals are doing
In contrast to natural gas in its pure form, hydrogen is not suitable for transport by ship. Because in order to liquefy it, it has to be cooled to minus 253° C (with LNG it is only minus 161° degrees). In addition, the volume-specific energy density is significantly lower compared to LNG, so less can be transported in the same space.
“For this reason, hydrogen will most likely be transported in the future in the form of ammonia, a hydrogen derivative.” This only needs to be cooled to minus 33° C and also has a significantly higher energy density than liquid hydrogen.
The process of making ammonia is considered simpler in the industry than liquefying natural gas, so the cost of export terminals should be less than the cost of LNG export terminals, Zukunft Gas writes. However, the synthesis of ammonia is a chemical process, while the liquefaction of natural gas is a physical one, so different systems are required.
The VDI association points out that a terminal that can be used for LNG and later for hydrogen should ideally be planned and built as if it were being operated exclusively with liquid hydrogen. “Upgrading at a later date is possible, but not economically viable because too many large components would have to be replaced.”
The situation is somewhat different when it comes to importing hydrogen: If a terminal is to be designed for imports via ammonia in the future, the tanks could already be prepared for use with ammonia, say the gas experts.
If you switch later, only components such as the internal pumps and compressors would have to be replaced. This is already planned in the design of the German import terminals in Wilhelmshaven and Stade.
The hydrogen market in Canada is just emerging. However, the country is the third largest hydroelectric power producer in the world and has great potential for the production of green hydrogen, which can only be produced using renewable energies such as hydroelectric power.
So far, Canada has exported excess hydroelectric power to the United States. Blue hydrogen generated from natural gas would also have potential as Canada has large oil and gas reserves. However, the federal government wants to rely exclusively on green hydrogen in the future.
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