On Sept. 15, 2022, Gowling WLG was honoured to host Her Excellency Sabine Sparwasser, German ambassador to Canada, at the first session of our 2022 Fall Energy Innovator Roundtable Series. The key take away from that session was that Canadian hydrogen project developers now have access to an attractive market in a country with a long history of taking practical steps to attract industry, a close diplomatic relationship with Canada, independent courts, the rule of law and a very clear need for energy resources.
During the session, which was, as always, subject to the Chatham House Rule, insights and context were shared regarding Chancellor Scholz's visit to Canada in August and the overall importance of the Canada-Germany Hydrogen Alliance to prospective project developers in Canada.
The key takeaway from the September roundtable session was that Canadian hydrogen project developers now have access to an attractive market in a country with a long history of taking practical steps to attract industry, a close diplomatic relationship with Canada, independent courts, the rule of law and a very clear need for energy resources.
We see this fact as being crucially important to the hydrogen industry in Canada – comparable to the early days of Germany's Energiewende when it led the world in providing bankable contracts to solar and wind energy project developers, thereby creating a fundamental economic shift for both technologies which drove these technologies down the economic cost curve and laid the groundwork for the energy transition now well underway around the globe.
During the roundtable discussion some concern was expressed regarding the exclusion of blue and pink hydrogen from the German program. It seems likely, in our view at the moment, that the rising hydrogen tide will float all technological boats and that, as the nascent hydrogen market evolves, new and expanding opportunities will form for all forms of hydrogen.
The decision taken by the world's fourth largest economy to make itself independent of Russian oil and gas and to do so, at least in part, by shifting to renewable hydrogen is momentous for the hydrogen industry. Not all the bugs will be worked out in the early stages but Germany's 30+ years of experience contracting clean and renewable energy resources – large and small – bodes well for the creation of an exciting new market, which will, once again, likely lay the ground work for another essential step in the global energy transition.
Further background: The Canada-Germany Hydrogen Alliance
On Aug. 23, 2022, the Canadian Minister of Natural Resources Jonathan Wilkinson, Vice-Chancellor of Germany Robert Habeck, Canadian Prime Minister Justin Trudeau, German Chancellor Olaf Scholz and German Ambassador to Canada Sabine Sparwasser visited the small town of Stephenville, Newfoundland, to sign a Joint Declaration of Intent to establish a Canada-Germany Hydrogen Alliance. The Canada-Germany Hydrogen Alliance commits the two nations to collaboration in the development of a new hydrogen economy, and to the creation of a transatlantic supply chain for hydrogen, with a target to have initial exports begin in 2025.
"Green hydrogen is an important key for a climate-neutral economy. We must resolutely pursue climate change mitigation in order to secure our prosperity and freedom. This is more important and urgent than ever at this time. The Hydrogen Alliance between Canada and Germany is a significant milestone as we accelerate the international market rollout of green hydrogen and clear the way for new transatlantic cooperation. Specifically, we aim to build up a transatlantic supply chain for green hydrogen. The first shipments from Canada to Germany are to begin as early as 2025." [Emphasis added.]
Robert Habeck, Vice Chancellor of Germany
A new Energiewende: Germany's National Hydrogen Strategy
In 2020, the German federal government published its National Hydrogen Strategy (the National Strategy" or the "Strategy") to boost the domestic market for green hydrogen in an effort to meet its climate targets for 2030 and its long-term goal to achieve carbon neutrality by 2050. Through the Strategy, the German federal government acknowledged limitations of its domestic production capabilities and recognized the importance of international cooperation and partnership to keep with demand, particularly in the medium to long term:
"Considering the status quo, it is unlikely that the large quantities of hydrogen that will be needed for the energy transition can be produced in Germany alone, as Germany's renewable energy generation capacity is limited. This means that Germany will continue to import much of its energy from abroad. We will foster and intensify international cooperation and partnerships on hydrogen." [Emphasis added.]
The National Hydrogen Strategy,
Federal Ministry for Economic Affairs and Energy
In particular, items 34 to 38 of the National Strategy focus on the international hydrogen market and external economic partnerships.
This is exciting news for Canada and we look forward to seeing the market response.