OTTAWA-
Some energy experts warn that a deal to sell Canadian hydrogen to Germany will be only a small, far-flung and expensive part of the solution to Europe’s energy crisis.
German Chancellor Olaf Scholz and Prime Minister Justin Trudeau are set to sign a hydrogen deal in Stephenville, NL next week, during Scholz’s official visit to Canada.
A government official speaking on condition of anonymity confirmed that a hydrogen deal will be signed that is the culmination of months of talks between the two countries.
Stephenville, a port city an hour south of Corner Brook on Newfoundland’s west coast, is the planned home for a zero-emissions power plant where wind power will be used to produce hydrogen and ammonia for export.
The Canada-German deal is expected to make fuel-hungry Germany the first major customer for a one-of-a-kind project in Canada.
Germany was already considering hydrogen as an energy solution in its climate plan before Russia invaded Ukraine last February. But since that invasion, as Russia tries to fend off punitive economic sanctions, it has repeatedly threatened Germany’s energy supply.
Germany typically gets about half of its natural gas from Russia and is looking for short-term and long-term solutions to move away from Russian exports.
Proponents say the hydrogen deal comes at a crucial time for Canada’s green hydrogen industry, which is still in its infancy.
But some experts also say the fledgling product comes with a high price tag and won’t be able to help Germany any time soon. Canada does not yet have the infrastructure to produce large amounts of green hydrogen or export it over long distances.
“The key is that a lot of associated infrastructure needs to be built before we can do a large-scale export of hydrogen to other countries,” said Amit Kumar, chairman of industrial research at the Natural Sciences and Engineering Research Council.
To be shipped, the hydrogen will likely need to be cooled to a liquid, loaded into a specially adapted pipeline or tanker, and heated again when it reaches its destination.
The process and infrastructure are expensive, as is production.
Most of the world’s hydrogen production comes from the conversion of natural gas into hydrogen and carbon dioxide. If the latter is emitted into the atmosphere, the hydrogen is called “grey”. In Canada, the goal is to capture those emissions with carbon capture and storage, which would make hydrogen “blue.”
To date, Canada has been talking about plans to help Germany with new natural gas projects in Atlantic Canada that could one day become blue hydrogen facilities.
But Germany is mainly looking for “green hydrogen”, which is produced by splitting water molecules using renewable energy such as wind or solar power. That comes at a much higher price.
“You’re looking at three to four times the cost increase,” said Kumar, a professor in the University of Alberta’s college of engineering, who was asked about drafting Alberta’s hydrogen strategy.
He said the technology needs to improve and more investment needs to be made before the cost is relatively comparable to its natural gas-derived alternative.
The company behind the Newfoundland project, World Energy GH2, said the first phase of its Newfoundland project should see up to 164 onshore wind turbines built to power a hydrogen production facility. Long-term plans call for tripling the size of the project.
In its proposal, World Energy GH2 said it is at the forefront of a new green industry.
Construction of the first wind farm is supposed to start next year. That means hydrogen production is still some way off, said Paul Martin, a chemical engineer and co-founder of the Hydrogen Science Coalition.
“It will take years and years and years,” he said. “And then you have the problem of infrastructure.”
Martin says the infrastructure costs to produce and transport green hydrogen don’t add up.
“Looking at it honestly as the green hydrogen field in Canada for export, it’s false,” he said.
That’s part of why Canada’s hydrogen strategy involves moving toward “blue hydrogen” before eventually turning green, Kumar said.
However, Germany’s strategy clearly favors green hydrogen, while the role of blue hydrogen is uncertain, an analysis by Isabelle Huber, a fellow at the Center for Strategic and International Studies, shows.
Trudeau and Scholz, who became Germany’s chancellor in December, first discussed hydrogen and Canadian energy exports when Trudeau visited Berlin in March.
At the G7 leaders’ summit in the Bavarian Alps in June, Trudeau spoke at length with other world leaders about how Canada could offer alternatives to nations dependent on Russian oil and gas.
In a news conference at the end of the summit, Trudeau suggested that the infrastructure used to transport liquefied natural gas could be adapted to transport hydrogen, as an example of how Canada could help.
“We’re also looking in the medium term to expand some infrastructure,” Trudeau said, “but in a way that achieves that medium-term and long-term goal of accelerating the transition, not just out of Russian oil and gas, but out of our own dependence on fossil fuels.
Canadian hydrogen could be just one part of Germany’s plan to ditch German gas in a very tight spot, said Sara Hastings-Simon, who directs the master’s of science in sustainable energy development at the University of Calgary.
“It’s not the end of everything, it’s not going to completely fix it and it’s not going to be the only answer,” he said in an interview.
This report from The Canadian Press was first published on August 16, 2022.
— With files by Mia Rabson