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Canada, Germany sign deal to start hydrogen shipments

Canada intends to start shipping green hydrogen produced by wind farms to Germany by 2025, the first step in a partnership to help Europe’s biggest economy reduce its reliance on fossil fuels.

Canadian Prime Minister Justin Trudeau and German Chancellor Olaf Scholz signed a five-year hydrogen accord on Tuesday in Newfoundland and Labrador, a remote province on Canada’s east coast with abundant wind power potential.

The gaseous fuel, which burns hot enough to be used for making steel, is seen playing a key role in curbing industrial emissions, as well as eventually powering cars, trucks and ships. The two countries commit in the pact to creating “a transatlantic supply chain for hydrogen well before 2030, with first deliveries aiming for 2025.”

Canada is “aiming to become a major producer and exporter of hydrogen as well as related clean technologies,” according to the accord, and wants to attract foreign direct investment to build the infrastructure.

Germany, meanwhile, is “aiming to import significant amounts of renewable hydrogen to decarbonize its hard-to-abate sectors in line with its 2045 climate neutrality target.”

Trudeau and Scholz inked the agreement in Stephenville, a small town with a deep sea port on the Gulf of St. Lawrence, more than 1,000 miles northeast of New York. There are at least two large-scale wind farm projects proposed for the area that would use water electrolysis to produce hydrogen.

Speaking earlier in the day at a business conference in Toronto, Scholz said Canada “has almost boundless potential to become a superpower in sustainable energy and sustainable resource production.”

The chancellor added that “Germany, for its part, stands ready to become one of your closest partners.

Scholz is on the final day of a three-day visit to Canada, bringing a delegation that includes Economy Minister Robert Habeck and major German business leaders.

The trip has seen Volkswagen AG and Mercedes-Benz Group AG seal agreements with Canada to secure access to raw materials such as nickel, cobalt and lithium for battery production.

Scholz also met with representatives of Canadian pension funds in Toronto to lobby for more green investments to support Germany’s shift toward a carbon neutral economy.

Canadian and German officials are still examining options for shipping liquefied natural gas to Germany, but Trudeau said Monday there has to be a strong business case to justify building export infrastructure on Canada’s east coast. Voicing support for Scholz’s effort to wean his country off Russian gas, the prime minister said he would be willing to ease the regulatory burden if the private sector decides LNG export projects make economic sense.

Source: Bloomberg

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