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'Huge opportunity': East Coast hydrogen industry gets shot in arm from German energy giants

Royal Dutch Shell Plc Opens Green Hydrogen Refinery
Royal Dutch Shell Plc Opens Green Hydrogen Refinery

On the sidelines of German Chancellor Olaf Scholz’s first official visit to Canada, some big names in European energy have signed initial agreements that could provide a massive boost to Atlantic Canada’s fledgling hydrogen industry over the next decade.

German energy providers E.ON SE and Uniper SE announced plans to begin work on deals to buy a total of one million tonnes of green hydrogen annually from EverWind Fuels’ planned Point Tupper facility in Port Hawkesbury, Nova Scotia, starting in 2025.

The news came on the last day of Scholz’s three-day visit to Canada, which wrapped up Tuesday in Newfoundland, with the signing of an agreement between the two countries to jointly explore the production of green hydrogen fuel for export to Germany.

Scholz said Tuesday the country is moving away from Russian energy “at warp speed” as Europe and its allies continue efforts to isolate Russia following the Putin regime’s invasion of Ukraine last February. Germany is hoping Canadian hydrogen could be a medium or long-term solution to meet the country’s energy demands without the greenhouse gas emissions that accompany traditional fossil fuels, since hydrogen emits only water when burned or used in a fuel cell.

 Prime Minister Justin Trudeau, left, and German Chancellor Olaf Scholz arrive for the Canadian-German Business Forum in Toronto, on August 23, 2022.
Prime Minister Justin Trudeau, left, and German Chancellor Olaf Scholz arrive for the Canadian-German Business Forum in Toronto, on August 23, 2022.

European gas and power prices have skyrocketed to record levels following a decline in Russian gas deliveries to the region that some fear could presage a costly winter.

“Clearly Germany needs this energy. There’s a real crisis over there right now,” said EverWind chief executive Trent Vichie in an interview Tuesday. “Germany needs new energy sources and they want green energy sources and the combination of those things is accelerating the green industry and hydrogen.”

EverWind’s project will see the construction of a green hydrogen and ammonia production and export facility on the site of an existing marine terminal. The hydrogen would be produced using a green power from the provincial electricity grid and onshore wind power.

E.ON SE chief operating officer Patrick Lammers called the project the start of “a transatlantic hydrogen bridge,” in a statement Tuesday.

“This way, we can bring the energy of the Canadian wind to Germany by ship,” Lammers said. “We are not just decarbonizing and diversifying our energy supply. We will create more energy security by co-operation between societies which share the same values and stand for democracy, the rule of law and a social market economy. This step is more urgent than ever.”

Vichie said permits will be in place this year and construction could start in early 2023. The agreement struck Tuesday aims to see the Nova Scotia project reach commercial operation by 2025. Future phases of the Point Tupper facility could involve production powered by offshore wind.

EverWind isn’t the only wind-powered hydrogen project proposed for Atlantic Canada.

World Energy GH2 is proposing to build up to 164 wind turbines on the Port au Port Peninsula on Newfoundland’s west coast to power a hydrogen and ammonia production plant in Stephenville. Earlier this month, the province ordered that an environmental assessment be completed before it can go ahead.

 German energy providers Uniper SE’s headquarters in Duesseldorf, western Germany.
German energy providers Uniper SE’s headquarters in Duesseldorf, western Germany.

Australia-headquartered Fortescue Future Industries is also proposing to build a green hydrogen production and export project in and around Stephenville, St. George’s and Channel-Port Aux Basques in Newfoundland.

But energy experts warn that it may take more time for Atlantic Canada’s green hydrogen projects to come to fruition. In part, that’s due to the sheer amount of infrastructure required, from wind turbines, hydrogen production facilities, pipelines and liquefaction plants — to the terminals and regasification plants that will be required on the other side of the Atlantic.

Green hydrogen is also still a developing technology that remains more costly than conventional hydrogen production methods using natural gas — even after factoring in the additional costs associated with using carbon capture technology to ensure near-zero emissions, said University of Alberta professor Amit Kumar, the industrial research chair in energy and environmental systems for the Natural Sciences and Engineering Research Council.

“The cost of producing hydrogen from wind-based electricity is three to four times higher than producing hydrogen from natural gas integrated with carbon capture and storage,” Kumar said.

And some of the green hydrogen projects proposed in Atlantic Canada would only be capable of producing a fraction of the supply that can currently be produced using natural gas, Kumar added. “The technology is still developing. The costs are still high. And the scale is still very small.”

But as a net importer of energy — one that has suffered significantly in the face of dwindling gas supplies from Russia in recent weeks — Germany appears motivated to strike long-term energy agreements with a like-minded, democratic ally.

We believe that Atlantic Canada presents a huge opportunity for us, but also for Canada to contribute to a green energy transition

Olaf Scholz

Scholz said his country’s demand for hydrogen will increase to around 90 to 110 terawatt-hours by 2030.

“Hydrogen will play a major role in our future energy supply, especially in sectors that are difficult to decarbonize otherwise, such as industry, shipping, aviation, or heavy traffic,” Scholz said Tuesday evening.

“We believe that Atlantic Canada presents a huge opportunity for us, but also for Canada to contribute to a green energy transition.”

With additional reporting from the Canadian Press

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