Canada to join German-backed effort to create hydrogen market

Canada is set to join a German- and Dutch-backed effort to kickstart the trade of hydrogen, which is seen as a clean-energy alternative to dirtier fossil fuels.

The North American nation will provide funding for H2Global to help create hydrogen markets, Energy and Natural Resources Minister Jonathan Wilkinson said in an interview, without providing specific figures. He and German Economy Minister Robert Habeck are set to make an announcement in Hamburg on Monday. 

Canada already has an agreement to supply Germany with hydrogen by next year, though there is currently no global market for the gas. The two countries are now seeking to reduce price uncertainty that has so far deterred investment.  

H2Global uses a government-backed intermediary to connect buyers and sellers of the gas through auctions. It helps cover any price gap between long-term supply and short-term sales contracts — akin to so-called contracts-for-difference that have also been used to foster investment in wind energy. 

The aim is “to best address premiums as we move to scale the production of hydrogen over a 10-year period,” Wilkinson said, adding that the precise mechanics of the auctions are going to be established within the next 90 days. 

Germany’s Economy Ministry is providing €900 million ($980 million) to support H2Global’s auctions for green derivatives, and further funding has been earmarked by Berlin and the Dutch government.

Canada is “still in the timeframe” to ship its first hydrogen from ammonia to Germany by the end of next year, though it could occur in 2026, Wilkinson said.