Canada-Germany LNG deal looks unlikely as focus on hydrogen grows

Prospects for a liquefied natural gas (LNG) export deal from Canada to Germany are set to evaporate as German Chancellor Olaf Scholz prepares for a visit to Montreal, Toronto and Stephenville, Land -Neuve, from August 21 to 23, depending on The energy mix.

For months, Canadian fossil fuels have been touting the possibility of shipping LNG to Germany to help the country deal with an energy supply crisis caused by Russia’s war in Ukraine. Public speculation and behind-the-scenes lobbying has focused on three possible export terminals: Repsol SA’s Saint John LNG plant in New Brunswick, the Pieridae Energy on-again, off-again scheme for a new export terminal in Goldboro, Nova Scotia, and much less likely, the C$14 billion Énergie Saguenay project which was flatly rejected by the Innu Nation and the Government of Quebec last July.

But none of these plans seem to have been retained when Germany announced the Chancellor’s itinerary for his Canadian tour. The words “liquefied” and “LNG” did not appear in a Saturday article in The Globe and Mail that had reached an agreement between Trudeau and Scholz “to jointly explore the production of hydrogen fuel in Canada for export to Germany.” Scholz’s stop in Stephenville for a hydrogen show will bring it closer to the site of the proposed one-gigawatt, 164-turbine turbine Port au Port wind farmwhich would be connected to a 500 megawatt hydrogen and ammonia plant at the Port of Stephenville.

LNG was also not mentioned in an announcement made Saturday by the Prime Minister’s Office in Ottawa.

In addition to discussing peace and security in Europe, the two leaders “will continue to collaborate on ways in which the two countries can work together to safeguard energy security and accelerate the global transition to clean energy, including through secure access to key resources such as clean hydrogen and critical minerals”, the PMO said. “They will discuss taking strong climate action through policies such as pricing pollution” and talk about “strengthening the relationship between science and innovation and attracting investment, including in sectors such as automotive and electric vehicle manufacturing, hydrogen and clean energy, bio-manufacturing and life sciences.”

Aversion to LNG

The growing emphasis on hydrogen is the result of ongoing discussions between the two countries and, at least in part, a reflection of a strong aversion to LNG on the part of a key partner of Scholz’ three-party coalition governmentthe German Green Party, said a senior Canadian government official The mixture. The push for LNG in both governments continues, but even if it succeeds, the Repsol plant – a facility that already exists and would likely not need new permits or public hearings to revamp its operations – is the only one with a credible chance of proceeding.

Even then, there are serious questions about whether Repsol could convert its St. John facility for export in time to help Germany deal with a short-term gas shortage while the country is also committed (and legally bound) to rapidly reduce its greenhouse gas emissions.

In April 2021, the German Constitutional Court declared that the country’s 2030 emissions reduction targets were insufficient, lacking in detail and therefore violated the fundamental rights of citizens, including the nine young climate activists who originally launched the case. A week later, the then finance minister, Scholz announcement a 65% emissions reduction target for 2030 and a 2045 deadline to reduce emissions to zero.

For months, this rapid timing has raised serious questions about any Canadian LNG exports to Germany. “If the typical off-take agreement in the LNG sector is 20 years and we want to be out of gas in 2045, there is not much time for any of these projects to come online at unless you find another creative solution,” Gerhard Schlaudraff, Deputy Head of Mission at the German Embassy in Ottawa, Told The mixture in May.

“Opening a new LNG export facility in five years would be irrelevant to the current energy crisis in Europe,” added Brian O’Callaghan, principal researcher and project manager at the Oxford Economic Recovery Project in the UK, in a statement released in early July by the Sierra Club of Canada Foundation and the Council of Canadians. “The construction of a new LNG export facility in Canada appears to be a huge active failed in the making.”

As Canada’s fossil sector seeks export deals with Europe, Pierre-Olivier Pineau, a professor at the HEC business school in Montreal, said companies will need guarantees before investing in new infrastructure to make these agreements a reality.

“I have never heard Germany say… ‘We are ready to sign a purchase contract for the next 20 years’, so that they secure all the financial aspects of the project,” Pineau said. Told Radio Canada yesterday.

Canadian Minister of Natural Resources, Jonathan Wilkinson excluded government subsidies for East Coast LNG projects in early July.

Green means green

A parallel conversation took place around the production process for any hydrogen that Canada exports to Germany. Today, Canadian hydrogen is mostly derived from fossil gas, so it’s labeled “blue” hydrogen if the resulting emissions are captured and stored or earns the dreaded “grey” designation if carbon and methane pollution is simply released into the atmosphere. A project like the Port au Port wind farm would produce ‘green’ hydrogen, and it wouldn’t need a pipeline east from British Columbia, Alberta or Saskatchewan to deliver the product. to an export terminal.

Green hydrogen is also the only formulation Germany would likely accept, Schlaudraff said. The mixture in May.

“When we say hydrogen, we mean ‘green’ hydrogen,” he said. “The Canadian side, for very good reason, prefers to talk about ‘clean’ hydrogen. The situation in Canada is different, and we appreciate that. But the German financing instruments for the hydrogen economy are all geared towards green hydrogen,” and “if you look at the opportunities for Canada to export hydrogen to Europe, it’s just green hydrogen made from water and electrolysis, due to the huge renewable potential in Canada.

Canada’s Duty

During a trip to St. John earlier this month, Deputy Prime Minister Chrystia Freeland gave general support for the idea that Canada should try to ship its share of the fossil fuel whose Europe needs.

“I think energy security today, more than ever, is a matter of absolute security, and Canada is really lucky,” she said. said, after a reporter asked if Canada should do more to export LNG. “We have a lot of energy. I think it is a political responsibility for us as a country to support our allies in energy security.

But despite “a very difficult time for many European countries at the moment”, she refused to endorse the Repsol factory in St. John as an export opportunity. “I think now is not the time to pick specific projects,” Freeland said.

And while Enbridge Inc. CEO Al Monaco is urging Ottawa not to waste a “second chance” to enter the global LNG market, other factors militate against a rapid build-up of gas. New green finance taxonomy adopted in early July by the European Union sets an emissions standard that will be difficult to meet for gas, according to analysts at Rystad Energy concluded later in the month.

Meanwhile, public opinion on both sides of the Atlantic appears to be solidifying in a way that would make a major LNG deal a tougher political sell. In Canada, a Léger poll in mid-July for Clean Prosperity concluded that the majority of voters expect elected officials to implement credible climate plans despite high inflation. And CBC says around 6,000 people from across Europe have joined a festival-like protest camp in Hamburg, Germany, saying LNG ‘climate suicide’ is not a solution to the energy crisis in Germany.

This article is republished from The energy mix. Read it original article.

About Norma Wade

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