Letters: About the Canada-Germany hydrogen alliance

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Let's have a chat about the Canada-Germany Hydrogen Alliance in light of the news Germany intends to build 10 GW of new natural gas capacity. In particular I want to cover how the east coast of Canada (namely Newfoundland) fits in. This is also topical to Nova Scotia, where they too have gone all in on large wind turbines.

At a glance, this policy announcement is not dramatically out of step with our own energy goals. These plants are meant to be 'hydrogen ready' and will be obliged to convert their fuel at some point in time. There will be direct operational subsidies for these plants to run off of Hydrogen. A much smaller number of dedicated plants will be funded for pure hydrogen generation. The devil is in the details — direct H2 fired capacity will only be funded up to 500mw. Operational funding will be given to those using both green and blue hydrogen. Red or pink hydrogen from nuclear will not receive this subsidy.

This is strange at best, and pretty bad for the green hydrogen sector. Green hydrogen relies on a variable source of energy (wind) and includes pretty dramatic capital costs. Blue hydrogen comes from natural gas, which is often treated as a waste product to be burnt rather than captured. Natgas has been safely under $3 / mmbtu for about a year now and currently barely about $2 (rip boil bulls).

While estimates vary, Green H2 costs 3-6 USD per KG to produce vs 2.8-3.5 USD per KG (source is GEP, estimates have a bit of a range but this captures it well). In a short or medium time frame, it is hard to imagine green hydrogen being able to cut it's cost per kg in half. Long term estimates do have the cost of green h2 coming down with innovations, and while this is good for the industry generally, it's pretty bad for Newfoundland.

The notion of east coast wind going to Germany as ammonia is basically following the assumption H2 will be in such high demand, the freight and intermittency will be worth the cost. The German side of the alliance would help generate demand by accelerating their H2 build out, and build ports to receive ammonia for further processing.

And there is... something to be said about ammonia as fuel. But, the German's do not seem to be building out the pathway for Canadian electrons to reach their shore. It was only last month industry leaders in Germany complained about the lack of direction. This is the German government's answer — more American natural gas.

It is sensible policy in some regards; namely, Germany uses a lot of coal still. Replacing coal with natural gas is a pretty giant step in the right direction, though still broadly trivial compared to turning back on and building out their nuclear. North American natural gas will likely remain abundant for some time, and we're a more stable partner than Russia (even if piped gas is still part of their nations business plan).

It does, however, leave their partners stranded.

Christopher Bruce

Codroy Valley, NL