September 23, 2022

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Prime Minister Justin Trudeau and his German counterpart, Chancellor Olaf Scholz, appeared to pour cold water on the idea of shipping Canadian natural gas to Europe when asked about the proposal Monday.

At a press conference in Montreal, the two leaders instead suggested that their priority is developing cleaner energy sources like green hydrogen in Canada for export to Europe to help solve the continent’s energy crunch.

While not ruling out a role for Canadian natural gas in alleviating Europe’s energy shortage, Trudeau said there isn’t a clear business case yet for building a liquefied natural gas export terminal in Saint John, N.B. or elsewhere.

Trudeau said natural gas would have to be shipped by pipeline from the gas fields of Western Canada to a still-unbuilt liquefaction terminal on the Atlantic coast.

It would be a costly undertaking and might not be a prudent investment, given Europe’s commitment to a rapid transition to a cleaner economy, Trudeau said.

“One of the challenges around LNG is the amount of investment required to build infrastructure for that,” he said.

“There has never been a strong business case because of the distance from the gas fields, because of the need to transport that gas over long distances before liquefaction.”

Trudeau said private companies are investigating whether such multi-billion-dollar investments would be worthwhile in this “new context.”

The war in Ukraine has upended the global energy market.

Russia, a major supplier of natural gas to Europe, has been accused of holding back some of its supply to retaliate against crippling sanctions imposed by Western countries, including Germany, over its unprovoked attack on Ukraine.

To reduce Europe’s reliance on Russian gas, observers have floated the idea of shipping some of Canada’s abundant natural gas across the Atlantic to terminals in Germany.

But because Canada has been slow to develop proposed LNG sites in the Atlantic provinces, it’s unlikely this scenario will materialize any time soon.

Construction work is being carried out on the lock island in Brunsbuettel, northern Germany, Tuesday, March 1, 2022. The port on the North Sea is under discussion as a site for a new liquefied natural gas (LNG) terminal. (Frank Molter/dpa via AP Photo)

Trudeau said Canada will push ahead with LNG projects that are already under construction on the country’s West Coast, terminals that will supply gas to another energy-starved region: Asia.

With more gas coming from Canada, other major suppliers, like Qatar, would have a freer hand to send their product to Germany and other European countries, he said.

“Right now, our best [solution] is to continue to contribute to the global market, to displace gas and energy that then Germany and Europe can locate from other sources,” Trudeau said.

Scholz said Germany is interested in helping Canada develop its hydrogen production capacity — it’s still a nascent industry with very little production underway — so that it can eventually tap into that resource.

Trudeau and Scholz will travel to Newfoundland and Labrador on Tuesday to meet with companies there that are pitching new hydrogen projects that eventually could feed energy to Europe.

Germany is interested in “green” hydrogen — a form of fuel that is produced through electrolysis with no resulting emissions.

People inspect a transparent model of the hydrogen-powered Hyundai Tucson Fuel Cell at the 2015 Canadian International Auto Show in Toronto. (Darren Calabrese/The Canadian Press)

In a recent report, Canada’s environment commissioner, Jerry DeMarco, found that the actual annual production of hydrogen in Canada is only about 3 megatonnes — almost all of it being “grey” hydrogen, a dirtier form that produces roughly double the emissions of natural gas.

The commissioner said there are doubts about whether hydrogen can play any sort of meaningful role in Canada in the short term because very little of the necessary infrastructure — like hydrogen pipelines and liquefaction plants — is in place.

Green hydrogen is also prohibitively expensive. A gigajoule of natural gas costs about $3.79 to produce, while a gigajoule of green hydrogen costs over $60 if it’s produced using electricity from renewable sources such as wind and solar, the commissioner found.

But Scholz said rapid technological innovation is possible and hydrogen could soon be a crucial source of energy for major industrial economies.

“What we’re doing at this time is scaling them up, which would really change the world of industry and production globally,” he said.

“This is like all other industrial processes from the past. It starts slowly but then there is a moment where, from one day to the other, there is a big scaling up because so many different industries have decided they need to change.” 

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