In a major boost to Europe’s renewable energy ambitions, the European Commission has given the green light to Germany’s €200 million plan to produce and import renewable hydrogen from Canada.
This marks another step in Europe’s efforts to strengthen renewable energy supply chains and reduce dependence on fossil fuels.
The initiative, approved under EU state aid rules, will support the production of renewable fuels of non-biological origin (RFNBO) in Canada, which will then be imported into Germany and sold across the European Union.
The plan is closely aligned with the EU’s Hydrogen Strategy, the Clean Industries Pact and the REPowerEU plan, which prioritizes renewable energy as the basis of Europe’s industrial and climate future.
Commenting on the agreement, Teresa Rivera, Executive Vice President for Clean, Fair and Competitive Transition, said: “This German plan will meet the growing demand for renewable fuels within the EU and support the development of renewable fuel production in Canada, a valued trading partner.”
“This builds on the successes of the EU-Canada Comprehensive Economic and Trade Agreement, the Strategic Partnership on Raw Materials and the EU-Canada Industrial Policy Dialogue.
“The design of the scheme ensures that only the most cost-effective projects are supported, thereby reducing costs to taxpayers and minimizing the potential for distortions of competition.
Boosting renewable energy fuels across the Atlantic
Germany’s commitment of €200 million is expected to enable matching funding of €200 million from Canada, creating a €400 million investment package for RFNBO production.
These fuels are produced using renewable electricity, usually by electrolysis, and can be stored or transported as syngas or liquids derived from hydrogen and carbon dioxide.
The program will support the construction of up to 300 megawatts of electrolysis capacity in Canada, significantly expanding renewable energy-based hydrogen production. A competitive bidding process, scheduled to conclude in 2027, will determine which projects will receive funding.
According to German estimates, the plan could prevent up to 2.47 million tonnes of CO₂-equivalent emissions, contributing to national and EU-wide climate goals.
How the double auction system works
At the heart of this scheme is an innovative double auction mechanism. Canadian RFNBO producers and EU buyers will be integrated into a single market process.
Producers offering the lowest selling price are matched with buyers willing to pay the highest price, and public funds bridge the gap between the two.
This structure is designed to ensure cost efficiency while accelerating market development for renewable energy fuels.
All beneficiaries will be required to demonstrate full compliance with EU sustainability standards for renewable hydrogen as defined in delegated legislation.
Why renewable hydrogen is important for Europe
Expanding Europe’s renewable hydrogen supply is becoming increasingly important as heavy industry, transport and energy storage seek alternatives to fossil fuels.
Renewable hydrogen can decarbonize sectors that cannot be directly electrified, such as steel manufacturing, chemicals, refining, and fertilizer production.
Beyond industry, renewable energy-based hydrogen can power long-haul trucks, ships, and potentially aviation through synthetic fuels. They also play a key role in balancing the power grid by storing excess renewable energy generated by wind and solar power.
By sourcing RFNBO from trusted partners like Canada, Europe can diversify supply, improve energy security and accelerate large-scale deployment of hydrogen technologies beyond 2030.
Build on previous approvals
This initiative follows European Commission approvals in 2021 and 2024 to support investments in renewable hydrogen in non-EU countries.
Together, these plans reflect a strategic shift towards global renewable energy cooperation to meet Europe’s growing demands.
As renewable energy moves from ambition to infrastructure, partnerships like this German-Canadian plan will play a decisive role in shaping Europe’s low-carbon economy.
Source link
