Energy
Canadian hydrogen is not a silver bullet for Germany’s energy needs
From Resource Works
Germany bet big on hydrogen, an infant technology in terms of commercial viability. Canada also jumped on the hydrogen train at a time when they should have been doubling down on LNG exports, a resource Canada has in abundance
Canada and Germany had, and probably still have, such mighty ambitions for their hydrogen. Lauded as a can’t-miss step in the journey towards a clean energy utopia that would position Canada as a world leader in hydrogen, it is now cracking before it even really gets underway.
The goal of the deal was a good one. Germany wanted to reduce its reliance on vast amounts of Russian gas following the invasion of Ukraine in 2022. However, the nonstop delays and challenges of realizing a Canada-Germany hydrogen deal have exposed the folly of going all in on a non-developed energy source at the cost of an existing one. These problems make it very clear that both Canada and Germany have miscalculated by placing all their eggs in one basket for a long-term goal, instead of turning to alternatives like liquefied natural gas (LNG) in the short term.
The federal government announced that there was no “business case” for exporting LNG to Europe at the time.
Hydrogen has a good future as a clean, renewable source of energy, and that is undeniable. It is not going to happen overnight as it will require large-scale facilities for production and distribution, especially for green hydrogen. Canada and Germany signed their hydrogen agreement in 2022, aimed at jumpstarting Canadian hydrogen exports by 2025.
We are now sitting at the end of 2024, and the necessary infrastructure is not close to being completed. Facilities in Atlantic Canada intended to help supply the hydrogen are still in their planning stages, while German investment is falling behind.
As far as logistics go, hydrogen presents a huge challenge. To produce hydrogen, massive amounts of energy are needed, and the plan to use wind energy to power these facilities is very impractical. Hydrogen also must be converted into ammonia for shipment, which is another energy-intensive and expensive process. When ammonia does theoretically reach Germany, up to 80 percent of the original energy load is expected to have been lost. If such a loss could be captured in a photo, it could slot into the dictionary for the word “inefficient.”
Germany needs energy security given its divorce from Russian gas, and this demanded a far more immediate response in 2022. Rather than diversifying energy imports and turning to short-term solutions like Canadian LNG, Germany bet big on hydrogen, an infant technology in terms of commercial viability. Canada also jumped on the hydrogen train at a time when they should have been doubling down on LNG exports, a resource Canada has in abundance, and which, like most fossil fuels, can be stored and shipped with speed and efficiency.
While hydrogen has a future, refusing to embrace LNG as an export to Europe was a mistake when responding to Europe’s energy crisis. Both the United States and Qatar secured long-term contracts for LNG exports to Europe, while Canada has been absent from the table. Germany itself invested heavily in floating LNG terminals, highlighting how natural gas will remain a vital part of the European energy mix for years to come.
There is great irony in the fact that natural gas, while still emitting more than hydrogen, produces far fewer emissions than coal, which many European states have been forced to turn to in the wake of energy shortfalls. Germany is one of the world’s most prolific consumers of coal, and that has only intensified with the cutoff of Russian gas, undermining its ambitious climate goals. Canadian LNG should have played a greater role while hydrogen infrastructure was constructed in Canada, and investment capital was raised in Germany.
What the ongoing delays and inefficiencies in the Canada-Germany hydrogen deal demonstrate is a cautionary tale. While hydrogen has a key role to play in the future of global energy, it is not a silver bullet in the short term.
From the Fraser Institute
When federal Environment Minister Steven Guilbeault recently criticized Conservative Leader Pierre Poilievre for hosting a fundraiser that included an oil company executive, he raised an interesting question. How should our politicians—of all parties—engage with Canada’s natural resource sector and the industry leaders that drive our natural resource economy?
Consider a recent report by the Chamber of Commerce, entitled Canada’s Natural Wealth, which notes that Canada’s natural resources sector contributed $464 billion to Canada’s economy (measured by real GDP) and supported 3 million jobs in 2023. That represented 21 per cent of the national economy and 15 per cent of employment.
Within the natural resources sector, mining, oil and gas, and pipeline transmission represent 45 per cent of all GDP impact from the sector. Oil and gas production accounted for $71 billion in GDP in 2023. If you throw in the support sector for oil and gas production, and for manufacturing petroleum and coal products, that number reaches nearly $100 billion in GDP.
Shouldn’t any responsible leader want to regularly consult with industry leaders in the natural resource sector to determine how they can facilitate expansion of the sector’s contribution to Canada’s economy?
The Chamber also notes that the natural resource sector is a massive contributor to Canada’s balance of trade, reporting that last year the “sector generated $377 billion in exports, accounting for nearly 50% of Canada’s merchandise exports, and a $228 billion trade surplus (that is, exports over imports) —critical for offsetting trade deficits (more imports than exports) in other sectors.”
Again, shouldn’t all government leaders want to work with industry leaders to promote even more natural resource trade and exports?
The natural resource sector also accounts for one out of every seven jobs in Canada’s economy, and the wages offered in the natural resource sector are higher than the national average—annual wages in the sector were $25,000 above the national average in 2023. And workers in the sector are about 2.5 times more productive, meaning they contribute more to the economy compared to workers in other industries.
One more time—shouldn’t all of Canada’s political leaders, regardless of political stripe, want to work with natural resource producers to create more high-paying jobs for more Canadians?
Finally, the Chamber of Commerce report suggests that some environmental policies require swift reform. Proliferating regulations have made investing in Canada a “riskier and more costly proposition.” The report notes that carbon pricing, Clean Fuel Regulations, proposed Clean Electricity Regulations, proposed federal emissions cap and proposed methane regulations all deter investment in Canada. Which means less economic opportunity for many Canadian workers.
With so much of Canada’s economic prosperity at stake, it’s not improper—as Guilbeault and others suggest—for any politician to meet with and seek political support from Canada’s natural resource industry leaders. Indeed, to not meet with and listen to these leaders would be an act of economic recklessness and constitute imprudent leadership of the worst kind.
Author:
A nuclear power plant
From the Daily Caller News Foundation
Google has made big news in the energy space over the past week, and all of it conflicts with the Harris-Biden goals of a glorious future powered entirely by windmills, solar arrays and presumably some combination of Unicorn fur and fairy dust.
Last week, the Washington Post ran a major story detailing the fact that Nebraska’s Omaha Public Power District (OPPD) will be forced to keep two coal-fired power generation units running for years longer than previously planned to accommodate the electricity needs of new data centers being built in the area by Google and Meta. Originally scheduled to be shuttered at the end of 2023, the units will now remain active through 2026, and local residents and activists expressed skepticism they will be shut down even then.
“A promise was made, and then they broke it,” the Post quotes local resident Cheryl Weston as saying. “The tech companies bear responsibility for this. The coal plant is still open because they need all this energy to grow.”
Well, yes, they do. Given the way supposed deadlines and promises related to this government-forced energy transition have been consistently extended and broken, Weston’s skepticism seems well-grounded.
By now, most everyone is aware of the enormous new demand the proliferation of data centers is placing on the U.S. regional power grids. The new demand from Big Tech is being added to an electric system already strained by huge demands from crypto mining, EV charging and general population growth and economic expansion.
This demand growth threatens to overwhelm the ability of power companies to build new electric generating capacity rapidly enough to keep up. This is especially true for companies operating in areas that restrict such new generating capacity to be “green,” i.e. intermittent wind and solar.
In the Washington Post’s story, the OPPD attributes the need to keep the coal units running on the slow development of anticipated new wind and solar capacity. But that avoids the reality that these data centers and other big power demand hogs require reliable generation, 24 hours a day, 7 days every week. The limitations of intermittent, weather-dependent wind and solar, even when combined with current backup battery tech, leaves companies like Google and Meta demanding more reliable, consistent generation.
This reality is not limited to the Omaha area. On Monday, the Wall Street Journal reported that Google and parent company Alphabet are also backing a new company engaged in the development of a new generation of modular nuclear reactors as a means of securing its future electricity supplies. In a deal with nuclear startup Kairos Power, Google commits to buying power from seven Kairos reactors when they go live in the coming years.
“The end goal here is 24/7, carbon-free energy,” Google/Alphabet senior director for energy and climate Michael Terrell said. “We feel like in order to meet goals around round-the-clock clean energy, you’re going to need to have technologies that complement wind and solar and lithium-ion storage.”
These developments involving Google and Meta come on the heels of other recent stories detailing efforts by tech giants to secure their future power needs. In early October, Constellation Energy announced it will reactivate its Three Mile Island nuclear plant in Pennsylvania to feed the power needs of nearby data centers under development by Microsoft. Constellation announced a similar deal in July to power data centers owned by Amazon from other nuclear facilities it operates.
The securing of their own power supplies could well become a requirement for big tech companies in some regions, as regulators and grid managers become increasingly concerned about their potential to drain regional grids of needed capacity to keep the lights on for everyone else. Bloomberg recently reported on comments by Thomas Gleeson, Chairman of the Public Utilities Commission of Texas, warning data center developers they should plan to provide at least part of their own power needs if they wish to connect to the grid in a timely fashion.
What it all means is that demand for reliable, 24/7 power supplied by nuclear, natural gas and even coal is going to continue rising for the foreseeable future. The glorious energy transition will just have to wait for reality.
David Blackmon is an energy writer and consultant based in Texas. He spent 40 years in the oil and gas business, where he specialized in public policy and communications.
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