Germany to fund €200 million for hydrogen production in Canada

The funds, which were approved under EU state aid rules and unlock an additional €200 million (€234 million) in Canada, will support the construction of up to 300MW of electrolysis capacity in Canada for the production of so-called ‘renewable fuels of non-biological origin’ for import into Germany and sale within the EU.

The aid will be awarded through a competitive bidding process, planned to be concluded in 2027.

Germany expects the scheme to avoid up to 2.47Mt of CO2 equivalent, which will also help the country fulfil its EU climate targets.

Also of interest
German steelmaker decarbonises with Iberdrola solar power

The scheme is based on a double auction system, which brings together renewable fuels of non-biological origin producers in Canada with buyers in the EU.

Companies offering to sell the fuels at the lowest price, with buyers buying at the highest price, will enter into a contractual relationship, with state resources helping to fill the funding gap between the two prices.

Teresa Ribera, Executive Vice-President for Clean, Just and Competitive Transition, said this  German scheme will help to meet growing demand for renewable fuels in the EU and support the development of renewable fuel production in valued trade partner Canada. 

It will also support the EU's ambition for renewable hydrogen technologies to be deployed on a large scale from 2030 onwards.

“The design of the scheme will enable only the most cost-effective projects to be supported, thereby reducing costs for taxpayers and minimising possible distortions of competition.”

Earlier joint EU-Canada initiatives include an economic trade agreement, a strategic partnership on raw materials and an industrial policy dialogue.

The scheme is not without precedent and follows two earlier approvals by the Commission to support investments in the production of renewable hydrogen in non-EU countries for import and sale in the EU.

One in December 2021 from Germany was for an amount of €900 million over 10 years. The H2Global scheme, as it is know,n is managed by the Hydrogen Intermediary Company (Hintco).

In the first pilot auction in Q2 2024, 397,000t of hydrogen were secured at €1000/t. In January 2025 up to €588 million was announced for two bilateral H2Global tenders with Canada and Australia.

The second in December 2024 was a joint German-Dutch scheme for €3 billion (€2.7 billion from Germany and €300 million from the Netherlands) to support the construction of at least 1.875GW of electrolysis capacity throughout the globe. Tenders were launched in 2025, open to projects with a minimum electrolyser capacity of 5MW.

Renewable fuels of non-biological origin are defined in the 2018 renewable energy directive as fuels produced from renewable hydrogen (excluding biomass) and carbon dioxideobtained from fossil flue gases, direct air capture or from other non-renewable, biological ornatural sources, as well as nitrogen captured from the air. 

This category includes synthetic hydrocarbons, alcohols and ammonia-based fuels. Together with advanced biofuels, these fuels are considered to represent a key pathway to decarbonising Europe’s fossil fuel supply by leveraging existing infrastructure for distribution, storage and end-use and offering a viable solution for decarbonising hard-to-electrify sectors like aviation, maritime transport and heavy industry.