In June, the iconic home-furnishing store announced it was launching solar panels for apartment balconies. “Small system, big impact,” Ikea writes on its German-based website, touting its “DIY solar solutions that help you generate your own solar power and become more independent from energy price developments.” 

For now, the “balcony power plants” are available only in Germany, which recently simplified rules about solar installation, removing grid operator registration for homeowners and allowing plug-in panels on balconies, like the ones now offered through Ikea. 

Solar is key to the energy transition. The International Energy Agency (IEA) says it is set to become the largest renewable-energy source by 2030, which as a whole will account for nearly half of global energy production by the end of the decade. Buoyed by its flexibility, portability and rapidly dropping costs, roughly 100 million households will rely on rooftop solar energy by 2030, according to the IEA, up from around 25 million in 2022. Solar will account for 80% of renewable-energy growth by 2030, the agency says. “To fully decarbonize the electricity sector, solar PV will have to be installed everywhere possible, starting with buildings. Households are essential in this development,” the IEA said in a report. 

The Ikea panel kits are produced by Swedish energy company Svea Solar. Three packages are available through Svea: the smallest and most suited to single-family homes comes with two panels, an inverter and AI app assistant, at a cost of €449 (roughly $724). A level up, for a three- to four-person household, includes four panels and an energy storage device at a cost of €1,280 ($2,065). Or you can customize the package and buy any number of panels required. 

Ikea estimates that a typical balcony power plant can save users between €200 and €600 per year and generate between 860 and 2000 kilowatt-hours per year. 

In many parts of the Global South, such as Nigeria and Pakistan, the surge in affordable Chinese-made solar panels has fuelled a natural transition to the renewable-energy source. China itself is driving this shift within its own borders, accounting for 60% of all renewable-energy expansion by 2030, according to the IEA. 

Solar energy is also booming in Europe, which has adopted policies aimed at decreasing its reliance on fossil fuels from Russia. Its initiatives include speeding up the rollout of photovoltaic solar, in part through new rooftop rules. 

For industry watchers, the Ikea move matters. “When generating clean electricity becomes as simple as assembling furniture, we’re looking at a fundamental shift in how people think about power generation,” wrote Javier Gascón Araujo, founder of a Madrid-based AI solutions firm for climate companies, on LinkedIn. 

“We need regulators to accelerate plug-in electricity permits to make this accessible Everywhere!!!” María Mendiluce, CEO of the We Mean Business Coalition, added on LinkedIn. 

Ikea was ranked 17th in Corporate Knights’ first ranking of the 25 most sustainable private-sector companies in the world this year, committing to halving its value chain emissions by 2030 and reaching net-zero emissions by 2050. Investigations by environmental groups such as Greenpeace have raised questions about some of the company’s supply chains, specifically around working with manufacturers that source wood from old-growth or protected forests. The company says it has shrunk its total climate footprint by 22% compared to 2016 and that it is focusing on using only “responsibly sourced renewable or recycled materials.” 

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In an industrial hall next to the Stephenville airport, Prime Minister Justin Trudeau and Chancellor Olaf Scholz signed an agreement to boost Canada’s production of green hydrogen for the German market, aiming for exports to begin by 2025. With the stroke of a pen, Stephenville went from being a dot on the map of western Newfoundland to the potential epicentre of a new cleantech industry. 

“I kind of thump my chest,” Rose says, on the phone from the mayor’s office. “Stephenville has had its ups and downs. Now we’re on the cusp of an economic boom.” 

The 2022 Canada-Germany Hydrogen Alliance kicked off something of a gold rush. Major players in the clean-energy sector flocked to Canada’s East Coast in search of optimal sites for green hydrogen production and export. Their criteria: high wind to generate electricity, industrial facilities to produce hydrogen and a serviceable port for shipping. Boston-based biofuels company World Energy already had its eye on Stephenville and the gusty west Newfoundland coastline.   

In June 2023, the company’s Canadian affiliate – World Energy GH2 – purchased the port of Stephenville. Under the banner of Project Nujio’qonik (Mi’kmaw for “where the sand blows”), it laid out plans to build three wind farms on the rugged mountains surrounding St. George’s Bay and to convert the town’s decommissioned pulp and paper mill into a hydrogen-processing plant. In August 2023, the nascent project was one of four to receive provincial approval to apply for Crown land.  

Project Nujio’qonik is now gunning to become Canada’s first commercial producer of green hydrogen. It was greenlit by government regulators this month after clearing environmental hurdles. But getting the megaproject off the ground has come with a fair share of obstacles – from local roadblocks to regulatory question marks to undeveloped infrastructure – and some experts maintain that Canada’s hydrogen industry should learn to walk before it tries to run.

World Energy GH2’s resolve remains firm. “We’re one of the ‘lighthouse projects’ being watched by international investors,” says Sean Leet, the company’s managing director and CEO. “And the global potential for green hydrogen is massive.”

We’re on the cusp of an economic boom.

 

– Tom Rose, mayor of Stephenville, Newfoundland

In its 2023 Global Hydrogen Review, the International Energy Agency cites a nearly 3% increase in hydrogen use over the previous year. Canada is part of that trend, producing some four million tons of hydrogen annually, according to Amit Kumar, Canada Research Chair in Assessment of Energy Systems at the University of Alberta. It’s mainly used as feedstock for industry – oil refining and the production of steel, methanol and ammonia for synthetic fertilizer.

The vast majority of hydrogen produced in Canada – as in the world – is derived from natural gas through a process called methane steam reforming. It produces significant carbon dioxide emissions: if they are captured and sequestered, the hydrogen is labelled blue; if they’re released, it’s called grey. 

But Germany, with its net-zero aspiration for 2045, wants hydrogen in its cleanest form – green hydrogen – which is made by using renewable energy to power electrolysis, the splitting of water molecules. No fossil fuels are involved. The energy-dense, emissions-free hydrogen that results is what Germany intends to use to power its entire chemical, steel and cement industries. And because only a fraction of that demand can be met domestically, Germany is shopping around for other sources in Scandinavia, North Africa and Canada. 

Pump up the green

Canada’s ambitions are aligned. The federal government’s 2020 Hydrogen Strategy sets out to make Canada “a major exporter of hydrogen and hydrogen technologies” and foresees up to 30% of the country’s end-use energy coming from green hydrogen by 2050. PM Trudeau has been discussing the possibility of a trilateral clean hydrogen market with Mexico and the United States. In an effort to spur on investment, the government launched a Clean Hydrogen Investment Tax Credit in 2022, which offers up to 40% in tax reimbursements, calibrated to the carbon intensity of the production method, and is also considering a subsidy that would match the market price of green hydrogen to that of grey, creating an incentive for buyers. In February, World Energy GH2 secured a $128-million federal loan for Project Nujio’qonik.

But Kumar questions the logic of jump-starting green hydrogen production in Canada when the technology is still so young. Like many others, he’s critical of the practice of transporting hydrogen in the form of ammonia – the current solution for long-haul shipping from Canada to Europe – as it introduces major losses in energy efficiency. Kumar believes better carrier methods are on the horizon.

Furthermore, because the infrastructure for large-scale production – the turbines, transmission lines and electrolyzers – has yet to be built, Kumar estimates the cost of green hydrogen production to be three times that of blue hydrogen. He says Canada would be wiser to focus on the latter for now. “In 10 to 15 years, green hydrogen may be cost-competitive,” he says. “It’s not there yet. Why should Canadian taxpayers be paying for exports to Germany?”

I get in trouble for being so optimistic. But how often does someone come along and offer to invest billions of dollars in your region?

 

– Jasen Benwah, chief of Benoit First Nation

The answer may be: because Germany is willing to pay. When the Canada-Germany Hydrogen Alliance was signed, Germany was reeling from Russia’s throttling of gas exports to Europe following its invasion of Ukraine. Scholz’s government, a coalition of Social Democrats and Greens, was anxious not only to accelerate the country’s decarbonization process but also to put its energy security on a more solid footing.

“Like Russia, this country is blessed with natural resources,” Scholz said shortly after arriving in Canada on his three-day visit in 2022. “The difference is it’s a reliable democracy.”

Sean Leet is confident in Germany’s commitment. In January, he travelled to the north German town of Wilhelmshaven, whose deep-water port will be one of the first to receive green hydrogen shipments, to join a network of companies that will be in the market to process, transport and buy Project Nujio’qonik’s product. While Leet says the 2025 timeline won’t be met, he hopes production at the Stephenville plant will begin by early 2026; shipping schedules will depend on sales agreements with German buyers, who await clarity on government subsidies and tax breaks as well as the completion of pipeline infrastructure. 

Jasen Benwah, chief of the Benoit First Nation, one of several bands in the St. George’s Bay area, is not bothered by all the contingencies. “I get in trouble for being so optimistic,” Benwah says. “But how often does someone come along and offer to invest billions of dollars in your region?”

World Energy GH2 estimates that the first phase of its project will create 2,200 construction jobs, 400 operations jobs and 4,200 indirect jobs. It also plans to invest in the local workforce, establishing a wind-industry training program in partnership with the Qalipu First Nation, Newfoundland’s largest Mi’kmaw band, and the Netherlands-based DOB Academy.

It’s music to the ears of many in a region that has weathered its fair share of blows: the closing of a major U.S. Air Force base in 1966, the Abitibi pulp and paper mill in 2005 and the downturn in the fishery. The population has been in steady decline since the 1970s; Benwah says all six of the schools on the Benoit First Nation are at risk of closing. Like many, he has spent a good chunk of his adult life commuting to job-rich Alberta, where, for 13 years, he managed a lodge for workers on the oil patch – 18 days in, 10 days out – leaving his wife and six kids behind. He describes the lifestyle as soul-destroying.

“Do we want to continue living on handouts or to become an economic generator?” he asks rhetorically, adding that the majority of his 1,500-strong nation shares his support for the project. 

Not Sheila Hinks. The 58-year-old fisherwoman lives on the craggy Port au Port Peninsula, where World Energy GH2 plans to erect 155 turbines. Last winter, Hinks and a group of fellow protesters spent more than a week blocking an access road to a wind testing site. The road’s construction, they claimed, had caused contamination of a brook that runs parallel to the road and serves as a secondary water supply. And Hinks says that the road was so muddy that ATVs couldn’t get through, preventing locals from accessing the firewood that many use to heat their homes in winter. 

“We want them to leave our peninsula alone,” Hinks says on the phone from the home where she raised a son who, now 33, travels back and forth to Alberta for work. Her group’s Facebook page – No Windmills on the Port au Port Peninsula – has more than 600 members. “We’re concerned about the drinking water, the wildlife and our total way of life,” she says.

Last November, Newfoundland and Labrador’s environment minister, Bernard Davis, asked World Energy GH2 to provide a second environmental assessment, after reviewing the company’s original 4,000-page report. Davis asked for more precision on water use and monitoring, baseline data, the project’s potential and cumulative effects, as well as mitigation, contingency and emergency-response plans.

The thoroughness of the process has Jasen Benwah persuaded that any environmental disruption will be temporary and greatly outweighed by the project’s benefits. “It’s not like they’re building a mine or fracking,” he says. “It’s green energy.”

Mayor Tom Rose sees it much the same. “Not everyone likes change,” he says. “But this is going to bring our families home. And we’ll have a role in helping the world.”  

Naomi Buck is a Toronto-based writer.

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One observer said the two countries’ joint declaration of intent, which calls for green hydrogen shipments from Canada to Germany to begin in 2025, was likely the first global trade deal for renewable hydrogen or its more easily-transported derivative, green ammonia. In Stephenville, Trudeau called the bilateral commitment to build a trans-Atlantic hydrogen supply chain by 2030 a historic moment, CBC reports.

“We must look to resources like hydrogen which can and will be clean and renewable. We can be the reliable supplier of clean energy a net-zero world needs,” he said. “The need for clean energy is almost limitless, and that’s where Canada, and Atlantic Canada specifically, gets to step up. With our renewable resources, we have a huge advantage.”

“We believe that Atlantic Canada presents a huge opportunity for us, but also for Canada to contribute to a green energy transition,” Scholz said, adding that his country will be looking for 90 to 110 terawatt-hours of hydrogen by 2030. “Canada is a close and like-minded partner in the energy transition.”

The coverage of Scholz’ visit pointed to Russia’s invasion of Ukraine, and the intense energy supply crisis confronting Germany as a result, as the context for a faster shift to renewables. “”We cannot as a world continue to rely on authoritarian countries that will weaponize energy policy as Russia is, that don’t concern themselves with environmental outcomes, or labour rights or even human rights,” Trudeau said.

Yet “the joint declaration of intent makes clear the agreement is not legally binding and stipulates it will be up to Canada’s Minister of Natural Resources and Germany’s Ministry of Economic Affairs and Climate Action to keep track of whether it’s making progress on its goals,” the Globe and Mail writes. “The Canadian-German agreement sets no targets for volumes of hydrogen produced and contains no commitments of new money to help commence exports to Europe by 2025.”

Natural Resources Minister Jonathan Wilkinson said the volumes of product that Canada can export that quickly “are probably going to be modest,” acknowledging that the timeline is “very ambitious”. But that “reflects the fact that Germany sees how this can help them in their current context,” with an immediate need to break free of Russian fossil fuels as soon as possible.

“Part of this is being driven by the desire to displace Russian gas,” Wilkinson said.

But behind the bid for clarity and speed on the green hydrogen deal, Scholz’ visit featured a sequence of mixed messages on whether Canada and Germany see a future for liquefied natural gas exports from Canada’s East Coast.

Since the beginning of Russia’s war, Canadian fossil fuel companies have been pushing hard to resurrect LNG export schemes that had already been rejected for economic or environmental reasons. Analysts and observers have been explaining for months that the projects wouldn’t go into production in time to address Germany’s immediate need, and the country’s commitment to rapid decarbonization would soon wipe out the demand that would justify a longer-term import/export deal.

We believe that Atlantic Canada presents a huge opportunity for us, but also for Canada to contribute to a green energy transition.

-German Chancellor Olaf Scholz

As The Energy Mix reported last week, when the Canadian and German governments announced Scholz’ itinerary almost two weeks ago, neither the word “liquefied” nor the acronym “LNG” showed up in either official statement. Later news reports confirmed that LNG would not be on the agenda for the three days of deliberations.

But none of that stopped Trudeau and Scholz from confusing matters when discussions went live.

At a news conference in Montreal Monday, the two leaders “appeared to pour cold water on the idea of shipping Canadian natural gas to Europe,” with Trudeau pointing to the cost and complex logistics of shipping gas from Western Canada “to a still-unbuilt liquefaction terminal on the Atlantic coast,” CBC reports.

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

He said Canada’s “best” contribution to the global gas market would be to ship product to Asia (which brings its own set of serious challenges), or via pipeline to the United States, freeing up supplies that Germany could more easily acquire from other exporters.

While Canada would be willing to ease regulatory hurdles for LNG exports, “there needs to be a business case,” Trudeau added. “It needs to make sense for Germany to be receiving LNG directly from the East Coast. Those are discussions that are ongoing right now between our ministers, between various companies, to see if indeed it makes sense.”

Scholz agreed that any LNG deal would need a business case, “because if it’s too expensive, it will not fly.”

But Trudeau still held open the possibility that LNG bound for Germany might be “doable”, with Scholz adding that Germany “would really like Canada to export more” gas to Europe.

“As Germany is moving away from Russian energy at warp speed, Canada is our partner of choice,” he said, during a German-Canadian economic conference in Toronto. “For now, this means increasing our LNG imports. We hope that Canadian LNG will play a major role in this.”

“We are creating the atmosphere for very direct talks between the business sectors of Canada and Germany [to see] if there is something which could be done now in this very crisis,” the German chancellor told Power & Politics host Vassy Kapelos. “But this is part of the follow-up between the businesspeople of the two countries.”

One of the challenges around LNG is the amount of investment required to build infrastructure for that.

-Prime Minister Justrin Trudeau

In the fog of comments and counter-comments, it wasn’t immediately clear how seriously either leader was advocating for direct LNG trade between the two countries. “Asked if there had been developments making new Canadian LNG projects more likely since Monday, a government source with knowledge of the talks said there had been ‘no change’ and Scholz was ‘well aware of sort of the timeline that would be associated’ with new Canadian LNG,” Reuters wrote Tuesday.

At the same time, with winter approaching and its own supplies in doubt, Germany “is quite keen for gas from just about anywhere,” the Reuters source added.

Reaction from Canadian civil society reflected the layered message coming out of Scholz’ three-day visit.

“After months of discussions focussed on East Coast liquified natural gas (LNG), the visit results in a welcome shift in rhetoric and focus towards green hydrogen,” Climate Action Network-Canada said in a statement.

“At a moment when the Canadian fossil fuel industry has been intensifying its lobbying efforts and instrumentalizing the invasion of Ukraine to promote fossil fuel expansion, the Canada-Germany Hydrogen Alliance offers a glimpse of economic opportunity and job creation beyond oil and gas,” CAN-Rac added. “As Canada’s domestic ‘clean hydrogen’ strategy continues to blur the lines between renewable and fossil-based hydrogen, the Canadian government has the chance to learn from Germany’s clear categorization and focus on green hydrogen.”

“There’s something beautiful about wind power from Newfoundland and Nova Scotia blowing away petro-power in Europe,” added Greenpeace Canada Senior Energy Strategist Keith Stewart. “Fossil fuels are at the core of the current conflicts in Europe and around the world, whether they are paying for weapons or fueling climate disasters.  So it is great they’re signing a deal proving renewable energy is the way forward, even though they can’t quite bring themselves to shut the door completely on LNG just yet.”

But that opening still raised flags with some CAN-Rac member groups.

“While we are encouraged to see the new Canada-Germany agreement for production and export of green hydrogen, we are concerned that the door is being left open to blue hydrogen fuel,” said Keith Brooks, programs director at Environmental Defence Canada. “Blue hydrogen, produced from fossil fuels, is not a clean fuel, and in fact may contribute just as much greenhouse gas emissions as burning gas, or even more. The world needs truly clean, renewable energy sources now.”

“We welcome the race toward a zero-emissions economy,” said Louise Comeau, director of climate change and energy solutions at the Conservation Council of New Brunswick. “We need to run that race with fair rules of engagement for communities and companies,” and “liquefied natural gas is not a legitimate contestant in this race. It won’t cross the finishing line in time to help Germany or the planet.”

This article is republished from The Energy Mix. Read the original article.

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Germany has achieved major gains with its coal phase-out, an objective that was originally set for 2038 but has been moved forward to 2030. This, combined with the commitment to end nuclear power generation by 2022, has resulted in major government investment in renewables – boosted again with Germany’s recent decision to halt certification of the Nord Stream 2 pipeline and wean itself off Russian fossil fuels.

The new federal minister of climate action (and the vice-chancellor), Green Party member Robert Habeck, is currently revising the Renewable Energy Sources Act Law with an aim to significantly expand renewable energy production; solar capacity is slated to increase by more than threefold, and wind power will more than double by 2030. For the first time, the federal government is offering financial support for farmers willing to install solar panels on their land. The government is also raising solar subsidy rates and requiring all new industrial buildings to host solar panels. Meanwhile, Germany’s 16 federal states are being compelled to allocate 2% of their surface area to wind power installations. The government aspires to an 80% renewable grid by 2030, 100% by 2035.

Since the Russian invasion of Ukraine, climate goals are inextricably tied to energy sovereignty, with Finance Minister Christian Lindner now referring to renewables as “Freiheitsenergie” (freedom energy). He has announced a $200-billion investment in industrial transformation that will expand the electric vehicle charging network (100,000 stations to be added annually), boost hydrogen technology and fill the fiscal hole that will result from the removal of the renewable energy surcharge (which has been added to consumers’ electricity bills since 2000).

Energy efficiency is also a key piece of the net-zero puzzle. Germany is working to reduce total energy consumption by 20 to 25% of current levels by 2030. A major focus here is on the country’s buildings, the majority of which were built before 1977, when thermal insulation requirements were introduced, and are still heated with oil or gas. Buildings currently account for 16% of Germany’s CO2 emissions.

In concert with the EU, which recently raised the standards of its Energy Performance of Buildings Directive in a bid to achieve carbon neutrality in Europe’s building stock by 2050, Germany is further raising the bar on energy efficiency requirements for buildings in legislation expected to pass in 2023. An incentive program run through Germany’s state-owned development bank calibrates subsidies, grants and interest rates for building and renovation projects to their energy efficiency.

While Germany’s 2019 Earth Index score of 136% (which is consistent with the previous three-year trend) suggests that the country is well on its way to net-zero, the current government’s attitude is anything but complacent. At his first press conference as minister, Habeck summarized the country’s climate performance thus: “We’re not standing on the starting line here; we’re way behind.”
He says the pace of change has to accelerate by a factor of three in order to reach the 2030 targets; while emissions sunk by an average of 15 megatonnes per year between 2010 and 2020, annual reductions will have to reach at least 40 megatonnes in this decade.

The hitch: while Russia’s invasion of Ukraine should accelerate Germany’s renewable energy plans, Habeck also announced the creation of strategic coal reserves in an effort to reduce Germany’s dependence on Russian gas. As well, the country is building two new port terminals for liquefied natural gas.

Naomi Buck is a Toronto-based writer. She lived in Berlin for 12 years, working for Canadian and German media.

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East Germany’s coal industry has been in decline since German reunification, but the recently elected federal government – a coalition of green, liberal and social democratic parties – has driven the last nail in its coffin with its commitment to phase out all coal power by 2030. Questions that have hovered over Lusatia for decades take on new urgency: what will replace coal as the region’s economic foundation, and who will be on the losing end of that transition?

Lusatia is far from alone; fossil-fuel-producing regions around the world face similar challenges. Meeting them head-on will be key to the success of the massive global shift that lies ahead, and Lusatia’s resurrection as a centre of electric mobility offers both inspiration and important lessons.

Lusatia lies southeast of Berlin, on the Polish border, and is home to vast seams of the compressed peat that forms lignite, or brown coal. At one time, it was the pumping heart of East Germany, the foundation of the communist state’s energy autonomy. The sulfuric smell of burning coal suffused East German towns and cities as their inhabitants wiped its film off their windows and shook its dust from their laundry. Not only an energy and heat source, lignite fuelled the East German rail system, was used as a petroleum substitute in the chemical industry and as coking coal in metallurgy. East Germany ran on brown coal, making the roughly 100,000 people who worked in Lusatia’s strip mines, briquette factories and power plants heroes of the workers’ state.

Fred Mahro was one of them. Lusatian by birth, he was 30 when Germany united – or, as he puts it, when West Germany took over – and working as an electrical engineer in the local power plant in Jaenschwalde. He spent the next decade watching the local economy collapse as hundreds of thousands of his fellow East Germans headed west. Three-quarters of the Lusatian brown-coal workforce were left jobless, but Mahro was not among them. Describing himself as “rooted in the soil,” he stayed put, got involved in union work and entered the public service.

Today Mahro is the mayor of Guben, a Lusatian town perched on the Neisse River that forms the German border with Poland. Guben’s population of 17,000 is half what it was at the time of reunification. Its main employer – a chemical fibre company – is now Thai-owned and 6,000 jobs lighter. The challenges just keep coming. Last year, a fence was erected to limit the spread of African swine fever and avian flu from Polish livestock, while refugees from Africa and the Middle East continue to attempt crossings of the frigid Neisse into Germany. And then there’s the pandemic.

In the most recent federal election, candidates of the far-right populist Alternative for Germany received the most votes of any party in Guben. The party rails against immigration and Europe and the green transition. But Mahro doesn’t consider it a serious political threat. “They feed the fear, but they don’t offer solutions,” he says.

We spent 30 years looking for investors. And now they’re coming.

—Fred Mahro, mayor of Guben

In fact, Mayor Mahro is decidedly optimistic. Unemployment levels in Lusatia, which peaked in the mid-2000s at 25%, now hover around 7%. Good things are happening in Guben, the best of them last October, when Rock Tech Lithium, a Canadian-German lithium development company headquartered in Vancouver, announced that it would be building Europe’s first lithium hydroxide converter in Guben.

The cleantech company’s €470-million investment in the Lusatian town reflects a carefully crafted political strategy that is paying off.

“This is the last cornerstone,” says a jovial Jörg Steinbach, minister of economic affairs, labour and energy for Brandenburg, one of two federal states that Lusatia traverses. Steinbach, who was the president of a major university in Brandenburg before being named minister in 2018, has overseen the most recent chapter of the region’s structural transformation and feels that things are coming together beautifully.

Since reunification, massive public investments have been made to re-naturalize the Lusatian landscape and stimulate tourism. A chain of abandoned pits has been flooded to create the “Lusatian Lake District,” the largest collection of artificial lakes in Europe, complete with hotels, recreational boating outfits and holiday rentals. But it was clear that Lusatia could not live from tourism alone. Steinbach knew that the region’s success rested on finding a replacement for coal that feels as essential to the present and future as coal did in the past.

Open for business

The first cornerstone of that new industrial identity was laid in November 2019 with Tesla’s decision to build a US$6.8-billion “Gigafactory” – the company’s fourth worldwide – in Gruenheide, a small municipality southeast of Berlin. It is slated to manufacture 500,000 cars annually and to employ 12,000 locals. The announcement, which followed nine months of intense negotiations, was a major coup.

“This put Brandenburg on the map,” Steinbach says. And it gave new definition to the region. Tesla’s vote of confidence had a domino effect. In the last two years, BASF, the world’s largest chemical producer, and U.S. battery producer Microvast have both opened plants in Brandenburg, producing cathodes and vehicle battery systems, respectively, and enabling Lusatia to brand itself as a centre of electric mobility.

Certainly, this is what Rock Tech Lithium CEO Dirk Harbecke saw in Lusatia. A serial entrepreneur who previously worked in financial services in Africa, Harbecke anticipates a huge increase in the European demand for lithium hydroxide – an essential component of battery cathodes – as the continent’s electric car market takes off. He sees the electric vehicle boom shifting from China to Europe, destined to hit North America in two or three years.

Starting in 2023, Rock Tech will be extracting lithium from the granite outcrops of a property on Georgia Lake, 160 kilometres northeast of Thunder Bay, Ontario, and shipping it in concentrated form to Guben for processing. Ultimately, Rock Tech aims to harvest at least half of its lithium from recycled batteries, creating a closed production cycle. Harbecke also intends to expand Rock Tech’s empire of converters, with the next facility planned for the Thunder Bay area, providing access to American auto manufacturers via the Great Lakes.

In scouting locations for Rock Tech’s European converter, Harbecke, who grew up in West Germany, was interested to discover that the “other” Germany had more to offer. For one, it boasted more vacant industrial space, ready for development and well connected to road and rail. For another, Harbecke felt significant political support for his project in the former East. “They made it clear that they really wanted to have us there,” he says.

This is the last cornerstone.

—Jörg Steinbach, minister of economic affairs, labour and energy for Brandenburg

This was exactly the plan. Minister Steinbach has made promoting Brandenburg’s “open for business” message – and polishing up on his English – top priorities. He feels there’s a misconception that subsidies alone will draw foreign investors, while in fact it is other factors that clinch the deal: personal commitment, for example, and the building of trust.

Another attractive feature of Brandenburg to investors is the composition of its energy supply. At two-thirds renewable (wind, solar and biomass), Brandenburg’s is the greenest grid in Germany: pretty remarkable for a state that, as recently as 2017, was still running mainly on coal. This makes it a natural home for electric mobility – but also any other industry, in a world where carbon emissions hurt the bottom line.

The focus on renewables serves Germany’s climate goals, but also a sense of identity in places like Lusatia. There’s a cliché of East Germans as nay-saying, glass-half-empty defeatists. But given their recent history – from the expiry of the state many grew up in, to the adoption of an entirely new economic system, to a climate transition that has killed their prime resource – it’s no wonder that spirits have flagged.

Fred Mahro sees that changing. With pride, he can say that his region is now home to the entire supply chain of electric vehicles. More than a dozen EV charging stations are scattered across Guben, and Mahro is spotting more and more electric vehicles on its streets. His next car will be one of them.

In the last three years, the demographic tide has turned: more people have moved into Guben than away.

“We spent 30 years looking for investors,” he says. “And now they’re coming.”

Naomi Buck is a Toronto-based writer.

The post How a German coal region is becoming a poster child for a successful green transition appeared first on Corporate Knights.

Political leaders in the European Union, the United States and Canada are increasingly exploring how they might implement carbon border adjustment measures (CBAMs), also known as carbon border taxes, to allow greater ambition on emission reduction without undermining their economies. Imposing higher carbon costs on industry can result in lower emissions in the home jurisdiction but higher ones elsewhere, resulting in no benefit for the climate. Governments in Canada and Europe currently levy carbon taxes on a small portion of production to avoid that leakage scenario. Border measures would allow them to impose steeper carbon costs while protecting their industry.

In Canada, Prime Minister Justin Trudeau has given his cabinet ministers the task of figuring out how to stop what’s known as carbon leakage, when carbon-emitting industries move abroad to avoid paying penalties. The Liberal government has committed  to raise Canada’s federal backstop carbon price from $50 a tonne in 2022 to $170 by 2030, and that includes the output-based pricing system that applies to large industrial emitters. Provinces that have adopted their own pricing systems to avoid the federal one will be expected to match Ottawa’s price increase.

Canada would be well-served to find co-operative approaches in implementing any border measures, researchers from the Canadian Institute for Climate Choices (CICC) told a webinar on December 15, previewing a report on CBAM co-operation to be released in the coming weeks. That effort is enormously complex, as different jurisdictions – even within Canada – have varying approaches to carbon pricing that make it difficult to make comparisons, the report concluded. At the same time, governments will have to avoid the temptation to wield CBAMs as unfair trade measures that use the climate battle as a pretext for outright protectionism. 

“Coordinating best practices [on CBAMs] can smooth the protectionist waters,” CICC economist Dave Sawyer said. Through a co-operative approach, governments can maintain competitiveness by ensuring equivalent climate costs while motivating other countries to increase their ambition. 

Former environment minister Catherine McKenna said the trade issues around climate transition are challenging but must be addressed. “It matters because competitiveness matters,” she told the webinar. “It matters because we want to tackle climate change, but we also want to have industries in Canada and we want to have good jobs in Canada.”

The Liberal government is currently developing its approach to carbon border adjustments. In his mandate letter to Finance Minister Chrystia Freeland that was released December 16, Trudeau tasked the minister with working with provinces as well as key trading partners like the United States and the EU on CBAMs.

Trudeau’s instructions to his ministers signalled an unprecedented government-wide effort to combat climate change. Freeland is charged with a host of policies to ensure that financial markets and pension funds put climate change risks and opportunities front and centre in their decision-making. Environment Minister Steven Guilbeault and Natural Resources Minister Jonathan Wilkinson have lengthy to-do lists, grounded in the Liberal commitment to reduce emissions by at least 40% by 2030 from 2005 levels and achieve net-zero by 2050. Their remit includes setting greenhouse-gas-reduction targets for the oil and gas sector and putting the country on track for a fossil-free power grid by 2035. Guilbeault is also tasked with producing the country’s first strategy on climate adaptation by the end of 2022.

Coordinating best practices [on CBAMs] can smooth the protectionist waters.

– Dave Sawyer, economist, Canadian Institute for Climate Choices

Every minister in an economic portfolio had climate-related priorities. Infrastructure Minister Dominic LeBlanc is to oversee an effort to establish a “buy clean” strategy that would support the use of made-in-Canada, low-carbon products in Canadian infrastructure projects. Innovation, Science and Economic Development Minister François-Philippe Champagne is tasked with promoting the country’s cleantech sector and the electric vehicle supply chain, including establishing new rules around foreign investment in the critical mineral sector. 

Freeland’s mandate on CBAM suggests the federal government will apply a carbon tariff on imports from countries “that are not doing their part to reduce carbon pollution and fight climate change.” The measures would apply specifically to carbon-intensive goods such as steel, cement and aluminum, the letter said.

The tricky business of determining which countries are “doing their part” in cutting emissions will be fraught with tensions and international rivalries, particularly given the long-standing principle at the United Nations that developed, emerging and least-developed countries have differing responsibilities for climate action.

EU championing carbon border measures 

The EU is leading the charge on CBAMs as it drives greater climate ambition and a rising carbon price. New German Chancellor Olaf Scholz is a champion of carbon border measures and pledges to help push such measures through the European Parliament.

The Canadian government has begun to assess the impact that the adoption of carbon border measures would have on exports to the EU, said Marie-France Paquet, chief economist at Global Affairs Canada. If the Europeans acted alone, it would result in tariffs on Canadian exports averaging 0.54% – higher than the average levies for the U.S., Australia or Japan, Paquet told the webinar. In a joint approach, that average tariff would drop to 0.15%, and Canadian exports to Europe would increase, she said.

Germany is taking over the presidency of the G7 in January, and Scholz is expected to push members to work together on carbon border measures, Ambassador Sabine Sparwasser told the webinar.

Germany and the EU have set out to rapidly transform their economies from a reliance on fossil fuels to clean energy, the ambassador said. “With this agenda, we do need to look at good ways of keeping our economies competitive and at good joint ways of avoiding carbon leakage within the EU and with very like-minded partners.”

Cooperation with the United States – which is by far Canada’s leading trading partner – would be tougher because it has no national carbon price and instead relies on a raft of state and federal regulations, pricing systems and subsidies. At the same time, Canada’s own climate strategy goes well beyond pricing to include a host of regulations, such as the Clean Fuel Standard.

The U.S. and EU announced at November’s UN climate summit in Glasgow, COP26, that they intended to negotiate a CBAM for trade in aluminum and steel.

It is impossible to overestimate the enormity of the challenge, even in reaching agreement with the EU, Sawyer said. Governments will have to ensure consistency regarding how carbon intensity in industry is measured and in assessing what climate-related costs are imposed by governments. 

It matters because competitiveness matters.

-Catherine McKenna, former minister of environment and climate change

The Canadian system alone is a patchwork of federal and provincial policies, noted Ken Boessenkool, a former Conservative Party strategist and a lecturer at the Max Bell School of Public Policy at McGill University.

“Each province has addressed the competitiveness issue in a different way,” Boessenkool said. “That will be a challenge when you want to put on top of it a single carbon border adjustment.”

Under the output-based pricing system adopted by Ottawa and provinces like Ontario and Alberta, industry pays the carbon levy on a small percentage of emissions. The approach avoids adding undue costs to industry while encouraging the companies to cut their emissions. But each province has its own procedures to determine what output will be taxed. Under a cap-and-trade approach used by Quebec and Nova Scotia, companies get free allowances up to a cap, again effectively paying only a small percentage of their output.

The EU has an emissions trading system, and the goal is to drive down the amount of free allowances provided in order to reduce emissions by 55% by 2030 and to zero by 2050, said Susanne Droege, a researcher at the German Institute for International and Security Affairs. 

To protect its industry from resulting climate costs, the EU has introduced legislation with carbon border measures to be phased in over 12 years. It would cover steel, aluminum, cement, fertilizers and electricity from non-EU countries.

The legislation was drafted with an inward focus on European industry, and “there was not much dealing with the international ramifications,” Droege said. But trading partners – from Ukraine and Russia to the U.S. and China – are now engaging in the debate.

Leading politicians in Europe, including Germany’s Chancellor Scholz, have acknowledged the EU will not be able to go it alone in establishing a workable carbon border regime and will need partners. Scholz is looking to establish “climate clubs” – countries with high mitigation ambitions – to work together on trade issues. It’s a club from which Canada cannot afford to be excluded.

With the support of the Embassy of the Federal Republic of Germany in Canada.

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Leaders are grappling with this balancing act as they try to implement meaningful climate policies and keep the public on side. The question of how to achieve a just transition was central to a series of recent online panel discussions co-hosted by Corporate Knights, the Embassy of the Federal Republic of Germany in Canada and the Embassy of France.

“It is not going to be easy, but it has to be effective and it has to be real,” Canadian Labour Minister Seamus O’Regan said Wednesday at the final of the three panel discussions, which focused on the outcomes of COP26 from a climate justice perspective. 

The people most likely to suffer the costs of the transition live in low-income, Indigenous and rural communities. Experts worry that their energy costs may go up, at least in the short-term, if leaders fail to consider them when designing transition policies, such as carbon taxes and regulations. Energy poverty already affects people in Canada, Germany, France and across the world, and it could get worse if governments aren’t mindful of how they’ll be affected. “We need to raise questions when we design these policies: What is the social impact of these measures, [and] to what extent are different consumer groups burdened or relieved by these policies?” said Veit Bürger, deputy head of energy and climate division at the Öko-Institut, a non-profit research institute, at the first roundtable in October, which explored the concept of energy justice. Bürger said low-income households must be compensated in some way when carbon pricing policies are adopted. There are also workers to consider, who could be displaced when they lose their jobs in high-emitting industries. 

The community of Old Crow in Yukon has shown how the transition can be successful in rural areas. For many years, this small remote community of around 250 residents has lived largely cut off from the modern world without a connection to a major road system or the power grid. Residents transport everything they need – including diesel for generators – on ice roads in the winter and by air. But Chief Dana Tizya-Tramm, the elected chief of Old Crow’s Vuntut Gwitchin First Nation, said this isolation gave the community an opportunity to take a “short cut” when it came to transitioning to a renewable power source. Vuntut Gwitchin owns and operates a solar panel project that reduces diesel use by around 190,000 litres every year. The second phase of the solar farm was completed this summer and is expected to meet approximately a quarter of the community’s electricity demand. 

“With one single project, and a disruptive business model, we have shown the world [and] we have shown rural communities that we are a major part of the solution,” Tizya-Tramm told the first panel discussion. 

In France, the Yellow Vest movement of 2018 emerged in opposition to a gas tax and forced the government to rethink its approach to the energy transition. Since the protests, Emmanuelle Wargon, the French housing minister, said the government has come up with a three-pronged strategy. The first part of this plan, Wargon said, is to show the economic benefits of the transition through investments and jobs. The second step is to make sure policies are designed with their social consequences top of mind. And the last part is working with local communities to make sure that when a coal plant closes, the government encourages investment in the area so that workers are able to transition to new jobs.

To ensure results, Wargon sees three steps in a successful transition: “pioneering, mainstreaming and then putting obligations in place.” By pioneering a development or new technology, you show the public that making change is possible, she said. Making that technology or solution mainstream relies on ensuring that it’s affordable and simple, and then once it becomes widely accepted, you can implement constraints and regulations. 

“If you go too quickly from one phase to the other, you risk losing part of public opinion,” she said.

That public support will be vital for the array of policies – from market-based mechanisms, such as carbon pricing, to strong regulations that prohibit gas-powered vehicles – needed to decarbonize our energy systems and prevent climate chaos. “You need to have effective climate policies, but at the same time you need, in particular, to address the question of how [you] can create some kind of just transition in order not to put too much burden on the poor households,” Bürger said. 

With the support of the Embassy of the Federal Republic of Germany in Canada and the Embassy of France.

The post How do we transition off fossil fuels in a way that is truly just? appeared first on Corporate Knights.

“If Canada is going to continue to prosper, we’ve got to skate to where the puck is going,” the minister told a virtual roundtable hosted by Corporate Knights and the Embassy of Germany. “Hydrogen is where the puck is going.”

While Canadian companies are already major providers of hydrogen-powered trucks and trains internationally, there has been a lack of large-scale projects domestically. That is about to change, O’Regan said. “Canada can lead globally on hydrogen,” he said, suggesting the hydrogen sector could generate 350,000 jobs in the country and reduce greenhouse gas emissions by 190 megatonnes by 2050. That’s equivalent to roughly a quarter of Canada’s current GHG emissions.

Canada is joining a host of other countries in adopting a strategy to commercialize clean-burning hydrogen, with progress required on the production, transportation and end-use of the fuel.

Currently, most hydrogen is made from natural gas in an emissions-intensive process, but it can also be made from water using clean electricity, generating a product known as “green hydrogen.” As well, producers can use natural gas but capture and sequester the carbon dioxide emissions, producing “blue hydrogen.”

Hydrogen is seen as a key solution for reducing carbon emissions in such diverse applications as long-haul trucking, rail and aviation; in heavy industry like steel-making and concrete; and in storing electricity generated from intermittent sources like wind and solar so that it can be sold when the demand requires it.

O’Regan provided no details on the federal strategy, which is due to be released before the end of the year. Corporate Knights has proposed that Ottawa spend $1 billion on research and development efforts over the next five years and another $8 billion over the decade to deploy hydrogen technology across the Canadian economy.

Last month, the Alberta government released a natural gas strategy that includes development of a hydrogen supply chain, starting with the production of the fuel from natural gas while capturing and sequestering carbon emissions.

The European Union, South Korea, Japan, Australia, the United Kingdom and several individual European countries have announced their own hydrogen strategies. Germany has one of the most ambitious plans, aiming to spend €9 billion over the next four years to help its industry and transportation sector transform to a hydrogen economy.

The German government has decided that hydrogen “is key to a sustainable economy and society,” Stefan Kaufmann, the country’s federal commissioner for green hydrogen, told the Building Back Better Together webinar. Germany will have to import up to 80% of the green hydrogen it will need and is looking at sources in Namibia, Australia and now Canada.

“Blue hydrogen” – produced from natural gas, using carbon capture and storage (CCS) technology – can still be a significant source of greenhouse gases that will be inconsistent with the goal of achieving net-zero emissions by 2050, said Raffaele Piria of the Berlin-based think tank adelphi.

He said CCS technologies remove on average only 80% of the CO2 emissions from the flue, while there are also fugitive methane emissions that result from the production and transport of the natural gas from the field to the factory.

Piria noted the industry’s goal is to slash by half the cost of producing hydrogen from water and clean power. “I strongly doubt it is worth pouring billions of dollars into CCS if in 10 years green hydrogen will be more attractive,” he said.

The colour scheme for hydrogen can be misleading, and the focus should be on measurable and certifiable carbon intensity, said Sarah Petrevan, policy director for the think tank Clean Energy Canada, which issued a report on hydrogen last month. European definitions of “green hydrogen” typically exclude the use of nuclear power, though the GHG intensity of that process can be quite low.

Petrevan said hydrogen could be an important fuel source for decarbonizing the sectors with the “toughest third” of Canada’s total emissions to abate. They include heavy industry such as steel and cement, marine transport, aviation and long-haul freight. In each of those sectors, hydrogen will have to compete with other solutions such as battery-powered electric motors.

The Clean Energy Canada report concludes that Canada can be a leader in both the supply of clean hydrogen exported to the world and in the industrial products that facilitate adoption of hydrogen in the modern economy.

However, Petrevan warned Thursday that many in Canada focus on the opportunities in hydrogen production, while the market for the fuel remains undeveloped: “Something is going to have to be done to stimulate demand domestically while we wait for the international markets to mature.”

A range of applications are currently being pursued. Indigenous communities are looking at hydrogen technology to replace their reliance on dirty and expensive diesel and to provide reliable power for their energy-deprived citizens, said Beaver Paul, a founder of SEN’TI Environmental & Indigenous Services, based in the Gaspé region of Quebec.

The company is working with partners on an ammonia plant that will use green hydrogen and is considering switching the community’s fishing fleet from diesel to hydrogen-fuel-cell engine.

“For remote communities, we believe hydrogen will play a big role in our futures,” Paul said.

Canada is fortunate to be among the world’s lowest-cost producers of zero- or low-carbon hydrogen, according to a report from Harvard University.

According to the non-profit Transition Accelerator, in provinces with ample low-carbon electricity (e.g. from hydropower, nuclear or renewables), electrolysis of water can produce “green” hydrogen for $2.50 to $5 per kilogram, and in provinces with low-cost natural gas and the geology suitable for permanently sequestering the by-product CO2, “blue” hydrogen can be produced at a price of $1.50 to $2 per kilo.

However, BloombergNEF forecasts that by 2030, green hydrogen will be cost-competitive with the natural-gas-derived fuel as a result of declining costs of renewables and the scaling up of hydrogen production.

Scores of start-up companies are pursuing innovations across the fledgling sector, from production of hydrogen to its transportation to applications for its end-use, said Farzin Shadpour, managing director for supply chain and logistics at Plug and Play, a major venture-capital provider and technology accelerator.

Global investors are keen to participate, Shadpour said, in the development of a market that BloombergNEF forecasts could supply a quarter of the world’s energy by 2050.

Shawn McCarthy writes on sustainable finance and climate for Corporate Knights. He is also senior counsel for Sussex Strategy Group.

With the support of the Embassy of the Federal Republic of Germany in Canada.

The post Hydrogen’s high stakes for Canada appeared first on Corporate Knights.

Ontario Government and Consumer Services Minister Todd Smith announced July 10 the cancellation of the nine-turbine White Pines Wind Project in eastern Ontario.

wpd AG, a medium-sized German wind producer, and the city of Munich have already put C$100 million into the nearly finished project, according to wpd’s Canadian subsidiary. One hundred workers were on site the day news of the cancellation broke.

“I’m definitely hearing a lot of questions and concerns from the German government,” ambassador Sabine Sparwasser told Corporate Knights in an interview July 19. “Beyond that, it is a case that has by now attracted the attention of the EU and European companies who want to invest in Ontario and in Canada.”

Recent concerns on foreign investment and the rule of law in Canada have focused on British Columbia’s attempts to stop Kinder Morgan’s expansion of the Trans Mountain crude pipeline, which is being developed in that province and Alberta. The federal government is contesting British Columbia’s efforts to regulate the project’s environmental risks.

But the new Progressive Conservative government in Ontario, which is seeking to dismantle its predecessor’s environment and energy policies, is raising new concerns about investment safety.

“This is a case of how safe is our investment, how good is it to invest in Ontario and Canada because we do want to have bilateral investment,” Sparwasser said.

There are 800 German companies in Canada and more are hungry to invest, she said. Most of Canada and Europe’s comprehensive free trade agreement went into force last year, laying the groundwork for more European money in Canadian projects.

But the White Pines cancellation is pushing interest away, according to the ambassador.

“When you have all the necessary permits, to be asked to immediately stop the project and take it down, with no clarity on what the indemnification process would be, is unsettling,” Sparwasser said. “It is unusual to have such a drastic measure when all the necessary permits of a project are present.”

Ontario’s government introduced legislation outlining its cancellation of White Pines on July 16. The bill, which is being examined by members of the provincial Parliament, includes a section on how compensation will be calculated but doesn’t provide any hard figures.

Premier Doug Ford’s office, as well as Smith’s, did not respond to a request for comment on Sparwasser’s concerns.

wpd AG issued an open letter to Ford July 12 calling on the new premier to reconsider the cancellation.

“Do you think, dear premier, that it is fair and equitable that a project right before completion is now being ruined retroactively and that our company is suffering serious damage through no fault of its own?” wpd AG CEO Hartmut Brosamle wrote.

It’s still too early to consider a formal complaint under the Canadian-European Union Comprehensive Economic and Trade Agreement (CETA), Sparwasser said.

“This is why we want to raise the concern now and say we want to proceed here in a better matter and in a manner that respects contracts and in a manner that respects the investment trust that an investor has put into the province of Ontario,” she said.

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