In a significant boost for Europe’s renewables ambitions, the European Commission has greenlit a €200m German scheme to produce and import renewable hydrogen from Canada.
This marks another step in Europe’s push to strengthen its renewable energy supply chains and cut reliance on fossil fuels.
Approved under EU State aid rules, the initiative will support the manufacture of renewable fuels of non-biological origin (RFNBOs) in Canada, which will then be imported into Germany and sold across the European Union.
The scheme aligns closely with the EU Hydrogen Strategy, the Clean Industrial Deal and the REPowerEU Plan, all of which prioritise renewable energy as a cornerstone of Europe’s industrial and climate future.
Commenting on the deal, 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 our valued trade partner Canada.
“It builds on the success of the EU-Canada Comprehensive and Economic Trade Agreement, the Strategic Partnership on Raw Materials, and the EU-Canada Industrial Policy Dialogue.
“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.
A transatlantic boost for renewable energy fuels
Germany’s €200m commitment is expected to unlock a matching €200m in funding from Canada, creating a €400m investment package for RFNBO production.
These fuels are produced using renewable electricity, typically through electrolysis, and can be stored or transported as synthetic gases or liquids derived from hydrogen and carbon dioxide.
The programme will support the construction of up to 300 megawatts of electrolysis capacity in Canada, significantly expanding renewable energy-based hydrogen output. A competitive bidding process, scheduled to conclude in 2027, will determine which projects receive funding.
According to German estimates, the scheme could prevent up to 2.47 million tonnes of CO₂-equivalent emissions, contributing to national and EU-wide climate targets.
How the double auction system works
At the heart of the scheme is an innovative double auction mechanism. RFNBO producers in Canada and buyers in the EU are brought together in a single market process.
Producers offering the lowest selling price and buyers willing to pay the highest price are matched, with public funding bridging the gap between the two.
This structure is designed to ensure cost efficiency while accelerating market development for renewable energy fuels.
All beneficiaries must demonstrate full compliance with EU sustainability criteria for renewable hydrogen, as defined in delegated legislation.
Why renewable hydrogen matters for Europe
Expanding Europe’s renewable hydrogen supply is becoming increasingly critical as heavy industry, transport and energy storage seek alternatives to fossil fuels.
Renewable hydrogen can decarbonise steelmaking, chemicals, refining and fertiliser production – sectors where direct electrification is often not feasible.
Beyond industry, renewable energy-based hydrogen can power long-haul trucks, shipping and potentially aviation through synthetic fuels. It also plays a key role in balancing electricity grids by storing surplus renewable energy generated by wind and solar.
By sourcing RFNBOs from trusted partners like Canada, Europe can diversify supply, improve energy security and accelerate large-scale deployment of hydrogen technologies from 2030 onwards.
Building on previous approvals
This initiative follows earlier Commission approvals in 2021 and 2024 that supported renewable hydrogen investments in non-EU countries.
Together, these schemes reflect a strategic shift toward global renewable energy cooperation to meet Europe’s growing demand.
As renewable energy transitions from ambition to infrastructure, partnerships like this Germany–Canada scheme are set to play a defining role in shaping Europe’s low-carbon economy.
