Memorandum of Understanding: The advancement of the Canada-Germany Hydrogen Alliance

Memorandum of Understanding between the Department of Natural Resources of Canada and the Federal Ministry for Economic Affairs and Climate Action of the Federal Republic of Germany concerning the advancement of the Canada-Germany Hydrogen Alliance

The Department of Natural Resources of Canada and the Federal Ministry for Economic Affairs and Climate Action of the Federal Republic of Germany, hereinafter referred to as " the Participants",

Considering the Joint Declaration of Intent between the Government of Canada and the Government of the Federal Republic of Germany on Establishing a Canada-Germany Hydrogen Alliance, signed at Stephenville on 23 August 2022 (the “2022 Joint Declaration of Intent”);

Wishing to advance the hydrogen economy as well as to create a transatlantic hydrogen trade corridor, while addressing the broader climate imperative, accelerating the global energy transition and safeguarding international energy security;

Acknowledging that renewable and low-carbon hydrogen and its derivatives will play an essential role in meeting global energy needs and international, European and national climate targets and in decarbonizing their industries as part of a people-centred energy transition towards climate neutrality;

Recognizing the commitments made in the 2022 Joint Declaration of Intent in which their Governments decided to:

• explore opportunities for bilateral trade pertaining to hydrogen and its derivatives, as well as hydrogen related technologies;
• accelerate the expansion of the hydrogen industry, the improvement of infrastructure and supply chains; and
• respect climate commitments;

Considering that Germany has chosen to focus on hydrogen produced from renewable electricity to advance its energy transition;

Understanding that Canada’s Atlantic region provides a compelling value proposition to supply hydrogen and its derivatives to the German market, thereby providing security of supply from a stable and reliable partner and contributing to the establishment of a transatlantic hydrogen corridor;

Aiming to use respective incentive regimes to support commercial offtake agreements and send a clear pricing signals to the market, thereby facilitating the fulfillment of the Canada-Germany Hydrogen Alliance;

Have reached the following understanding:

Paragraph I

1. In their collective interest, the Participants will cooperate in the design of a jointly supported H2Global window to address the “green premium” with regards to green hydrogen and its derivatives produced in Canada, over a 10-year period.
2. The Participants will use respective domestic production and demand incentives to maximize the success of H2Global with the long-term goal of establishing robust trade via a transatlantic hydrogen corridor.
3. The Participants intend to design a joint H2Global window in a way that facilitates the highest possible purchase volume of hydrogen and its derivatives. The Participants also intend to jointly develop and decide upon the terms of the underlying mechanism preferably not later than June 30, 2024.
4. The Participants will submit the proposal for the auction mechanism to relevant authorities for review and approval at the conclusion of the design phase.
5. The Participants understand the urgency for proponents to secure commercial offtake agreements and will aim to launch aligned supply and demand side auctions as early as possible, and preferably before the conclusion of 2024, should approvals by relevant authorities be secured in time.

Paragraph II

1. This Memorandum of Understanding is not legally binding.
2. The Participants will observe applicable competition law.
3. This Memorandum of Understanding is subject to confirmation of funding approval by the Participants, which would be on an equal basis.

Paragraph III

The Participants may amend this Memorandum of Understanding by mutual written consent.

Paragraph IV

The Participants will resolve differences arising from the interpretation or application of this Memorandum of Understanding by mutual consultation through relevant diplomatic procedures.

Paragraph V

1. This Memorandum of Understanding will come into effect upon its signature by the Participants.
2. Either Participant may terminate this Memorandum of Understanding at any time by giving written notice to the other Participant, at least 90 (ninety) days prior to the date of the proposed termination.