German energy company Mabanaft has signed a letter of intent (LOI) with Canada-based renewables firm Pattern Energy to import green ammonia into the Port of Hamburg, as Germany ramps up efforts to secure future hydrogen supplies from diverse sources.

The green ammonia production would be powered by wind power and hydroelectricity, and be based at a new facility to be developed by Pattern Energy at the Port of Argentia in the Canadian province of Newfoundland and Labrador, starting in 2027. Mabanaft could potentially invest in the project, which will have an estimated production capacity of 400t/d of green ammonia.  

“Importing green ammonia will be cheaper than producing it in Germany by 2030” Ganbold, Aurora

Ammonia will be imported through a new facility being developed by Mabanaft within the Port of Hamburg. The facility, called New Energy Gate, will form the company’s first major hub for the import, storage and processing of renewable fuels. The ammonia will then be supplied to energy-intensive industrial users in the Hamburg region.

The LOI was signed by the two companies in the presence of German Federal Minister for Economic Affairs and Climate Action Robert Habeck, Canadian Minister for Energy and Natural Resources Jonathan Wilkinson and Hamburg's senator for economic affairs, Melanie Leonhard. 

In 2022, the two governments signed a joint declaration of intent to collaborate on export of clean Canadian hydrogen to Germany.

Hydrogen diplomacy

The German government has embarked on a global round of “hydrogen diplomacy” in the last few years, aimed at building a diverse supply base, the need for which has been highlighted by the energy crisis triggered by Russia’s invasion of Ukraine.

The government recently committed €3.53b ($3.83b) of funding for H2Global Foundation, a scheme set up to source imports of hydrogen and its derivatives by awarding long-term purchase agreements to overseas production projects via competitive auctions.

Under its updated hydrogen strategy, announced in 2023, Germany expects hydrogen demand to reach 95–130TWh by 2030, of which up to 70% will have to be imported.

Green ammonia from Canada will play a key role in achieving these targets, Mabanaft said. The company declined to comment on the pricing details of the proposed deal with Pattern Energy.

Higher electricity costs mean “importing green ammonia from abroad will be cheaper than producing it in Germany by 2030”, Anise Ganbold, head of hydrogen research at UK-based consultancy Aurora Energy Research, told Hydrogen Economist. “This is even after adding the costs of conditioning and ship transport.”

Canada’s hydrogen strategy, published in 2020, targets Europe as a key export market for its production, she noted.

According to Aurora Energy Research analysis, Canadian green hydrogen delivered to Germany as ammonia, and then later cracked back to hydrogen, will cost less than imports from closer neighbours such as North Africa by 2030, based on 2020 Canadian power costs for green hydrogen of C$28/MWh ($20.7MWh).

Import diversification

Hydrogen imports from renewable-rich Middle East and North African countries are also expected to play a key role in Germany’s strategy.

Among the Gulf states, Saudi Arabia is the most competitively placed to export hydrogen in the form of ammonia, owing to lower costs of production based on solar energy, according to recent analysis by the Oxford Institute for Energy Studies.

70% – German import dependence

Meanwhile, Germany is developing pipeline routes for importing hydrogen from neighbouring countries. Projects include a route from Denmark, to become operational by 2028 and a link with Norway, to be ready by 2030.

Furthermore, Habeck recently signed an LOI with German renewables company Enertrag, aimed at adding the $10b Hyphen hydrogen export project in Namibia to Germany’s list of “strategic foreign projects”.

Hyphen—being developed by Enertrag and Africa-focused investment firm Nicholas Holdings—is located in the Tsau Khaeb National Park in southwestern Namibia. It is sub-Saharan Africa’s largest and only fully vertically integrated green hydrogen project. Plans envisage the project reaching first-phase capacity of 1mt/yr by 2027. At full-scale, it is expected to produce 2mt/yr from 3GW of electrolyser capacity powered by 7GW of renewables.

LNG and hydrogen

Germany has also quickly ramped up its LNG import capacity in recent years in response to the Ukraine war and the need to diversify its gas supply sources away from Russia.

The country has three operational FSRUs—the Wilhelmshaven, Brunsbuettel and Lubin terminals— with a total capacity of 15bcm/yr and is planning further expansion.

While the projects contrast with long-term goals to reduce fossil fuel dependence, their developers say repurposing them for hydrogen imports would mitigate the risk of stranded assets in the future.

However, critics disagree. “The argument that LNG terminals can be repurposed for hydrogen imports is not convincing, with questions remaining over future price levels and actually technological feasibility,” Sascha Müller-Kraenner, executive director of NGO Environmental Action Germany, told Hydrogen Economist. Should there not be enough affordable hydrogen available in future, Germany “will be stuck with those LNG terminals”, he said, adding there was also a risk of locking in gas dependence thus undermining climate targets.

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Author: Beatrice Bedeschi