The €200m German funding, which will be matched by Canada, will be awarded through the H2Global scheme, where Canadian producers could be awarded contracts to supply EU-certified green hydrogen for German consumption.

Under the scheme, H2Global’s investment vehicle Hintco will purchase the hydrogen volumes and resell them to European consumers at the highest possible market price, absorbing the price gap between green and grey alternatives.

The European Commission said the joint €400m ($464m) German-Canadian scheme could support the construction of up to 300MW of electrolyser capacity in Canada.

Contracts will be awarded through competitive bidding to support the lowest-cost molecules and are expected to be concluded next year.

Beneficiaries would have to prove compliance with the EU rules on renewable fuels of non-biological origin, which have matching requirements for electrolyser operation with renewable energy assets.

European Commission Executive Vice-President for Clean, Just and Competitive Transition, Teresa Ribera, said the auctions would help meet growing demand for green hydrogen in Europe, while also supporting Canada’s clean fuel sector.

“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,” she said.

However, the decision comes after a project once touted as Canada’s flagship green hydrogen export development was shelved after failing to secure any offtake agreements.

World Energy GH2’s 1.2GW green hydrogen and ammonia project in Newfoundland and Labrador was heavily promoted after the Canadian and German governments signed a pact to build up trade in green molecules.

The cancellation has raised questions about the commercial viability of large-scale transatlantic hydrogen trade.

Despite the setback, there are other export-focused projects on Canada’s east coast progressing.

Developer EverWind Fuels is pressing ahead with its 383,000-tonne per year green hydrogen project in Nova Scotia, which could begin smaller-scale production in 2028.