What’s Really Being Kept Under Wraps?

On January 15th, 2026, something quietly significant happened in Brussels.

The European Commission approved a €400 million state-aid agreement between Germany and Canada—a decision that could fundamentally reshape the future of transatlantic energy trade. Yet what made this announcement truly striking wasn’t just who was included… but who was missing.

The United States—Europe’s emergency energy lifeline during its darkest hours of the recent energy crisis—was nowhere on the list of approved partners.

So what’s really going on behind these numbers?

Because this deal is not just another joint investment. It represents Germany’s first-ever state-supported program for importing green hydrogen from overseas, specifically from Canada—a country more than 5,000 kilometers away.

And that raises an obvious question.

Why would Europe choose a distant partner across the Atlantic when the United States sits just a few hundred nautical miles to the west?

The Deal That Redraws the Energy Map

Under the agreement, Berlin and Ottawa will each contribute €200 million, funding up to 300 megawatts of electrolyzer capacity in Canada. These facilities will produce renewable, so-called “green” hydrogen, designed to meet the EU’s strict RFNBO standard—Renewable Fuels of Non-Biological Origin.

This is not a symbolic label.

RFNBO rules form one of the most rigid regulatory frameworks in the world. To qualify, hydrogen must be produced entirely from renewable electricity, under three non-negotiable conditions:

• Additionality: The electricity must come from newly built renewable power, not existing grids.

• Temporal correlation: Power generation and hydrogen production must occur at the same time.

• Geographical correlation: The renewable source must be located close to the electrolyzer.

Miss just one requirement—and the hydrogen is rejected.

Every single megawatt-hour is digitally tracked through the EU’s Guarantees of Origin system.

And here’s the critical detail that changes everything:

Hydrogen produced from U.S. natural gas—even with carbon capture—does not qualify.

Why Europe Is Turning Away From the U.S.

To understand why this matters, we have to rewind to 2022.

Russia’s invasion of Ukraine triggered Europe’s worst energy crisis in decades. Before the war, Germany depended on Russia for roughly 40% of its natural gas. When Moscow shut off the taps, Brussels scrambled to keep the lights on.

The United States stepped in.

American LNG tankers flooded European ports, stabilizing the system and preventing economic collapse. It worked—but only as a short-term emergency fix.

Because LNG is still fossil fuel.
It still emits CO₂.
And it cannot align with a continent legally committed to net-zero emissions by 2050.

That realization gave rise to REPowerEU—Brussels’ aggressive strategy to eliminate Russian fossil fuels and fast-track clean energy at any cost.

And at the center of that plan sits green hydrogen.

Under EU law:

• By 2030, at least 42.5% of hydrogen used in industry must be renewable

• By 2035, that figure rises to 60%

These are not aspirational targets.
They are binding legal requirements, backed by penalties.

A Market So Big, Brussels Gets to Choose the Winners

Germany alone expects hydrogen demand to reach 90–110 terawatt-hours by 2030.

Even with 10 gigawatts of domestic electrolyzers, Berlin can only produce 30–40% at home. That means 50–70% must be imported.

This is one of the largest future energy markets on Earth—and Brussels is deciding who gets access.

The €400 million Canada deal is the first clear signal.

So why Canada?

Stability, Compliance, and Trust

Canada offers three things Brussels values more than price or proximity:

Stability. Compliance. Trust.

Canada is rich in renewable resources—strong Atlantic winds, massive hydroelectric capacity in Quebec and Labrador, and vast undeveloped land. But just as important, it is a politically stable democracy with an established trade framework with the EU through CETA.

More crucially, Ottawa has committed to aligning with EU climate rules.

Washington, by contrast, is sending mixed—and increasingly troubling—signals.

From late 2024 through early 2026, U.S. politics took a sharp turn. Donald Trump returned to the White House, threatening tariffs on allies, floating remarks about absorbing Canada as the “51st state,” and—most critically—withdrawing from the Paris Climate Agreement for the second time.

For EU policymakers, this isn’t ideology.
It’s risk management.

How do you sign a 20- or 30-year energy contract with a partner whose policies can reverse every four years?

The Technical Wall the U.S. Can’t Climb

There’s also a hard technical reality.

Most hydrogen produced in the United States today is blue hydrogen—made from natural gas with carbon capture. While this reduces emissions on paper, it fails the EU’s RFNBO definition.

Brussels does not allow fossil-based hydrogen, with or without carbon capture.

This isn’t a bureaucratic quirk—it’s a strategic firewall, designed to prevent Europe from replacing one dependency with another that could collapse under political pressure.

Canada’s Big Promise—and Its Big Problem

On paper, Canada is positioning itself as a future green hydrogen superpower, targeting 6 million tons of exports by 2050, with Europe as its primary market.

The €400 million agreement is a powerful political signal.

Brussels is effectively saying:
“We trust you as a long-term partner.”

But between commitment and reality, the gap is still enormous.

Consider Stephenville, Newfoundland—a coastal town of just over 6,000 people. Once dependent on fishing and paper mills, it became a symbol of Canada’s hydrogen dream.

For years, residents heard promises of massive projects, thousands of jobs, and Atlantic Canada becoming the “Saudi Arabia of green hydrogen.”

Then, in January 2026, World Energy GH2 cancelled its flagship hydrogen-ammonia project, citing high costs, lack of firm offtake contracts, and poor commercial viability.

And it wasn’t alone.

As of early 2026:

• No hydrogen project in Atlantic Canada has reached completion

• EverWind Fuels is still searching for financing

• EVREC and Pattern Energy remain stuck in development

• 2025 delivery targets passed with zero hydrogen produced

The ambition is real.
The execution—still unproven.

Why Germany Is Willing to Take the Risk

Meanwhile, in Duisburg, engineers at Germany’s largest steel plants are racing against time.

Coal-fired blast furnaces are being replaced with hydrogen-based electric furnaces—a transformation costing billions of euros. But the entire plan depends on one thing:

A stable, predictable hydrogen supply for decades.

If hydrogen deliveries fail, the transition collapses—and thousands of industrial jobs disappear.

That’s why the Germany–Canada deal uses a dual-auction model:

• Canadian producers bid the minimum price they need

• German buyers bid the maximum they can afford

• The German state covers the gap

The goal isn’t permanent subsidies—it’s to create a functioning market where long-term planning becomes possible.