Canada should focus on clean hydrogen exports, EU head says before Ontario visit

Canada should focus on exporting clean hydrogen to Europe as the continent shifts its fuel sources away from Russia, the head of the European Union said ahead of her visit to Canada.

"The opportunities are limitless," European Commission President Ursula von der Leyen said in a written response to questions from The Canadian Press.

"We should definitely expand our co-operation on this energy of the future."

Von der Leyen was expected to arrive in Canada late Monday for a brief visit to Ottawa and Kingston, Ont., focused on clean energy, trade and support for Ukraine.

Ahead of that visit, von der Leyen wrote that Canada could broaden its exports of liquefied natural gas as an interim step to more hydrogen exports.

"For me the greatest potential of our energy co-operation lies in renewable hydrogen," von der Leyen wrote. "It will be great for our security of supply and for the competitiveness of our economies."

She also pushed back on Canada's objections to new forestry regulations and said an existing transatlantic trade deal is a key way to shore up ties in a turbulent world.

Achim Hurrelmann, co-director of the Centre for European Studies at Carleton University, said he is not expecting major announcements from the visit. But he said it's important for von der Leyen to make her first official visit to Canada since she started leading the EU in late 2019.

"The main reason that President von der Leyen is travelling to North America is probably meetings in Washington. But because Canada is such has been such a strong partner for the European Union, she is stopping by in Canada as well," he said.

"There isn't really anything in the Canada-EU relationship that would make this visit imperative right now," Hurrelmann said.

Von der Leyen's visit comes as the EU implements new forestry regulations that riled up Canada's delegation in Brussels.

Last November, Canada's ambassador to the EU, Ailish Campbell, argued that the new rules were "burdensome," such as requiring timber imports to have geolocation data that can trace the source of the trees.

In a letter obtained by Politico, Campbell sought a delay of the rules or a carve-out for Canada, arguing it's among the best countries for preventing deforestation. The letter did not mention the controversial logging of old-growth forest in places like the Fairy Creek watershed of Vancouver Island.

Asked about those concerns, von der Leyen said the measures contain "absolutely no discrimination" since they bring imports up to the same standards held by Europe's forestry sector.

"These rules will boost trade opportunities for companies and countries with sustainable practices in place," she wrote, adding that they fall in with pledges made at last year's UN biodiversity summit in Montreal.

Meanwhile, von der Leyen said her visit is meant to promote Canada's trade with Europe, through a trade deal that has been operating in draft form for five years.

The Comprehensive Economic and Trade Agreement, known as CETA, has boosted two-way trade by a third, with the exchange of goods going up by 66 per cent.

Yet there are still 10 of the EU's 27 member states who haven't fully ratified the agreement. This is largely due to local concerns around which mechanisms companies can use to seek compensation and rectify disagreements with national, state and provincial governments, known as investor-state dispute settlements.

Canadian firms have clashed with the EU's strict rules on food labelling and sanitation, such as pesticide residue and genetically modified organisms. And EU countries have been vigilant about protected geographical designations, such as Champagne only being sold if it's from the Champagne region of France.

Hurrelmann said CETA provides mechanisms to resolve those disputes, but the deal still has unlocked potential for Canada's small- and medium-sized businesses.

"Right now, it seems that the agreement has been benefiting European exporters more than Canadian exporters," said Hurrelmann, who has taken part in EU delegations in various provinces aimed at drawing up more interest in transatlantic trade.

"Canada will need to try to encourage more companies to take advantage of the agreement," he said.

For her part, von der Leyen said the deal represents more than just commerce, since it entrenches rules around sustainability, gender equality and labour rights.

"We worked hard indeed to break down trade barriers, overcome our differences and promote the agreement to our constituencies," she wrote, adding that the EU is committed to seeing the deal fully implemented.

"With Russia's war on Ukraine and its global shock waves, it has become a bridge more important than ever, contributing to the resilience of supply chains between two close, like-minded allies."

To that end, von der Leyen thanked Canada for its solidarity after Russia restricted exports of fuel that Europe has relied on for decades.

"Russia indeed tried to use our dependence on fossil fuels to try and blackmail us. But we have overcome, in part thanks to the support of reliable suppliers and partners like Canada," she said.

Von der Leyen said Europe is open to importing LNG directly from Canada, although analysts have said it will take years to create the infrastructure for this to be possible on the Atlantic coast.

"We should keep co-operating on LNG, knowing that some of the facilities could be repurposed for hydrogen trade afterwards," she said.

For now, Canada has pledged to look into ways of facilitated deliveries of LNG to Europe, such as by sending gas to the U.S. to replace fuel sent from America to the EU. It's unclear whether any of those shipments have been arranged.

Natural Resources Minister Jonathan Wilkinson said last August that Canada could ramp up production of LNG as an interim fuel for transitioning economies, or even to be used in the production of what's called blue hydrogen. However, European countries have generally pushed for hydrogen that is not created with fossil fuels, dubbed green hydrogen.

"We are interested obviously, in being part of producing liquid natural gas as part of a transitional fuel," Wilkinson said in an interview last August.

"At the end of the day, if you can produce hydrogen that has zero, or virtually zero carbon emissions, from my perspective, who cares where it comes from."

Hurrelmann said it's one of the few areas where disagreements between Europe and Canada.

"It's useful to send the signal that Canada and EU are really aligned on everything," he said.

"I don't see any major issues where Canada and the EU do not see eye to eye."

Von der Leyen's Tuesday visit had been planned to occur last fall, but was postponed due to the death of Queen Elizabeth II.

This report by The Canadian Press was first published March 6, 2023.

— With files from Mia Rabson