Canada and Germany agreed measures to kickstart the trade of hydrogen, which is seen as a clean-energy alternative to dirtier fossil fuels.

Both nations will contribute €200 million (US$217 million) in funding for bilateral hydrogen auctions, German Economy Minister Robert Habeck told reporters in Hamburg after meeting with his Canadian counterpart. The auctions will fall under a platform known as H2Global, which Germany launched together with the Netherlands.

While hydrogen is at the core of Europe’s plans to eventually wean itself off fossil fuels, there are currently few buyers for the gas as it’s expensive to produce and requires infrastructure investments to make its use more viable. The idea behind H2Global is to buy quantities of hydrogen and resell them at a lower price to European buyers via auctions, in the hopes that more competitive costs will incentivize industry to invest in systems for the use of hydrogen.

Canada already has an agreement to supply Germany with hydrogen by next year, though there is currently no global market for the gas. 

The aim is “to best address premiums as we move to scale the production of hydrogen over a 10-year period,” Canada’s Energy and Natural Resources Minister Jonathan Wilkinson said in an interview. His country may still send it first shipment of hydrogen from ammonia to Germany by the end of next year, though it could take until 2026, he said.

Both sides plan to launch aligned supply and demand side auctions “as early as possible, and preferably before the conclusion of 2024,” according to their memorandum of understanding. 

During the visit, German energy company Mabanaft GmbH & Co KG also signed a letter of intent to receive up to 150,000 tons of ammonia annually from U.S.-based Pattern Energy, starting in 2027. The ammonia would be produced using wind energy and hydroelectricity generated in Canada, and could later be converted to hydrogen for use in German industries.