An unofficial guide to Olaf Scholz’s ‘unusual’ trip to Canada

OTTAWA, Ont. — When German Chancellor Olaf Scholz touches down in Montreal on Sunday, he’ll be accompanied by Vice Chancellor Robert Habeck and a motley crew of CEOs.

“That is unusual,” said Sen. Peter Boehm, a former ambassador to Germany and veteran of logistics planning for past chancellor visits to Canada. “That's a pretty big deal, them taking the time to come over with the chancellor."

Habeck is Germany’s economics minister and charged with the country’s energy file. The portfolio has become increasingly volatile since the prolonged war in Ukraine has made reliance on Russian gas untenable. It helps explain why European Union leaders have been flocking to Canada.

Prime Minister Justin Trudeau will host Scholz for a three-day tour jumping across three provinces. The visit was announced in June after the two leaders met on the sidelines of the G-7 summit in Elmau, Germany.

A senior Canadian government official confirmed to POLITICO clean hydrogen and critical minerals will be the biggest areas of energy focus for the official visit.

Beginning in Montreal, the pair and their delegations will drop by artificial intelligence and quantum computing firms before heading to Toronto for a dinner to mingle with business leaders and pension fund magnates.

Members of the German delegation will include executives representing some of the biggest automakers in the world: Volkswagen and Mercedes-Benz.

Because of the EU’s desire to get ahead of Russia's threat of winter gas cutoffs, energy security will be a recurring topic throughout the trip. It will end with the signing of an accord in Stephenville, a farming village on the windy west coast of Newfoundland that was home to an American air force base during the Second World War.

The accord will be a symbolic gesture to foster more business and government cooperation between the two countries in the development of hydrogen fuel production.

“It's an amazing place,” German Ambassador to Canada Sabine Sparwasser said of Atlantic Canada. There’s good infrastructure including airport access and deep sea ports, she said. “It also has absolutely perfect non-stop wind.”

The town is where Canadian billionaire John Risley has proposed to build a new low-carbon intensity wind-to-hydrogen facility that could one day export fuel to Germany. If it goes ahead, it’s poised to be a new model of prosperity for an oil-producing province in financial crisis.

Canada is the world's fifth largest producer of natural gas. But it isn’t on the top of Germany’s list for short and medium-term suppliers of liquified natural gas because Canada doesn’t have export facilities to send immediate shipments of fuel to Europe without going through the United States.

While Berlin shops the world for ready-to-ship fuels, its focus on Canada is to sate tomorrow’s demand for low-carbon-intensity hydrogen — and lock down new supply chains for critical minerals from a G-7 country, reducing reliance on Russia or China.

The hydrogen industry is ripe for development in Canada given the east coast’s proximity to Europe. Plus, with Germany's goal to get to net zero by 2045, officials suggest investments into Canadian low-carbon intensity hydrogen projects are more attractive ventures than building out fossil fuel infrastructure to get western Canadian gas to Europe.

“We want imports that are as climate neutral as possible,” Sparwasser tells POLITICO.

Boehm, who served as Canada’s German ambassador between 2008 and 2012, said the arrival of Scholz and Habeck demonstrates Germany’s desire to double down on “safe” future economic and political investments, fast.

Trade between the two countries is increasing thanks to the Comprehensive Economic and Trade Agreement. Germany is Canada’s sixth-largest trading partner, according to government data.

The deal took three years of negotiations starting in 2013. It was in the final year of negotiations that Chrystia Freeland, in her former capacity as international trade minister, got to work closely with Scholz, mayor of Hamburg at the time.

Freeland, now deputy prime minister, referenced her friendship with Scholz during a Toronto Global Forum event last year, crediting him as a key figure behind CETA. During that November armchair discussion, she called Scholz someone she admires in the world.

“He has described to me the enormity of the green transition in a way that I think is really true, which is that this is the biggest transformation of industrial economies since the industrial revolution,” she said at the time. “I think it is accurate — so that's a lot we have to do.”

Germany, however, has yet to ratify the free-trade agreement.

“That's coming, I've been told,” Boehm said. “You just have to be patient.”

But patience is a virtue in short supply for two progressive leaders feeling the heat of juggling ambitious and expensive green agendas in a high inflation era.

Both leaders are also governing without the added safety of having a majority of seats in their respective Parliaments.

Scholz leads an ampelkoalition, a traffic light coalition government between the Social Democratic Party, the Free Democratic Party and the Greens.

Whereas the stability of Trudeau’s Liberal minority government teeters on a confidence deal with opposition New Democrats that could fall apart if Ottawa doesn’t move ahead on a national dental care plan by the end of the year.

For Scholz, the timing of the trip will give him temporary respite from a brewing tax fraud controversy over a decision made when he was mayor of Hamburg to waive a €47-million bill from Walburg, the country’s largest private bank.

Scholz faces an official inquiry after he returns from Atlantic Canada’s gusty shores.

When Parliament reconvenes in late September, Trudeau, now in his third term as prime minister, will face a zesty new Conservative leader — one who is almost guaranteed to scrap the Liberals’ carbon tax should he win the next election, a decision that comes with the risk of projecting flip-flopping policy signals to international investors.

Tenuous political circumstances in the United States, and the possibility of Donald Trump’s return to the world stage, also has world leaders preemptively making bi- and multilateral contingency plans — and more trips to Canada.

Scholz and Habeck’s visit is the latest sign of a desire to see closer bilateral relations with Canada, recently bolstered over the contentious return of Gazprom Nord Stream gas pipeline turbines to Germany.

German Foreign Minister Annalena Baerbock met with Foreign Affairs Minister Mélanie Joly in Montreal earlier this month, a diplomatic prelude to the chancellor’s visit next week. After Scholz, other dignitaries are on their way.

Following Scholz’s visit, European Commission President Ursula von der Leyen is expected to visit Canada in September.