In its Autumn Economic Statement, the Canadian Department of Finance announced it planned to establish a tax credit for clean hydrogen based on the lifecycle carbon intensity of hydrogen, similar to the US Inflation Reduction Act, passed in August this year (2022).
Read more: Win for hydrogen in the US – Inflation Reduction Act to become law
Under current plans, the investment tax credit is expected to be refundable and available for ‘eligible investments’ made as of the day of Budget 2023. Set to be phased out by 2030, the lowest tier that meets all eligibility requirements is proposed to received tax credits of at least 40%.
It is hoped the investment tax credits will promote jobs and skills for a Net Zero economy, such that, the Government has said the level of the credit will also depend on whether certain labour protection requirements are met.
According to the Department of Finance, companies that do not meet certain labour conditions see have the maximum credit reduced by 10% to help incentivise the support and creation of good jobs.
H2 View understands the consultation will seek input on; an appropriate carbon intensity-based system for the Canadian content; and the level of support needed for different hydrogen production pathways in the country.
In the Economic Statement, the Department of Finance, said, “With major investment tax credits for clean technology and clean hydrogen, we will make it more attractive for businesses in Canada to invest in technology and to produce the energy that will help to power a Net Zero global economy.”
Adding, “Canada will be a reliable, premium supplier of energy in a Net Zero world, and clean hydrogen is an essential part of this.”
The move follows on from the launch of the Canada-Germany Hydrogen Alliance which aims to support Germany’s switch from Russian fossil fuels with Canadian hydrogen exports by 2025.
Read more: Canada-Germany Hydrogen Alliance targets first exports by 2025
Additionally, the Department has proposed a similar investment tax credit of up to 30% of the capital cost for clean technologies, including “non-road zero-emissions vehicles” such as hydrogen or electric heavy-duty equipment for mining or construction, as well as the required charging or refuelling infrastructure.
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