Posted on 30 Mar 2023
Canada’s 2023 budget is introducing a new clean hydrogen investment tax credit of up to 40% for eligible clean hydrogen products, Kallanish reports.
That budget calls for new tax credits for clean hydrogen, clean electricity and clean technology manufacturing. Credits for clean technology adoption and carbon capture/storage are being expanded.
The green hydrogen credit will cost Canada CAD 5.6 billion ($4.12 billion) over five years through 2028 and an additional CAD 12.8 billion through 2035. Both green and blue hydrogen projects are eligible.
The tax credit had been announced last November by the federal government, but details were released earlier this week with Budget23 being tabled in the House of Commons in Ottawa, Ontario.
The incentive is expected to allow Canada to develop hydrogen projects and compete with other countries including the United States. It will also convince European countries and companies that Canada is aggressively pursuing hydrogen development.
Budget23 outlines the role of the CAD 15 billion Canada Growth Fund in launching Canada’s green hydrogen sector. The tax credit will be phased out, starting in 2034.
The credit provides a tiered structure depending on the lifecycle carbon intensity supporting between 15% and 40% of qualified projects. The government will also grant a 15% tax credit for equipment to transform hydrogen into ammonia for transportation. Applicants must meet labour requirements in order to qualify for the maximum tax credit.
Canada has said it wants hydrogen to provide 30% of domestic power by 2050. The North American nation is also forging a critical materials partnership with the EU, which includes renewable hydrogen. The parties said earlier this year they intend to advance the commercialisation of the hydrogen industry and develop transatlantic trade.
Source:Kallanish
