In its 2023 Budget, the Canadian government provided information on its CAD$5.6 billion ($4.1 billion) Clean Hydrogen Investment Tax Credit and described how the Canada Growth Fund will assist in the sector’s initiation.
In order to ensure that Canadian businesses can continue to compete on a worldwide scale, the investment tax credit, which was announced last November (2022), is scheduled to be accessible for clean hydrogen generation depending on the lifecycle carbon intensity of hydrogen.
The credit provides a tiered structure depending on hydrogen carbon intensity, supporting between 15 and 40% of qualified projects. Projects producing less than 0.75 kg CO2/kg H2 receive a 40% credit, 0.75-2 kg CO2/kg H2 receive 25%, and 2-4 kg CO2/kg H2 only receive 15% credit.
The tax credit will also grant equipment required to transform hydrogen into ammonia for transportation a 15% tax credit. Additionally, in accordance with the original intentions, labor requirements must be satisfied in order to qualify for the highest tac credit rates. If the conditions are not met, lending rates will be decreased by 10% and go into force on October 1, 2023.
The Clean Hydrogen Investment Tax Credit is anticipated to cost an additional CAD$12.1bn ($8.9bn) during 2028–2024–25, with a five-year cost of CAD$5.6bn starting in 2023–2024, according to the government.
