Canada to introduce 40% hydrogen tax credit as fears mount it will be ‘left behind’ by US IRA
Government hopes generous incentives for H2 investments will help Canada to compete with its southern neighbour
Hydrogen: hype, hope and the hard truths around its role in the energy transition
The autumn economic statement, announced by Canada’s department of finance yesterday (Thursday), pledges to introduce the regime in spring 2023, and run it until at least 2030.
“While the IRA will undoubtedly accelerate the ongoing transition to a net-zero North American economy, it also offers enormous financial supports to firms that locate their production in the United States—from electric vehicle battery production, to hydrogen, to biofuels, and beyond,” Canada’s department of finance said in its economic statement. “Without new measures to keep pace with the IRA, Canada risks being left behind.”
In addition to hydrogen incentives, Canada’s finance minister Chrystia Freeland introduced tax credits of up to 30% for renewable electricity systems, energy storage systems and industrial electric vehicles.
“The green transition is the most significant economic transformation since the Industrial Revolution”, Freeland said in a comment, adding that the budget proposals are “down payment on the work that lies ahead to respond to the Inflation Reduction Act”.
The Canadian government also revealed new details on the Clean Growth Fund announced last spring, now saying that the fund will be launched by the end of this year with a C$15bn ($11bn) in start-up capital. The fund aims to use a contract for difference (CfD) mechanism to attract private investment in CCS, among other technologies.
EverWind Fuels applauded the new Canadian tax credits. “The refundable nature of the tax credit enables private capital to be recycled to further stimulate project development, creating a virtuous cycle for green energy investment and supporting the establishment of a Canadian green energy economy”, said EverWind Fuels' chief executive Trent Vichie, adding that “Canada required a swift, ambitious, and effective response to the recent US Inflation Reduction Act and Minister Freeland has delivered.”
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