Investment Tax Credit for Clean Hydrogen

Country / jurisdiction: Canada · Year: 2023 · Status: In force · Level: National · Type: Voluntary

The Canadian government introduced an Investment Tax Credit for investments in projects that produce hydrogen from electrolysis or from natural gas with emission abated using carbon capture, utilization, and storage (CCUS), with the following features: the tax credit rate is based on the assessed carbon intensity of the hydrogen produced. It varies between 15 and 40 per cent of eligible clean hydrogen project costs, with projects producing the cleanest hydrogen receiving the highest level of support. A 15 per cent tax credit is also extended to equipment used to convert hydrogen into ammonia to transport the hydrogen. The tax credit would be available for eligible project costs that are aquired and available for use as of March 28, 2023. The clean hydrogen ITC rates will be halved in 2034 and fully phased out after 2034.The Canadian government announced its intention to add methane pyrolysis as a supported clean hydrogen production pathway. Once legislated, methane pyrolysis projects could be eligible for support as of December 16, 2024. Labour requirements must be met to receive maximum credit rates.

Official source: https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/corporations/business-tax-credits/clean-economy-itc/clean-hydrogen-itc.html