Canada

Country: Canada

Document type: National Strategy

Title: Hydrogen Strategy for Canada

Released: December 2020

Summary Points:

  • Recommendations in eight pillar areas are outlined to support Strategy implementation (within the Strategy, a series of four concrete actions and rationale are provided for each of the eight pillars):
    • Strategic Partnerships – strategically use existing and new partnerships to collaborate and map the future of hydrogen in Canada.
    • De-Risking of Investments – establish funding programs, long-term policies, and business models to encourage industry and governments to invest in hydrogen.
    • Innovation – take action to support further R&D, develop research priorities, and foster collaboration between stakeholders.
    • Codes and Standards – modernise existing and develop new codes and standards to keep pace with this rapidly changing industry and remove barriers to deployment, domestically and internationally.
    • Enabling Policies and Regulation – ensure hydrogen is integrated into clean energy roadmaps and strategies at all levels of government and incentivise its application.
    • Awareness – lead at the national level to ensure individuals, communities, and the private sector are aware of hydrogen’s safety, uses, and benefits during a time of rapidly developing technologies.
    • Regional Blueprints – implement a multi-level, collaborative government effort to facilitate the development of regional hydrogen blueprints to identify specific applications and plans for hydrogen production and end use.
    • International Markets – work with international partners to ensure the global push for clean fuels includes hydrogen.
  • If opportunities are realised, the Vision for hydrogen in Canada in 2050 includes a number of ambitions/possibilities; a sample includes:
    • More than 5 million fuel-cell electric vehicles on the road
    • Domestic hydrogen sector revenue of more than CAN$50 billion
    • Annual reduction of greenhouse gases of up to 190-megatonnes of CO2e
    • Accounts for 30% of Canada’s energy system
    • Canada is one of the world’s top 3 clean hydrogen producers

Hydrogen Strategy for Canada: Progress Report

In May 2024, the Canadian Government released the Hydrogen Strategy for Canada: Progress Report (‘Progress Report’) which details developments in Canada’s hydrogen sector since 2020, including financial/funding and regulatory supports.

Policy Support – Investment Tax Credits

In the 2022 Fall Economic Statement in November 2022, the government confirmed its intention to establish an investment tax credit to support investments in clean hydrogen production. In December 2022, consultations were launched on:

In March 2023, the 2023 Budget proposed to introduce a suite of clean energy investment tax credits, including the Clean Hydrogen Investment Tax Credit; the Budget proposal discussed eligible projects, credit rates, measurement of carbon intensity, eligible equipment, compliance, verification, labour requirements, etc. Relevant information for the Clean Hydrogen Investment Tax Credit is included in the Budget 2023 Tax Measure: Supplementary Information document pages 19-23.

In the 2023 Fall Economic Statement delivered in November 2023, the government presented timelines for the delivery of investment tax credits in 2024 across a range of clean energy technologies, including clean hydrogen. In December 2023, the government released draft legislation (for public consultation, submissions by 5 February 2024) for the Clean Hydrogen Investment Tax Credit.

As noted above, several related investment tax credits were announced in Budget 2023, and each of these is able to support reductions in the cost of low-carbon hydrogen:

  • The Clean Technology Manufacturing Investment Tax Credit
  • The Carbon Capture, Utilisation and Storage Investment Tax Credit
  • The Clean Electricity Investment Tax Credit
  • The Clean Technology Investment Tax Credit

In June 2024, media reports indicated that the Canada Revenue Agency (CRA) has issued guidance on the Carbon Capture, Utilization, and Storage Investment Tax Credit and the Clean Technology Investment Tax Credit, which were passed by the Senate in June 2024 as part of Bill C-59. The report also noted that the Clean Hydrogen Investment Tax Credit and the Clean Technology Manufacturing Investment Tax Credit formed part of Bill C-69, which received royal assent on 20 June 2024.

Policy Support – Initiatives Accessible to Low-Carbon Hydrogen

Iin Budget 2021, the Canadian Government committed to an investment of $1.5 billion over five years to establish a Clean Fuels Fund, to de-risk the capital investment required to build new or expand existing clean fuel production facilities (including facility conversions). The Progress Report notes that as of October 2023, 10 hydrogen projects had been selected to receive support totalling over CAN$300 million.

The Canadian Infrastructure Bank provides financing for decarbonisation projects:

  • In March 2023, the Bank announced it would provide CAN$277 million in financing to the Varennes Carbon Recycling Facility
  • In May 2024, after release of the Progress Report, the Bank announced financing support of CAN$337 million towards a hydrogen production and refuelling network in Western Canada.

The Strategic Innovation Fund – Net Zero-Accelerator (SIF-NZA) has announced funding for two hydrogen projects (CAN$300 million and CAN$15 million in support) with the Progress Report noting that additional projects are undergoing final negotiations.

The Canadian Government has introduced several programs to support zero-emission transportation, and which can provide funding for the deployment of hydrogen-based solutions, including the (CAN$2.75 billion) Zero Emission Transit Fund (ZETF), the (CAN$550 million) Incentives for Medium and Heavy-Duty Zero-Emission Vehicles (iMHZEV), and the (CAN$680 million) Zero Emission Vehicle Infrastructure Program (ZEVIP).

The Government of Canada’s ZEV charging and refuelling infrastructure targets are currently 84,500 chargers and 45 hydrogen stations to be deployed by 2029.

In May 2024, the Canadian Government announced a funding award of over CAN$9.4 million to establish a Clean Hydrogen Hub at Simon Fraser University’s Burnaby campus. This project would also receive CAN$1 million from the Province of British Columbia’s Centre for Innovation and Clean Energy, nearly CAN$2.4 million from Simon Fraser University, CAN$1 million from the City of Burnaby, as well as several other partners.

In August 2024, the Canadian Government announced a CAN$9.14-million investment for six projects to support innovation in Canada’s clean hydrogen sector, of which CAN$2.74 million was allocated through the Energy Innovation Program and CAN$6.4 million allocated via the Clean Fuels Fund (the latter supporting studies that seek to advance knowledge of the impacts of blending hydrogen into the existing utility networks).

Regulatory

Canada’s Clean Fuel Regulations (CFR) requires liquid fossil-based transportation fuels (gasoline and diesel) to reduce carbon intensity by 15% (compared to 2016) by 2030. The regulations establish a credit market for regulated parties (producers and importers). Credits are proportional to the carbon intensity of the hydrogen that is used.

The following uses of hydrogen can create CFR credits:

  • Hydrogen used as a fuel or feedstock in the production of liquid fossil fuels
  • Hydrogen used as a fuel or feedstock at a low-carbon-intensity fuel production facility
  • Hydrogen used as a fuel in stationary applications (for example, hydrogen injected in natural gas pipelines).
  • Hydrogen supplied for use in transportation (for example, refuelling hydrogen fuel-cell vehicles)

International Cooperation

As at the time of publication of the Progress Report, Canada had signed 12 international agreements to provide energy security and advance clean hydrogen export opportunities, including with Germany, the Netherlands, the United States, South Korea and Japan.

In March 2024, the Government of Canada announced that it has signed a Memorandum of Understanding with Germany to work to establish a dedicated Bilateral Window through Germany’s H2Global Foundation that would support commercial transactions between Canadian hydrogen producers and Germany’s industrial manufacturing and energy distribution sectors. The Canada-Germany Bilateral Window would be administered by the H2Global Foundation and would conduct coordinated supply and demand side auctions that would connect Canadian hydrogen exporters with German offtakers for hydrogen or its derivatives. In July 2024, the Government of Canada announced it would commit up to CAN$300 million to support clean hydrogen trade with Germany. The funds would be allocated via a competitive auction process expected to be launched by the end of 2024, following European Commission review of the proposed auction parameters and a similar funding commitment from Germany.

Provincial Strategies

Since 2020, six provinces have published hydrogen strategies, Roadmaps or Action Plans. British Columbia and Alberta released strategies in 2021. Ontario and Québec published strategies in 2022. Nova Scotia published its Green Hydrogen Action Plan in 2023, and New Brunswick published its Hydrogen Roadmap in 2024.

Provinces are supporting hydrogen developments through various initiatives, investments and regulations. The regional priorities vary, reflecting provinces’ diverse resources, energy usage patterns and economic drivers.

 

Updated: September 2024