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.
  • The Vision for hydrogen in Canada in 2050 includes a number of ambitions; 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
  • The Strategy is underpinned by a federal investment of CAN$1.5 billion in a Low-carbon and Zero-emissions Fuels Fund to support the production/use of low-carbon fuels, including hydrogen.

In March 2021, the Governments of Canada and Germany entered into an Energy Partnership, establishing a formal collaboration across a broad range of energy priorities. The Partnership is intended to position Canada as a clean energy partner of choice for Germany, notably for Hydrogen, critical minerals and liquefied natural gas. In August 2022, the Governments of Canada and Germany announced a Joint Declaration on establishing a Canada-Germany Hydrogen Alliance, to create a transatlantic supply chain for hydrogen well before 2030, with first deliveries aiming for 2025.

In April 2021, the Minister for Natural Resources announced the Hydrogen Strategy Implementation Strategic Steering Committee. The purpose of the Committee is to establish priorities, guide actions, share knowledge and track results delivery on recommendations outlined in the national hydrogen strategy. The Committee is co-chaired by Natural Resources Canada and the Canadian Hydrogen and Fuel Cell Association and comprises representatives from across industry, provincial and territorial partners, non-government organisations and Indigenous partners.

In June 2021, the Canadian Government launched a first call for proposals under the ‘Building New Domestic Production Capacity’ stream of its CAN$1.5 billion Clean Fuels Fund (applications through this call closed in October 2021, with final project decisions slated for the second half of 2022). The fund would support the building of new or expansion of existing clean fuel production facilities, including hydrogen, renewable diesel, synthetic fuels, renewable natural gas and sustainable aviation fuel. It would also support feasibility and front-end engineering and design studies. Natural Resources Canada would provide funding through conditionally repayable contribution agreements of up to 30 percent of the total eligible project costs, to a maximum of CAN$150 million per project. In November 2022, the Canadian Government announced that approximately 60 projects have been selected to undertake negotiations to receive funding under the Clean Fuels Fund. The announcement noted these projects represent a first tranche of the highest-ranking applications from the 2021call for proposals and have a total federal investment of up to CAN$800 million. (Note: the same announcement also highlighted a combined investment of more than CAN$8.8 million to six organizations for 10 hydrogen and natural gas refuelling stations to help accelerate the decarbonization of road transportation, with federal funding for these projects provided through Natural Resources Canada’s Zero-Emission Vehicle Infrastructure Program (ZEVIP) and the Electric Vehicle and Alternative Fuel Infrastructure Deployment (EVAFIDI)).

In July 2021, the Canadian Government announced an investment of CAN$400 million (through the Net Zero Accelerator) to support the ArcelorMittal Dofasco plan to transition from coke blast furnaces to a hydrogen-ready direct reduced iron-fed electric arc furnace.

In April 2022, as part of Canada’s 2030 Emissions Reduction Plan and the 2022 Federal Budget, it was announced that the Canada Infrastructure Bank (CIB) would invest CAN$500 million in large-scale urban and commercial ZEV charging and refuelling infrastructure. Funding would be sourced from the Canada Infrastructure Bank’s existing resources under its green infrastructure investment priority area. It was also announced that the federal budget would provide CAN$400 million over five years, starting in 2022-23, to Natural Resources Canada to fund the deployment of Zero-Emission Vehicle (ZEV) charging infrastructure in sub-urban and remote communities through the Zero-Emission Vehicle Infrastructure Program (ZEVIP). A range of other initiatives, totalling near CAN$800 million, was also announced in the 2022 federal budget to support businesses switch to medium-and heavy-duty zero-emission vehicles.

In September 2022, the Canada Infrastructure Bank announced the launch of its $500 million zero-emission vehicle (ZEV) Charging and Hydrogen Refuelling Infrastructure Initiative (CHRI).

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, the Department of Finance launched consultations on:

In March 2023, following on from the government’s announcement in the 2022 Fall Economic Statement, the 2023 Budget proposed to introduce the Clean Hydrogen Investment Tax Credit. Amongst other things, the Budget proposal discussed eligible projects, credit rates, measurement of carbon intensity, eligible equipment, compliance, verification, labour requirements, etc. Relevant information 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 and for the Clean Technology Manufacturing Investment Tax Credit. The legislation released for both the Clean Hydrogen Investment Tax Credit and the Clean Technology Manufacturing Investment Tax Credit largely follows proposals included in the 2023 Budget.

 

Updated: January 2024