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Hydrogen: strict criteria desired for the tax credit

Natasha Kumar By Natasha Kumar Dec31,2023

Billions of dollars are at stake, while we await the unveiling of the tax credit promised by Ottawa.

Hydrogen: strict criteria desired for tax credit

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In Newfoundland, the World Energy GH2 consortium wants to build two wind farms with at least 328 wind turbines in total. Above: The Storheia wind farm, in Åfjord, Norway, December 7, 2021.

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How much hydrogen green produced in Canada really be green? This is one of the questions being asked by industrial lobbies and environmental protection organizations as everyone awaits the details of the investment tax credit for clean hydrogen that Ottawa has promised.

A year ago, the federal government held consultations (New window) on this subject. According to the Ministry of Finance, clean hydrogen production projects that present a level of carbon intensity below the most demanding threshold that will be established […] could qualify for an investment tax credit. 'at least 40%.

Sierra Club Canada, a national environmental organization, hopes that the green hydrogen projects that benefit from the tax credit promised by Ottawa will actually be green.

Gretchen Fitzgerald, national director of programs for the organization, is particularly concerned that the eligibility criteria for the tax credit could be manipulated by large businesses if Ottawa does not x27;does not provide clear or strict enough guidelines.

For example, a wind-powered green hydrogen project shouldn't qualify for the credit if its secondary energy source comes from coal or fuel oil when the wind dies, says Gretchen Fitzgerald.

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It would be a great injustice, she said.

World Energy GH2 CEO John Risley eagerly awaits details of the GH2 program tax credit. One of his biggest concerns, he says, is that green projects that use fossil energy sources are treated on an equal footing with projects powered by solar or wind energy.

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Billionaire John Risley leads the World Energy GH2 megaproject in western Newfoundland. (File photo)

World Energy GH2 is a consortium proposing to build two large wind farms of at least 328 wind turbines in total and an ammonia and hydrogen plant.

In the United States, it appears that the federal government is preparing to limit subsidies to green hydrogen companies with clean secondary energy sources. Projects that wanted to use backup sources from fossil fuels will therefore be excluded.

John Risley believes this bodes well for Canadian companies, which will have to find a place in the international hydrogen market.

The worst thing that could happen to us would be for the US government to set the bar very low and provide incredibly generous subsidies for a product that is somehow distorted by reliance on fossil fuel-generated electricity, John Risley said.

He also believes that strict criteria on clean energy would favor businesses in Newfoundland and Labrador, where the backup energy source would be the provincial electricity grid, whose electricity comes 80% from renewable sources.

In comparison, potential competitors in Nova Scotia would have option of electricity still generated mainly by coal in this province, making them ineligible for a tax credit.

We do not know when Canada to unveil details of its clean hydrogen investment tax credit.

According to reporting by < /em>Ryan Cooke, CBC

Natasha Kumar

By Natasha Kumar

Natasha Kumar has been a reporter on the news desk since 2018. Before that she wrote about young adolescence and family dynamics for Styles and was the legal affairs correspondent for the Metro desk. Before joining The Times Hub, Natasha Kumar worked as a staff writer at the Village Voice and a freelancer for Newsday, The Wall Street Journal, GQ and Mirabella. To get in touch, contact me through my natasha@thetimeshub.in 1-800-268-7116

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