Clean Hydrogen Investment Tax Credit (ITC)
Canada
Incentivizes Canadian companies to adopt low-carbon hydrogen production technologies by offering refundable tax credits
grant_single_labels|summary
grant_single|eligibleFinancing
- grant_single|noCondition
grant_single|deadlines
- grant_single|openingDateNovember 28, 2023
- grant_single|closingDateDecember 31, 2034
grant_single|financingType
Tax Credits
grant_single|eligibleIndustries
- Manufacturing
grant_single|grantors
- Canada Revenue Agency (CRA)
- Natural Resources Canada (NRCAN)
grant_single|status
grant_card_status|open
grant_single_labels|preview
The Clean Hydrogen Investment Tax Credit (ITC) is a refundable tax credit for eligible clean hydrogen assets acquired from March 28, 2023, and operational by December 31, 2034. The program targets Canadian taxable corporations developing clean hydrogen projects with a carbon intensity below 4 kg CO2e per kg of hydrogen produced, including projects involving clean ammonia production.
grant_single_labels|projects
This grant is open to all eligible companies across Canada, provided they meet specific criteria related to clean hydrogen projects. No specific geographical limitations within Canada are mentioned for eligibility.
- All provinces and territories in Canada.
grant_single_labels|admissibility
Eligibility for the "Crédit d’impôt à l’investissement (CII) pour l'hydrogène propre" is determined by specific criteria.
- The applicant must be a taxable Canadian corporation, which may include a taxable Canadian corporation that is a member of a partnership.
- The project must be an eligible clean hydrogen project.
- The applicant must have acquired eligible properties for the clean hydrogen project that have become ready to be put into service during the tax year.
grant_eligibility_criteria|who_can_apply
To apply for the Clean Hydrogen Investment Tax Credit, you must meet the following two conditions:- Be a taxable Canadian corporation (including a taxable Canadian corporation that is a partner in a partnership).- Have an eligible clean hydrogen project and have acquired eligible properties for clean hydrogen that become ready to be put into service during the year.
grant_eligibility_criteria|eligible_expenses
This tax credit supports projects focusing on the production of clean hydrogen with low carbon intensity using eligible methods and equipment. The benefits extend to various equipment and activities crucial for producing clean hydrogen or ammonia.
- Production of hydrogen through electrolysis of water with necessary equipment such as electrolyzers and purifiers.
- Hydrogen production from eligible hydrocarbons utilizing reformers and related apparatus.
- Manufacture of clean ammonia using hydrogen as feedstock, involving heat recovery and conversion equipment.
- Supportive equipment used for integrated processes across hydrogen and ammonia production systems.
- Dual-use equipment for electricity and heating specifically tailored for hydrogen and ammonia applications.
grant_eligibility_criteria|zone
The grant covers expenses related to the acquisition and implementation of eligible property for clean hydrogen production projects.
- Acquisition costs of eligible property used for producing hydrogen via water electrolysis, such as electrolyzers, rectifiers, and water treatment equipment.
- Acquisition costs of eligible property used for producing hydrogen from prescribed hydrocarbons, like autothermal reformers and gas coolers.
- Costs of equipment used for clean ammonia production, including conversion and storage materials.
- Expense for dual-use electricity and heating equipment.
- Costs associated with auxiliary or supporting equipment that is integrated into the hydrogen or ammonia production processes.
- Capital costs reasonably attributable to the construction or installation of eligible properties.
- Legal and accounting fees related to the acquisition of eligible property.
- Site preparation and installation expenses for eligible property.
- Delivery and commissioning costs for eligible property.
- Cost incurred for materials, labor, and overhead if the property is self-manufactured.
grant_single_labels|criteria
Yes, there are evaluation and selection criteria for this grant. These criteria ensure the eligibility of projects for the Clean Hydrogen Investment Tax Credit (CII) by assessing their production methods, carbon intensity, and project feasibility.
- The hydrogen must be produced using an eligible method.
- The expected carbon intensity must be determined in accordance with the principles outlined in paragraph 127.48(6) of the Income Tax Act and must be reasonably achievable based on the project design.
- If the project aims to produce clean ammonia, it must be demonstrated that the project has sufficient production capacity to meet the needs of the ammonia production facility.
- If the hydrogen and ammonia production facilities are not located at the same site, the feasibility of transporting hydrogen between the facilities must be demonstrated.
grant_single_labels|register
Here are the steps to submit an application for this grant:
- Step 1: Respond to Preliminary Questionnaire
- Complete the pre-screening questionnaire available on the RNCan portal.
- Step 2: Conduct Environmental Impact and Carbon Intensity Calculation (EIIC)
- Perform an Environmental Impact and Carbon Intensity Calculation (EIIC) for your project.
- Step 3: Calculate Expected Carbon Intensity
- Compute the anticipated carbon intensity of the project following the guidelines provided in the Guide on the Modelling of Carbon Intensity.
- Step 4: Obtain Third-Party Validation Report
- Acquire a validation report from an eligible third-party provider to support your project’s carbon intensity calculations.
- Step 5: Prepare Project Documentation
- Gather all necessary documents for the project plan submission, including technical specifications and validation documents.
- Step 6: Submit Project Plan
- Upload and submit the complete project plan through the RNCan portal before the specified deadline.
- Ensure all required information is properly filled out and submitted as per guidelines.
- Step 7: Confirmation and Communication
- Await confirmation from RNCan regarding the eligibility and acceptance of your project plan.
- Maintain communication with RNCan for any additional information or clarification required.
grant_single_labels|otherInfo
The grant provides critical information regarding eligibility, equipment, and capital cost determination for producing clean hydrogen.
- Eligible projects must be confirmed in writing by RNCan.
- The credit applies to assets acquired from March 28, 2023, to December 31, 2034.
- Only Canadian taxable corporations can apply.
- Costs associated with legal, accounting, engineering, and site preparation are included in capital costs.
- Plans of projects must be submitted to and confirmed by RNCan.
- Equipment used for transmission, transport, off-site distribution, or storage of hydrogen is excluded from eligibility.
- Submissions for the project plan should be done through the RNCan portal in the specific form and manner indicated.
Apply to this program
Unlocking Clean Energy with Canada's Clean Hydrogen Investment Tax Credit (ITC)
The Clean Hydrogen Investment Tax Credit (ITC) is a refundable tax credit introduced by the Canadian government to stimulate investments in clean hydrogen projects. Focused on enhancing the country's clean energy production capabilities, this credit supports the acquisition and deployment of eligible property dedicated to clean hydrogen production.
Detailed Insights into Canada’s Clean Hydrogen ITC Program
Canada's Clean Hydrogen Investment Tax Credit (ITC) plays a pivotal role in the nation's commitment to reducing carbon emissions and promoting sustainable energy solutions. This credit is specifically tailored to advance clean hydrogen technology by incentivizing investments across a span starting from March 28, 2023, and extending to December 31, 2034. As a critical element in the government's broader climate strategy, the ITC facilitates the development of infrastructure necessary for producing hydrogen with an intensity of less than 4 kilograms of carbon dioxide equivalents per kilogram, thereby contributing significantly to a low-carbon economy.
Companies eligible for the ITC must be taxable Canadian corporations engaged in projects that conform to predefined criteria set forth by Resource Canada (RNCan). These projects must include the acquisition of qualifying properties—such as electrolysers for water electrolysis and other equipment foundational to the production of hydrogen—ensuring these assets are ready for use within the stipulated period. The credit offers substantial support to foster technological advancements and operational scale necessary for clean hydrogen production and indirectly supports clean ammonia synthesis using hydrogen as a feedstock.
The administration of the ITC involves collaborative efforts between the Canada Revenue Agency (CRA) and RNCan. While the CRA manages the credit claims and conducts verifications, RNCan is responsible for the evaluation and confirmation of project viability. This dual oversight ensures that projects are both compliant and aligned with the technical, scientific, and engineering standards vital for maximizing the credit’s impact. Businesses are encouraged to submit their project plans early via the RNCan portal to secure timely approvals, thereby integrating seamlessly into their fiscal strategies.
Moreover, the ITC offers diverse economic benefits by supporting a wide range of eligible properties, from electrolysers and compressors to purification and storage equipment essential for hydrogen production. Notably, the credit excludes certain categories such as offsite transport infrastructure, highlighting specificity in the eligible expenses aimed to optimize the program’s effectiveness in bolstering domestic clean hydrogen capabilities.
As part of Canada’s clean technology transition, the ITC is strategically designed to complement other incentives, such as the ITC for carbon capture, utilization, and storage (CCUS) for projects that utilize captured carbon dioxide in hydrogen production. This cohesive approach ensures that Canadian enterprises are equipped to contribute towards the national targets for greenhouse gas reductions by investing in this frontier green technology.
A successful application process involves meticulous planning and compliance, including the pre-submission of project documents to RNCan for evaluation, followed by the official tax credit application through CRA. This process ensures that all projects not only meet the rigorous eligibility standards but also contribute substantially to the overarching goals of economic decarbonization and sustainability.
By seizing opportunities under the Clean Hydrogen ITC, companies can alleviate capital expenditure burdens and position themselves at the forefront of Canada’s clean energy revolution. Thus, this tax credit not only propels immediate economic benefits but also lays down the infrastructure for long-term ecological benefits, ensuring Canada’s leadership in the global clean energy landscape.
