Environmental groups in Canada are calling on the federal government to exclude blue hydrogen from the new tax credit for the energy industry.
The Canadian government has found itself under pressure to keep up with the green incentives introduced in the US with the Inflation Reduction Act (IRA).
And as part of the efforts to do so, Trudeau’s government is devising a tax credit for the production of hydrogen.
However, the problem that the coalition of climate activists and academics has with the new tax incentive is the inclusion of hydrogen produced from fossil fuels or what is known as blue hydrogen.
The production of blue hydrogen is often paired with carbon capture facility proposals in order to lower emissions, which is likely what will start happening once hydrogen producers start applying for the tax credit.
The argument that opponents of the tax credit pointed out in their open letter to Finance Minister Chrystia Freeland is that it will stimulate the production of fossil fuels, instead of transitioning to greener energy sources.
“The tax credit should not be made available to any form of fossil-derived hydrogen,” the coalition said.
Part of the same coalition, including 55 organizations, among which are the Sierra Club and Greenpeace, advocated heavily against the incentives for carbon capture introduced last year, for the very same reasons.
The claims of the climate groups went unheard by the federal government, though, and Canada revealed a carbon capture credit worth over $7 billion through the rest of the decade.
Currently, the hydrogen tax credit is in the final phase of consulting