The Canadian Government has announced that it will introduce an investment tax credit in 2022 for carbon capture and utilisation (CCUS) and blue hydrogen projects.
Consultations with stakeholders will begin in the near future to come up with the exact formulation of the investment tax credit and the ways it can support a wide range of CCUS projects.
An important point from the country’s Department of Finance plan is not to provide the credit for enhanced oil recovery (EOR). This is a different approach compared to the current policy in the US where the 45Q tax credit is available for EOR.
Along with companies and industry reps, provincial governments will also be involved in the discussions. This is a signal that local specifics will also be taken into account when designing the tax credit and supporting legislature.
The carbon capture tax credit is planned to be enacted at the start of 2022 and will be accompanied by an equivalent set of tax credits for the production of green hydrogen.
The Canadian government recently funded a hydrogen station program called AZETEC in Alberta, signaling its intent to boost hydrogen adoption in the coming years. With green hydrogen set to become cheaper than grey hydrogen by 2030, this could be a good longterm investment and support the countries decarbonization efforts while still keeping the economy competitive.
