Research and Development (R&D) of green hydrogen technology is in high demand. In fact, Canada is on a transformative journey to achieve carbon-neutral electricity generation and net-zero emissions by 2050, and thus continues to invest in businesses involved in innovation and R&D in clean energy. There is a spectrum of government incentives and grants that fund projects aiming to develop solutions to decarbonisation and the transition to renewable and carbon-neutral energy.
The Demand for Green Hydrogen
Currently, the majority of hydrogen production is fossil fuel based. Green hydrogen is produced by electrolysis in which water is split into oxygen and hydrogen using renewable electricity or low-carbon power. The application of Green hydrogen has substantially lower carbon emissions than grey hydrogen, which is created from fossil fuels and is the most commonly deployed in the industry.
While green hydrogen has a relatively small role in the overall energy sector (0.1% of worldwide hydrogen production), it is quickly gaining a lot more attention with recent technological advances enabling its production to be more efficient and less expensive. Additionally, applications of hydrogen are expanding to multiple energy-intensive industries such as power generation, fuel cells for electric vehicles, production and manufacturing processes, electricity grid stabilization, etc. These factors have led to the increase in the demand for hydrogen, which is expected to grow to 500-600 million MT by 2050.
Accessing Funding for Clean Tech Projects: SR&ED
One government program that financially supports development and innovation in the renewable energy technology sector is the Scientific Research and Experimental Development (SR&ED) program, which is a tax incentive administered by the federal and provincial governments. This program benefits businesses by delivering an Investment tax credit (ITC) refund and allowing R&D expenditures to be deducted from income for tax purposes.
Through this program, you can claim back expenses associated with the development of hydrogen production technology alone as well as the development of hydrogen transmission and distribution. Developing technologies to increase the efficiency speed and capacity of hydrogen transfer and transport, research to facilitate design of hydrogen implementation infrastructures, improving electrolysis technology, research to increase the efficiency of green hydrogen production technology, and developing modeling tools to enable full cycle analysis of hydrogen implementation are a few examples of projects that can be eligible for SR&ED.
The potential for SR&ED eligibility is high for this category of projects as these aspects of green hydrogen production and implementation are still very much in the developing phase on a large-scale. This potential is higher for companies that are focused on mitigating the lack of knowledge on the suitable design of green hydrogen systems and the high-energy losses associated with electrolysis and transmission process. This is because these are the key technological challenges currently faced in the industry.
Accessing Funding for Clean Tech Projects: Grants
Several government grant programs support the green transformation of key industrial sectors and demonstration of innovative low-carbon technologies. These grants are offered by different government organizations, including but not limited to NRCan (Natural Resources Canada), Mitacs, SIF (Strategic Innovation Fund), and ISED (Innovation, Science and Economic Development Canada), that invest in companies carrying out R&D, innovation, demonstration, and commercialization in the renewable energy industry. These programs can fund projects in renewable energy, energy storage, and carbon capture and storage.
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Sources:
https://www.cnbc.com/2021/01/19/canada-is-set-to-have-one-the-worlds-biggest-green-hydrogen-plants.html
https://iea.blob.core.windows.net/assets/9e3a3493-b9a6-4b7d-b499-7ca48e357561/The_Future_of_Hydrogen.pdf
https://www.weforum.org/agenda/2021/06/4-technologies-accelerating-green-hydrogen-revolution/
https://www.nrcan.gc.ca/climate-change-adapting-impacts-and-reducing-emissions/canadas-green-future/the-hydrogen-strategy/23080
