Clean Hydrogen Investment Tax Credit
Eligibility & Details
What this program funds and who can apply
Program Description
Refundable investment tax credit of 15% to 40% for taxable Canadian corporations producing clean hydrogen. The credit rate varies by the carbon intensity of the hydrogen production pathway: 40% for the cleanest hydrogen (below 0.75 kg CO2e/kg H2), scaling down to 15% for higher-intensity pathways. Eligible pathways include electrolysis, natural gas reforming with CCUS, and methane pyrolysis (added by Budget 2025).
Eligibility Requirements
- Taxable Canadian corporation
- Producing clean hydrogen via electrolysis, natural gas reforming with CCUS, or methane pyrolysis
- Must meet carbon intensity thresholds for applicable rate tier
- Equipment must be available for use in Canada
Quick Assessment
Funding Details
- Amount
- 15%–40% refundable tax credit (rate depends on carbon intensity)
- Type
- Tax Credit
- Level
- Federal
- Co-Funding
- Up to 40% of eligible costs
- Deadline
- Ongoing (March 28, 2023 to December 31, 2034)
Program Scorecard
Competition, effort, and approval at a glance
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How to Win
Insider tips, common pitfalls, and what successful applicants look like
Insider TipThe 40% rate applies only to hydrogen with carbon intensity below 0. 75 kg CO2e/kg H2 — effectively green hydrogen from clean electricity. Budget 2025 added methane pyrolysis as an eligible pathway, opening this credit to turquoise hydrogen producers. Alberta and Quebec (cheap hydro) are best positioned.
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Success Profile
A Quebec electrolyzer manufacturer producing green hydrogen using cheap hydroelectric power, claiming 40% on $10M in eligible equipment for a $4M refundable credit.
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Evaluation Criteria
Entitlement-based — no competitive evaluation. Eligibility is binary: the corporation must be a taxable Canadian corporation, the property must be eligible clean hydrogen property, and the hydrogen production pathway must meet carbon intensity thresholds verified by a qualified third party. The credit rate is determined solely by the assessed carbon intensity: Tier 1 (<0.75 kg CO2e/kg H2) = 40%; Tier 2 (0.75-2.0) = 25%; Tier 3 (2.0-4.0) = 15%. Labour compliance election adds 10 percentage points to each tier.
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Application Playbook
Step-by-step process, required documents, and expenses
Application Steps
Required Documents 5
Eligible Expenses 16
- Electrolysis equipment: electrolysers (PEM, alkaline, AEM), rectifiers, ancillary electrical equipment
- Water treatment and conditioning equipment for electrolysis
- Hydrogen compression equipment
- Hydrogen storage equipment
- Natural gas reforming equipment: pre-reformers, auto-thermal reformers, steam methane reformers
- Pre-heating equipment for reforming processes
- Syngas coolers and shift reactors
- Hydrogen purification equipment (PSA units, membrane separators)
- Fired heaters for reforming processes
- Methane pyrolysis equipment (eligible for property acquired on or after December 16, 2024)
- Clean ammonia production equipment (when integrated with clean hydrogen)
- Dual-use electricity and heat equipment supporting hydrogen production
- Dual-use hydrogen and ammonia equipment
- Safety and integrity equipment solely supporting eligible hydrogen equipment
- Control and monitoring systems solely supporting eligible hydrogen equipment
- Property physically and functionally integrated with eligible equipment above
Ineligible Expenses 11
- Land and buildings (structures housing the equipment)
- Equipment used for hydrogen distribution or end-use applications (fueling stations, pipelines)
- Equipment not used all or substantially all for clean hydrogen production
- Used or refurbished equipment (must be new, previously unused property)
- Equipment not located in and used in Canada
- Equipment acquired from non-arm's length parties (related-party transactions)
- Soft costs: engineering studies, feasibility assessments, environmental assessments, permitting
- Working capital, operating expenses, or consumables
- Equipment for hydrogen production pathways not meeting carbon intensity thresholds (above 4.0 kg CO2e/kg H2)
- Vehicle or mobile equipment
- Property that is part of a tax shelter
Intake Periods
No intake period — entitlement-based. Credit is claimed on annual T2 corporate tax return for the taxation year in which eligible property becomes available for use. Available for property acquired March 28, 2023 through December 31, 2034. Full rates through 2033; rates reduced by 50% for property available for use in 2034.
Deadline Notes
Available for eligible property that becomes available for use from March 28, 2023 through December 31, 2034. Budget 2025 added methane pyrolysis as an eligible pathway. Full rates apply through 2033; 50% reduction for 2034.
Open Application Portal →Ineligible Organizations
- Non-taxable entities (Crown corporations, non-profit organizations, charities, cooperatives exempt from Part I tax)
- Partnerships directly (the credit flows through to taxable corporate partners)
- Trusts (unless structured as taxable Canadian corporations)
- Individuals and sole proprietorships
- Foreign corporations without a taxable presence in Canada
- Tax-exempt entities under section 149 of the Income Tax Act
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Funding Stack Strategy
Compatible programs, clawback risk, and combined funding potential
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Clawback Risk
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How Clean Hydrogen Investment T... Compares
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