Green Hydrogen – Industry Overview


Hydrogen is a naturally occurring element that can also be produced through electrolysis – a process that splits a water molecule (H20) into two hydrogen and one oxygen molecule. This process is energy-intensive, with most of the world’s hydrogen currently produced using fossil fuels (coal and natural gas), meaning that it is still responsible for significant CO2 emissions.

Hydrogen is categorized by its carbon intensity using colours: brown hydrogen derived from coal; grey from natural gas; blue from natural gas with carbon sequestered; and green using renewable energy. The European Union has criteria for the import of green hydrogen – namely that hydrogen producers must have power purchase agreements (PPAs) for new and unsupported renewable electricity generation capacity and not defer energy from other domestic sources that lead to more fossil fuel electricity generation. 

As we shift towards attaining net-zero emission goals globally, green hydrogen could play a role in decarbonizing many sectors as a hydrogen-derived fuel, like long-haul transport, chemical production, iron and steel production, and transportation with hydrogen-powered vehicles. Hydrogen can also be used to store excess renewable energy in its fuel form. According to the International Energy Agency, the estimated annual production of low-emission hydrogen, if all proposed projects are realized, is 38 metric tonnes (Mt) in 2030.

Competitive Advantages

Nova Scotia is actively pursuing the development of a green hydrogen sector. The Government of Nova Scotia has released Nova Scotia’s Green Hydrogen Action Plan and is continuing to engage project proponents, supply chain members, communities, and other interested parties to ensure that its approach to sector development balances agility, responsiveness, and diligence.

What makes Unama’ki – Cape Breton an excellent place to invest?

  • Strong onshore (6-8 m/s) and offshore winds (9-11 m/s), proven to be a valuable resource for generating renewable electricity;
  • An abundance of freshwater through groundwater, watersheds, and municipally treated water facilities;
  • Located along the Great Circle Route making for a prime location for exporting green hydrogen and its derivatives to Europe, with two deep-water, ice-free ports in the Strait of Canso and Sydney Harbour;
  • Experienced marine energy workforce and a network of ocean and energy technology information and innovation centres;
  • Academic institutions like Cape Breton University and Nova Scotia Community College (NSCC) providing training in renewable energy and clean fuel production, transmission, storage, and applications;
  • Government of Nova Scotia’s commitment to establishing a clean economy through the enactment of Nova Scotia’s Environmental Goals and Climate Change Reduction Act, setting goals that link environmental stewardship, economic growth, and well-being; and
  • Collaboration between federal and provincial governments through the Hydrogen Strategy for Canada and the signing of Canada and Germany’s Joint Declaration of Intent to establish the Canada-Germany Hydrogen Alliance.

Development of Nova Scotia’s regulatory framework for hydrogen production

There are several pieces of legislation that will be amended to regulate the hydrogen industry in Nova Scotia. The Electricity Act will expand the definition of wholesale customers to include businesses that are advancing green hydrogen projects. This bill will give the government the ability to create a new hydrogen innovation program to support the industry and ensure it is aligned with provincial climate goals.

Amendments will be made to the Underground Hydrocarbons Storage Act to include hydrogen, ammonia, carbon sequestration and compressed air energy storage. The Pipeline Act will be amended to include pipelines built for hydrogen or hydrogen blends. The Nova Scotia Utility and Review Board (NS UARB) will also have regulatory authority as hydrogen will be considered part of a gas distribution system under the Gas Distribution Act.

Nova Scotia’s Green Hydrogen Action Plan

Nova Scotia’s Green Hydrogen Action Plan was released in December 2023. It is a comprehensive plan with seven goals overarching goals:

  • Goal 1: Create conditions for a sustainable and prosperous green hydrogen sector that produces local benefits from both domestic and export opportunities.
  • Goal 2: Support the development of competitive green hydrogen export opportunities.
  • Goal 3: Ensure the green hydrogen sector is developed in alignment with Nova Scotia’s environmental and climate change goals.
  • Goal 4: Support engagement efforts to foster transparent communication and meaningful community participation in the green hydrogen sector.
  • Goal 5: Ensure that safety is paramount along the entire green hydrogen supply chain.
  • Goal 6: Invest in skills training and development to ensure a strong domestic workforce that supports the green hydrogen sector.
  • Goal 7: Support green hydrogen sector development through research and innovation projects.

Investment Incentives

The proposed Clean Hydrogen Investment Tax Credit will provide a refundable tax credit of 15-40% on eligible expenses incurred for projects that produce hydrogen from electrolysis; or from natural gas with emissions abated using carbon capture, utilization, and storage (CCUS). The tax credit rate is based on the assessed carbon intensity (CI) of the hydrogen produced. It will also extend a 15% tax credit to equipment needed to convert hydrogen into ammonia for the purpose of transportation.

The Clean Technology Investment Tax Credit aims to support investment in low-emitting energy generation and storage equipment. Eligible companies can receive a refundable tax credit of up to 30 per cent of capital costs for qualifying technologies.

The Clean Fuels Fund provides $1.5 billion over five years (2021-2026) to de-risk investment in building or expanding clean fuel production facilities.

The $15 billion Canada Growth Fund is designed to attract large-scale private sector investment in low-carbon products, technologies, businesses, and supply chains.

The Government of Nova Scotia has committed to developing programs to support the green hydrogen sector, including the Nova Scotia Clean Fuels Fund and the Hydrogen Innovation Program.

Invest Nova Scotia has implemented updates to the Innovation Rebate Program that will better support decarbonization initiatives by Nova Scotian businesses, and has piloted a Low-Carbon Technology Stream of the Early Stage Commercialization Fund. Supported by the Government of Nova Scotia, Net Zero Atlantic is administering the Emerging Concepts and Technologies (ECT) Program. The ECT Research Program looks to identify gaps in carbon-reduction pathways for hard-to-abate emissions and to support made-in-Nova Scotia solutions to reduce greenhouse gas emissions required to achieve net-zero by 2050. 


Downloadable Resources

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For More Information

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Last Modified: May 2, 2024