Introduction
This report is
the second of two reports related to the Case Study on the Role
of Fiscal Policy in Hydrogen Development. The first report,
the Baseline Report, presents background information on the
state of hydrogen development in Canada and around the world,
describes Canada’s current policy framework related to
hydrogen and evaluates fiscal policy options for facilitating
hydrogen development in Canada. The policy evaluation completed
in the Baseline Report resulted in the identification of seven
fiscal policies capable of providing a direct incentive to hydrogen
technologies while explicitly addressing a barrier currently
limiting technology penetration.1
The seven policies are investment tax credits, producer tax
credits, accelerated capital cost allowances, research and development,
grants, consumer tax credits and pilot projects.2
As will be demonstrated
in the Reference Case Results chapter of this report, without
government intervention, the hydrogen technologies considered
in this analysis realize relatively little market penetration.
Initial modelling undertaken as part of this exercise indicated
that the major barrier to increased market penetration of hydrogen
is the price differential between hydrogen and competing technologies.
The fiscal policies simulated in this analysis were thus chosen
for their ability to narrow the price gap described above and
increase the competitiveness of hydrogen. To that end, we focused
our evaluation on producer incentives designed to reduce the
cost of hydrogen production and consumer incentives to reduce
the cost of end-use hydrogen technologies. In terms of the seven
policies listed above, all of them could be designed either
as producer or consumer incentives.
However, producer
tax credits, consumer tax credits and/or grants to hydrogen
producers and consumers are the policies that provide the most
direct link from a modelling perspective to the cost of producing
hydrogen and purchasing hydrogen technologies. The policies
simulated in this exercise therefore most closely resemble those
of either a producer tax credit or grant, or a consumer tax
credit or grant. The purpose of this report is to present the
results of the modelling exercise undertaken to test the impact
of these fiscal policies on the market penetration of select
hydrogen technologies over a period of time.
Following this
Introduction, the Modelling Framework and Scenarios chapter
defines the fiscal scenarios that were simulated and describes
the modelling approach employed in this study. The Reference
Case Results chapter, which presents the modelling outputs for
the business as usual, is followed by the Fiscal Policy Evaluation
chapter, which compares the fiscal policy results with the Reference
Case results. The final chapter summarizes and interprets the
results, and identify next steps in this study as well as key
areas for future research.
This outline doesn’t
mention the Greenhouse Gas Emissions chapter. (p. 13)
