Budgetary and Economic Impact of an Amendment to Qualify e-Methanol Production Projects Under the Clean Hydrogen Investment Tax Credit

Final Report — March 5, 2026

01Executive Summary

StormFisher is planning to build an e-Methanol production plant in the coming years at the site of the former Recyclage Carbone Varennes facility.

With additional investments of approximately $650 million, this project will annually produce 72,000 tonnes of e-Methanol and generate significant economic impacts and environmental benefits as well as very high labour productivity.

The project will also increase Canada’s GDP by $54.9 million annually, with the governments of Canada and Québec collecting yearly tax revenues of $5.5 million and $5 million, respectively. If the fiscal impacts from the plant’s construction are included ($101 million federally and $93 million provincially), the two levels of government will receive over $145 million and $133 million over the next ten years.

The project will also lead to a substantial reduction in global GHG emissions through the capture of CO₂ normally released into the air that will be used to produce the methanol.

When compared to average GHG emissions from marine transportation, over 100,000 tonnes of CO₂ would be prevented per year.

However, considering expected sale prices, the significant capital cost will make it difficult to achieve the required profitability for this project. This is why StormFisher is asking the federal government to treat both methanol and ammonia equally under the Clean Hydrogen Investment Tax Credit (CHITC) so that its investments in e-Methanol production qualify for a 15% tax credit.

For StormFisher, this would represent an estimated $94 million in tax assistance. If all equivalent projects currently under development are included, this tax amendment would cost a maximum of $379 million.

It is estimated that the federal government will have $2.8 billion in budgetary space between now and 2028 for the initial cost of the CHITC. This budgetary space is available due to the many clean hydrogen production projects that have been developed but that have ended up being abandoned or postponed.

The requested tax amendment is financially viable for the federal government in terms of both the budgetary space available for the CHITC and the fiscal impacts, which will exceed the cost of the measure over the plant’s expected operational life. The federal government can therefore act without any budgetary risk while supporting a project that contributes to the energy transition and the competitiveness of Canada’s clean fuel industry.

02Background

2.1 About StormFisher’s Varennes Project

StormFisher acquired the Recyclage Carbone Varennes facility in October 2025. Although the project was initially created for biomass gasification, under StormFisher’s leadership it will produce e-Methanol from electrolyzed hydrogen and captured carbon.

By combining green hydrogen produced with a 100-MW electrolyzer (operated by Hydro-Québec) and captured carbon, the company will produce very low-carbon emission methanol, which will help reduce greenhouse gas emissions, particularly for marine transportation.

StormFisher plans to make an additional investment of approximately $650 million to complete construction on the electrolyzer and e-Methanol production facilities. Construction is scheduled to begin in 2027, and production will start in 2028.

Once commissioned, the plant will produce 72,000 tonnes of e-Methanol per year using 100,000 tonnes of biogenic CO₂ from an ethanol plant next to the StormFisher facility and from landfill sites. This CO₂ production is currently emitted into the atmosphere by the partner company and the landfill sites. Additional investments will be required to capture these emissions.

The Varennes plant will employ 37 people for its operations and will run at an annual operating cost of over $70 million.

2.2 Tax Amendment Request

In its 2023 budget, the federal government qualified capital investments in clean hydrogen-based ammonia projects for the CHITC at a rate of 15%.

StormFisher is therefore asking the federal government to qualify investments in the production of e-Methanol, e-Methane, and e-SAF.¹

An argument for this request is that methanol is a commonly used fuel around the world and that StormFisher’s production would replace it with a version that reduces global GHG emissions.

Given the prices that its customers are expected to pay for this production and the internal rate of return expected by investors, it is important for StormFisher to reduce the capital cost of the infrastructure they need to build.

¹ The “e-” prefix on these terms refers to “electro-,” i.e. when an alcohol (methanol), gas (methane) or fuel (sustainable aviation fuel, SAF) is produced from clean electricity and captured CO₂ and therefore has very low to zero net GHG emissions.

03The e-Methanol Market

3.1 Global

In 2023, 110 million tonnes of methanol were produced around the world despite a global production capacity of 183 MTPA.² China is the world’s leading producer and consumer of methanol, as it produces 69 MTPA and consumes 80.7 MTPA of this fuel (BloombergNEF, 2024).

This product is mainly used as a gasoline additive and in the petrochemical industry to produce plywood, textiles, paint and adhesives.

Currently, less than 1% of the methanol consumed worldwide is low GHG (DNV, 2025). However, European regulations will lead to increasing demand for production of this fuel in the coming years.

For example, in 2025 Europe fully implemented the FuelEU Maritime regulation that requires ocean-going ships of over 5,000 gross tonnage that enter European ports to gradually reduce their GHG fuel intensity at the following rates: −2% in 2025, −6% in 2030, −13% in 2035, −26% in 2040, and −80% in 2050 compared to the 2020 average (European Commission, n.d.). These targets apply to the entire fuel life cycle.

Furthermore, in 2025 the International Maritime Organization (IMO) proposed a new GHG pricing mechanism for shipping that will impose penalties on ships that exceed emission thresholds starting in 2028. The IMO aims to reduce GHG emissions in the shipping industry by 20% by 2030 and 70% by 2040 compared to 2008 levels, with the ultimate goal of achieving net-zero emissions by 2050 (DNV, 2025). Discussions about the adoption of this new framework should take place in 2026.

As a result, demand for low-carbon methanol is set to grow substantially. According to the Methanol Institute, the renewable and low-carbon methanol project pipeline will have a capacity of 56.3 MTPA by 2030, 21.8 MTPA of which is projected to be for e-Methanol (Methanol Institute, 2025). Considering the barriers to project development, actual commissioned capacity is expected to range between 6 and 13 MTPA by 2030, which is a substantial increase over the current production of approximately 0.2 MTPA (Methanol Institute, 2025).

The ambitious energy transformation scenario of IRENA and the Methanol Institute forecasts that global renewable methanol production over the longer term could reach 385 MTPA by 2050, which will include 250 MTPA of e-Methanol (International Renewable Energy Agency, 2021).

This demand is already supported by a rapidly expanding fleet, as globally, 450 methanol-capable ships are in operation or on order (DNV, 2025). By comparison, only 41 hydrogen-capable ships are in operation or on order, with the same number for ammonia.

According to the IEA, current policies will aim for low-carbon fuels to cover nearly 15% of shipping energy demand by 2050 (International Energy Agency, 2025).

This is why StormFisher has already identified a number of interested partners, has signed tentative agreements, and is currently negotiating final agreements with a number of partners to whom it will sell its production in the coming years.

² MTPA: Million tonnes per annum

3.2 Canada and Québec

Marine transportation is one of the main sectors that could benefit from e-Methanol production in Québec. The Port of Montréal started a research project for ships operating on the St. Lawrence River to test the use of e-Methanol (Port of Montréal, n.d.). This research project involves Ocean Group, a Québec-based marine services provider that specializes in towing and shipbuilding.

The situation is similar in the rest of Canada. For example, in Vancouver, e-Methanol has been chosen as a fuel to decarbonize marine transportation. A discussion paper by Oceans North and Arup studied the creation of a large-scale e-Methanol production facility in the Port of Vancouver to fuel shipping corridors, with a target production of 200,000 tonnes per year by 2040 (Oceans North and Arup, 2025).

Considering the standards implemented in Europe, the standards that could be applied through the IMO framework, and the growing number of methanol-capable ships in operation or on order, ports in Canada and Québec could become markets for e-Methanol produced domestically. However, these quantities would be minimal compared to the export market, particularly in Europe.

Canada and Québec could therefore stake a foothold in this market through exports, for example, as a result of demand arising from new European fuel standards.

04Environmental Impact

Methanol is currently produced from coal or natural gas, and its production from these processes generates a large amount of GHG emissions, i.e. 300 gCO₂eq/MJ³ (coal) and 110 gCO₂eq/MJ (natural gas) over their entire life cycle (Hamelinck & Bunse, 2022). Methanol production alone accounts for 0.7%, or 261 million tonnes, of global CO₂ emissions (Bloomberg NEF, 2024).

The marine sector uses other fuels in addition to methanol, such as liquefied natural gas (LNG) and marine gas oil (MGO), whose average carbon intensity is 79.9 gCO₂eq/MJ and 88.2 gCO₂eq/MJ, respectively (Zamboni, Scamardella, Gualeni & Canepa, 2024).

The current average carbon intensity of fuel used in shipping is estimated at 93.3 gCO₂eq/MJ (International Maritime Organization, 2025).

When it comes to e-Methanol, which is produced from green hydrogen and captured carbon, CO₂ emissions can be almost completely eliminated. If carbon is captured directly from the air, the net GHG emissions upon combustion can be zero if the electricity used to produce the methanol is 100% renewable. If the carbon comes from industrial processes, the impact is closer to 10 gCO₂eq/MJ (International Renewable Energy Agency, 2021). According to Zamboni et al. (2024), the average emissions for green methanol are 13.6 gCO₂eq/MJ.

These emissions are 30 times less than those of methanol produced from coal, 11 times less than methanol produced from natural gas, and 6 times less than other fuels used for marine transportation.

The estimated carbon footprint for the entire life cycle of the StormFisher, TES Canada, Elemental CF, and Greenfield Global projects—including inputs, production, transportation, and consumption⁴—is between 4 and 25 gCO₂eq/MJ.

Technically, the produced e-Methanol will replace the fuel that is currently used, whose carbon intensity is 93.3 gCO2eq/MJ. These four projects would therefore reduce GHG emissions by 562,000 tonnes of CO2 per year, with over 100,000 tonnes of CO2 per year for StormFisher. This is equivalent to removing 188,000 cars from the road (Natural Resources Canada, 2025).

³ MJ: Megajoule or 1 million joules  |  ⁴ Well-to-wake

05Economic and Fiscal Impacts

The figures shown in this section and the values used to perform the calculations have been rounded to maintain the confidentiality of the underlying information.

5.1 Economic Impacts

For Canada as a whole, StormFisher’s Varennes project will have a total economic impact on GDP of $54.9 million per year of operation and will create over 200 direct, indirect, and induced jobs (Table 1). Québec will enjoy the vast majority of these economic benefits, as this region will see over 80% of the increase in GDP and 80% of these jobs.

This is in addition to the economic impacts from the approximately $650 million investment for the plant’s final construction phases. This investment will increase Canada’s GDP by $700 million and Québec’s GDP by nearly $600 million.

Table 1

Economic impacts of the operation of StormFisher’s e-Methanol plant

Notes: Statistics Canada Input-Output Multipliers, Table 36-10-0595-01; Gougeon EP calculations.

Table 2

Economic impacts of the construction of StormFisher’s e-Methanol plant

Notes: Statistics Canada Input-Output Multipliers, Table 36-10-0595-01; Gougeon EP calculations.

Over the next ten years,⁵ StormFisher’s Varennes project will add over $1.1 billion to Canada’s GDP. Currently, the plant is expected to operate for at least 24 years.

5.2 Fiscal Impacts

This economic activity will have a fiscal impact on the governments of Canada and Québec, as the different levels of government will collect estimated total tax revenues of nearly $212 million on income tax from jobs supported by this project (direct, indirect, and induced)⁶ and from corporate income taxes (indirect and induced) (Table 3).

The federal government alone will receive additional revenues of $101 million, while Québec will receive tax revenues of $93 million in relation to the capital investments. The revenues for other jurisdictions, which are mainly municipalities, will be over $18 million.

Once the construction is complete, the plant’s activities will generate sizeable annual tax revenues. Overall, more than $13 million per year will go to the different levels of government. The federal government will receive over $5.5 million per year in additional revenues, while the Québec government will receive $5 million per year in tax revenues.

Table 3

Fiscal impact of the construction of the StormFisher plant
($ thousands, direct, indirect, and induced)⁷

Notes: Statistics Canada Input-Output Multipliers, Table 36-10-0595-01. The taxes paid by companies have been calculated based on gross operating profits. The average earned income per job created was used to calculate the taxes paid by workers. The 2026 tax tables were used. Based on the value of the required investments forecasted by StormFisher. Gougeon EP calculations.

Table 4

Annual fiscal impact of the StormFisher plant operation ($ thousands)

Notes: Statistics Canada Input-Output Multipliers, Table 36-10-0595-01. The taxes paid by companies have been calculated based on gross operating profits. The average earned income per job created was used to calculate the taxes paid by workers. The 2026 tax tables were used. Based on annual operating expenditures forecasted by StormFisher. Gougeon EP calculations.

Over the next ten years,⁸ the federal government will collect over $145 million in tax revenues from the StormFisher plant, which should be in operation for at least 24 years.

5.2.1 Details on the Economic and Fiscal Impacts

These economic and fiscal impact calculations simulate the implications of adding net capital to the economy but do not establish the relevance or likelihood of this investment.

In this case, StormFisher has announced its intention to make the planned investments, the e-Methanol market exists and is growing, and the company has signed agreements in principle and has advanced negotiations with buyers for its production, which will reduce net greenhouse gas emissions into the atmosphere.

The relevance of this investment and the likelihood that it will come to fruition are therefore significant. That said, it would not be impossible for the economic and fiscal impacts from the plant’s construction to materialize nonetheless if another project in Québec made use of available services from construction companies.

However, in times of weak economic growth (as is the case for Canada at the start of 2026), this assumption is not very robust.

It is therefore preferable to focus on the impacts of the plant’s operations. At the same time, the impacts from the construction phase should not be overlooked given the climate of economic uncertainty or disregarded as a comparison with standard economic impact assessments.

5.3 Productivity

As shown in Table 5, the StormFisher project generates added value per worker of over $1.3 million, or value that is significantly higher than the comparables presented in the table. Even when compared to companies in the energy sector, which are highly productive, StormFisher’s project has nearly double the productivity.

Table 5

Value added per worker ($)

Note: Statistics Canada, Table 36-10-0480-01; 2021 data. For StormFisher’s value, calculation based on data provided by the company in current dollars (2026); Gougeon EP calculation.

This is reflective of the high capital intensity characteristic of energy projects, as each worker operates and oversees high-value assets, which results in high value added per worker. This high labour productivity stems directly from significant capital investment.

All things considered, the StormFisher project will have an upward effect on average national productivity.

⁵ Two years of construction and eight years of operation.  |  ⁶ Given the size of the planned investments for this project and the depreciation that will be recorded in subsequent years, no income tax has been calculated for the Varennes plant.  |  ⁷ Taxation on products and production refers to indirect taxes levied on production (property taxes, rights and licences, payroll taxes) and on products (GST, QST, customs duties).  |  ⁸ Two years of construction and eight years of operation.

06Requested Tax Amendment

6.1 Budgetary Impact

As mentioned above, StormFisher is asking the federal government to qualify investments in the production of e-Methanol, e-Methane, and e-SAF under the CHITC at a rate of 15%.

For the StormFisher project, this tax amendment would have a budgetary impact of approximately $94 million.

6.1.1 Active Methanol Projects in Canada

This tax measure could be used by other planned projects in Canada in addition to StormFisher’s and could even generate new ones.

Currently, there are at least five other e-Methanol, e-Methane, or e-SAF projects being developed in Canada by the following companies:

• Nova Sustainable Fuels (Nova SF) in Nova Scotia
• TES Canada in Québec
• Greenfield Global in Québec
• Elemental CF in British Columbia
• Teralta in Manitoba

Like StormFisher’s project, the projects by these companies are still in the preliminary stages and are not at the point of starting production.

All of these companies were approached to provide information for this report. Only TES Canada, Greenfield Global, and Elemental CF shared some of their preliminary financial information.

Based on this data and the assumption that 100% of the planned capital investments would qualify for the enhanced CHITC, and if the average cost of the four projects for which we have information is applied to the other two projects, the requested tax amendment would cost nearly $379 million (Table 6).

Table 6

Budgetary impact of the CHITC enhancement – 100% of investments ($ thousands)

Note: The assumption is that 100% of the capital investments would qualify for the enhanced CHITC. Source: Data provided by TES Canada, Greenfield Global, Elemental CF, and StormFisher. The budgetary impact of StormFisher has been included in the budgetary impact of the CHITC – Methanol. Gougeon EP calculations.

This estimate is intended for information purposes only because, as previously noted, the provided data are estimates for projects that are still in the preliminary stages, and information is not available for two of the six projects.

At the same time, assuming that 100% of the investments would qualify for the new CHITC, the obtained value would therefore be a type of upper bound. If the assumption used was 70%, the total cost would be revised downward by $114 million.

6.1.2 Spillover Effects on the CHITC – Hydrogen

All of the above-mentioned projects will involve building an electrolyzer to create green hydrogen for the production of low-emission fuels, such as e-Methanol.

Assuming that the tax amendment requested by StormFisher is required for them to proceed, the projects will generate a gross budgetary impact for the federal government of $1.3 billion (Table 7).

Gross impact has been used here because some of these projects, and most likely TES Canada’s project, had to be included in the calculation of the cost of CHITC when it was announced. As the list of projects considered by the government was not available, the results in Table 7 must be considered as an upper bound for the additional budgetary impact.

However, it should be noted that the TES Canada project, which includes the construction of a 500-MW electrolyzer, is five times the size of StormFisher’s and therefore has a heavy weighting in this calculation and in the average applied to the Nova SF and Teralta projects.

If TES Canada were excluded from the calculation of the average applied to Nova SF and Teralta, the budgetary impact would instead be $1 billion.

Table 7

Estimated gross budgetary impact of the CHITC – Hydrogen for the six projects ($ thousands)

Note: Data provided by TES Canada, Greenfield Global, Elemental CF, and StormFisher. For the two projects for which no information was provided, the average cost of the four other projects was used. Gougeon EP calculations.

6.2 Economic Impact of These Projects

In addition to their fiscal impacts, these different projects will generate impacts of over $300 million per year for Canada’s economy. It should also be noted that a number of these projects target both domestic and international markets. TES Canada, for example, plans to sell half of its production to Énergir to supply its network with renewable natural gas. StormFisher, for its part, has signed multiple agreements to export its production to Europe and Asia.

Table 8

Economic impacts of e-Methanol, e-Methane, and e-SAF projects for Canada GDP ($ thousands)

Note: Statistics Canada Input-Output Multipliers, Table 36-10-0595-01. Based on projected annual operating expenses provided by TES Canada, Greenfield Global, Elemental CF, and StormFisher; Gougeon EP calculations.

6.3 Conclusion about the Impact of the Requested Amendment

In Section 5, it was determined that the operations of the StormFisher project would generate $5.5 million in annual tax revenues for the federal government.

The fiscal impact from the StormFisher project is an estimated $94 million.

The project would therefore have to operate for 18 years for the government to recover its initial investment. As mentioned above, the plant is expected to operate for at least 24 years.

However, if the fiscal impact of the plant’s construction (estimated at $101 million over two years for the federal government) were included, the cost of the requested amendment to the CHITC would be fully reimbursed. Each year of operation would then have a net positive impact on the federal government’s finances.

As mentioned above, we do not have sufficient information for the other projects to confirm beyond a doubt that the total fiscal impact from the construction and operation of their infrastructure would be the same.

However, given that tax revenues would offset the tax expense of the requested amendment for the StormFisher project—especially if all or some tax revenues from the construction are included in the calculation—the scenario would likely be similar for the other projects.

07Budgetary Space

7.1 Initial Estimate of CHITC Cost

In its 2022 budget, the government announced its intention to create an investment tax credit for the production of clean hydrogen (Department of Finance Canada [1], 2022). The CHITC was confirmed in the Fall Economic Statement 2022 (Department of Finance Canada [2], 2022), which estimated that the budgetary impact from 2023–2024 to 2027–2028 would be $5.7 billion. This amount was revised downward slightly in the subsequent 2023 budget to $5.6 billion (Department of Finance Canada [3], 2023).

In 2024, the Parliamentary Budget Officer (PBO) submitted an independent assessment of the cost of the tax measure, including projects to produce ammonia from clean hydrogen, which would total $5.7 billion over the same period.

For this latter estimate, the PBO consulted information collected by the Department of Finance Canada and Natural Resources Canada. Note that the PBO’s information from the Department of Finance Canada was from 2021 and that they estimated that 40% of capital spending on water electrolysis would be eligible for the CHITC.

At the end of its document, the PBO notes that its estimate has a number of uncertainties, notably that these projects are in the very early stages and many of them may not be completed.

7.2 Abandoned or Postponed Projects

As the PBO anticipated, since the time of its estimate, some projects have been abandoned or have remained in the concept stage, with very little progress made in the meantime.

The Canadian Hydrogen Association (CHA) conducted a survey of all clean hydrogen projects in Canada that could benefit from the CHITC to recreate the calculations of the PBO and the Department of Finance Canada.

The Government of Newfoundland and Labrador recently announced its intention not to renew access to public lands for wind initiatives that fell under three hydrogen production projects: Project Nujio’qonik (World Energy GH2), Burin Peninsula Green Fuels Project (EverWind), and Toqlukuti’k Wind and Hydrogen Project (ABO Energy) (Minister Parrott Provides Update on Wind-Hydrogen Development, 2026).

Overall, the electrolyzers for these three projects represented a capacity of nearly 2,000 MW. Added to this is Argentia Renewables’ wind energy and green fuel project, which currently focuses solely on wind energy, as green ammonia and hydrogen production have been dropped from the project for the moment (Kean, 2025).

The total capacity of these clean hydrogen production projects is now more than 2,100 MW below what had been announced in recent years.

Moreover, some projects have been postponed for various reasons, others have very little new information available, and others still remain in limbo. What has been observed in Canada is also in line with the global situation. Compared to 2024, forecasts of hydrogen production capacity by 2030 have decreased by 12 MTPA, from 49 MTPA to 37 MTPA (International Energy Agency, 2025). According to BloombergNEF, less than one third of the 1,600 projects announced will materialize or may do so later than expected (BloombergNEF, 2024).

7.2.1 CHA Information Collection Methodology

The CHA compiled this list of projects based on announcements made in recent years and based on discussions with these companies.

Additional research was done over the past few weeks to update this compiled list.

This method of collecting information does not guarantee ironclad accuracy. Indeed, the available information for some projects was months or even years old. Additionally, while official communications may suggest that a project is solid, unofficial information or market knowledge may indicate that these projects risk being abandoned in the future.

Also note that this list does not contain any unannounced projects that are currently being worked on under the public radar.

However, it is important to note that the PBO and the Department of Finance Canada appear to have used a similar methodology. The PBO also states that:

While the information collected by the CHA may be incomplete and imprecise, this exercise is still the best one that has been carried out so far to the knowledge of StormFisher and the CHA.

7.3 Freed-Up Budgetary Space

All of these projects were likely included in the list of projects selected by the Department of Finance and the PBO to estimate the budgetary impact of the CHITC.

Before these projects were withdrawn, the CHA had estimated that the budgetary impact of the CHITC over ten years would exceed $8.4 billion. When spread over the period from 2023–2024 to 2027–2028,⁹ the budgetary impact is closer to $5 billion, which is $600 million less than the PBO estimate.

However, once these abandoned projects are removed, the budgetary impact of the CHITC falls to $2.8 billion (Table 9), for a variance of $2.9 billion over the PBO estimate.

Table 9

Estimated budgetary impact of the CHITC ($ thousands)

Note: List of hydrogen projects using electrolysis provided by the CHA; Gougeon EP cost assumptions, adjustments and calculations.

It is important to note that this estimate is based on uniform assumptions for all of the projects (see section 7.4 below). However, these assumptions tend to overestimate the budgetary impact of the projects compared to the assumptions used by the PBO, which should minimize the variance compared with the PBO’s estimate.

⁹ All projects scheduled to start after 2029.

7.4 Calculation Methodology

7.4.1 Capital Investment Value

The CHA first compiled a list of all water-electrolysis hydrogen production projects that have been announced in recent years. For each project, the size of the electrolyzer (in MW) was obtained from information made public by the project developers.

The capital investment value¹⁰ was then estimated, as this information is rarely disclosed publicly.

Table 10

Assumptions to calculate the cost of capital investments

The data in Table 10 may of course be underestimated or overestimated. However, the variance would be significant in both cases given the size of the abandoned projects.

If the values were 10% lower, the cost of the CHITC from 2023 to 2028 would be $2.6 billion, or $283 million less than the reference scenario presented in the table above. If the values were 10% higher, the budgetary impact of the CHITC would be $3.4 billion, or $567 million more than the reference scenario. The variances compared with the PBO forecast are therefore well above $2 billion.

7.4.2 Eligibility Rate

It has been assumed that 70% of the calculated investments are eligible for tax credits. It is likely that this inclusion rate is higher than the actual rate. However, this would overestimate the cost of the CHITC and minimize the variance with the PBO estimate.

7.4.3 Credit Rates

A different tax credit rate was applied depending on the energy source. For projects powered by wind energy, a rate of 40% was applied. For hydroelectricity, the rate used was closer to 25%. For other projects, including those in Ontario, for example, a rate of 15% was applied.¹¹

Assuming that a tax credit rate of 40% is applied to all projects, the CHITC will cost $3.2 billion for 2023–2028, all other things being equal. Note that, if the calculation were not limited to the 2023–2028 period, the CHITC would cost $6.1 billion for projects that have been announced or are under development, which is just $400 million more than the PBO’s forecast for the five-year period.

7.5 Conclusion on Budgetary Space

Given that many clean hydrogen projects will ultimately not materialize, it is reasonable to assume that the CHITC will cost less than originally planned.

The estimated variance compared to the initial budget forecast is $2.7 billion.

Based on the calculation assumptions and the size of the recently abandoned projects, this estimate appears realistic. Note also that the TES Canada project was included in the estimated cost of the CHITC.

¹⁰ CAPEX  |  ¹¹ Source: CHA

08Conclusion

StormFisher is asking the government to enhance the CHITC so that its investments in e-Methanol production qualify for a 15% tax credit, as is the case for ammonia. For StormFisher’s project, this represents $94 million in probable tax assistance that would above all secure the profitability required by its investors.

For the six projects presented in this study, the maximum cost of the tax amendment would be $379 million.

These investments would generate economic and fiscal impacts. The operation of the StormFisher plant will create an additional $5 million in federal tax revenues per year, which would allow the federal government to recover its tax assistance over a period of 18 years. If the $101 million in tax revenues generated by the construction of the plant is also included, then the expense will be recovered immediately.

It has also been established that the government has the budgetary space to grant StormFisher’s request. Considering the budget forecasts for the CHITC and progress made in a number of green hydrogen projects, the budgetary space is $2.7 billion, which constitutes considerable fiscal headroom. Compared to the nearly $400 million that the tax amendment would cost, the freed-up space is nearly seven times greater.

Given this significant variance, it can be confidently asserted that, even if demand for the tax credit increases significantly, even if the $2.7-billion budgetary space has been overestimated as more projects are carried out, or even if tax revenues are lower than expected, there would still be sufficient headroom to absorb the costs associated with this tax measure.

Demand for this type of production is poised to grow and will support the development of an industrial sector that will help to significantly reduce GHG emissions. As demonstrated in section 5.3, these high value-added projects will help raise average productivity in Canada.

06Bibliography