U.S. President Joe Biden, officially signed into law the Inflation Reduction Act of 2022. The Act supports a 40% reduction in emissions in the US by 2030 and provides for investment and tax policies that will help catalyze the advancement and development of clean fuels, including renewable natural gas and green hydrogen.
In a separate announcement, on Saturday, August 13th, the Canadian Federal Government announced a pending agreement with Germany, to jointly explore the production of hydrogen fuel in Canada for export to Germany.
“As a producer of clean energy, including renewable natural gas and green hydrogen, we believe these announcements reflect a tremendous commitment by governments globally to continue to advance clean energy technologies,” said Andrew White, CEO of CHAR Technologies. “These announcements serve as further evidence of the value of clean energy in supporting the energy transition and demonstrate a continued focus on investing in solutions that address climate change, and energy security.”
The Inflation Reduction Act can help support CHAR Technologies Ltd. (“CHAR” or the “Company”) (TSX Venture Exchange: YES) existing High Temperature Pyrolysis (“HTP”) projects in the US by potentially providing for enhanced project returns and should accelerate the development of future projects due to superior project economics that are expected to attract significant investment dollars.
Specifically, the Act provides:
- Expanded Investment Tax Credit (“ITC”) which includes biogas property constructed prior to the end of 2024. The credit rate may be between 30-40%, depending on domestic content requirements. CHAR expects the expanded tax credit would directly benefit its Green Hydrogen & Biocarbon Project with Hitachi Zosen Inova in California, that is expected to be commissioning in 2023.
- A new tax credit applicable to domestic clean fuel production (“PTC”), beginning in 2025. The proposed tax credit could be up to $1.00 per gallon of nonaviation fuel and would apply to all transportation fuel sold until the end of 2027. CHAR is currently in early-stage development of facilities that may produce renewable natural gas and/or hydrogen specifically for transportation, which would benefit directly from this clean fuel production credit.
- For hydrogen producers, a tax credit for the production of qualified clean hydrogen, for up to 10 years, with a base credit applied and additional credits available based on the carbon intensity of production. Provided prevailing wage and apprenticeship requirements are met, the base credit amount is as high as $USD 3/kg, multiplied by the applicable percentage, and adjusted for inflation. The applicable percentage relates to the carbon intensity of the green hydrogen. As a producer of green hydrogen, CHAR expects this credit to benefit both projects under development and future planned facilities.
The Canadian Federal Government’s announcement demonstrates a commitment to advancing green hydrogen within Canada. CHAR Technologies’ HTP systems can produce renewable natural gas or green hydrogen and a variety of value-add biocarbons.
About CHAR Technologies
CHAR Technologies Ltd. is a cleantech development and services company, specializing in organic waste pyrolysis and biocarbon development, custom equipment for industrial air and water treatment, and providing services in environmental management, site investigation and remediation, engineering, environmental compliance and resource efficiency.
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