Good morning, Madam Chair and members of the committee. Thank you for the invitation to speak here today.
My name is Ivette Vera-Perez. I am the president and CEO of the Canadian Hydrogen and Fuel Cell Association, or the CHFCA. We represent over 160 companies at all stages of the hydrogen and fuel cell supply chain. Our members export clean technologies to over 42 countries. These countries account for 65% of the world's population.
According to a recent study by Ernst & Young, hydrogen's total Canadian annual market potential could reach $100 billion and create up to 350,000 jobs by 2050. That is in addition to the Government of Canada's estimate that the sector will assist with reducing Canada's emissions by 45 million metric tons annually.
With a 100-year legacy of industry and research expertise, Canada's hydrogen and fuel cell sector has until recently been a global leader in the space. However, unlike 100 years ago, we have competition for this leadership position. Countries around the world have rolled out policies and funding for the advancement of their domestic hydrogen and fuel cell industry. One of these policies is what has brought us together today: the United States' Inflation Reduction Act, or IRA.
The IRA contains several measures that make investing in the U.S. attractive. The investment and production tax credits for clean hydrogen and other incentives to produce clean technologies and clean energy, which are essential elements of the hydrogen supply chain, are all very attractive opportunities. These, in addition to the ease of use for companies accessing the measures and a very well-resourced regulatory approval process, add to the opportunity presented.
I am aware that Canada can't respond in kind to the U.S. IRA. We have a smaller market and different structure, but we have several measures in Canada that we could take that would better incentivize investment in our own domestic hydrogen industry.
The recent fall economic statement provided great news to the clean-tech sector, with a 30% investment tax credit, the ITC, for clean technologies and a 40% ITC for hydrogen technologies. These tax credits in addition to the creation of the Canada growth fund, which includes contracts for difference for hydrogen, will help incentivize domestic production of low-carbon hydrogen. As we work to gain clarity on the operational details around the hydrogen ITCs and the clean tech growth fund, there are several recommendations that I would like to share with this panel.
First, we should focus on rapidly deploying a fully functional and clear ITC, with clear guidelines on boundaries, eligibility criteria, processing timing and how these ITCs interact with other programs. This will give investors and project proponents much needed clarity as they develop their projects and secure financing.
Second, when exploring the potential of the clean hydrogen ITC in the fall economic statement, expanding the scope of this credit—at least in part—to apply to operational costs beyond capital costs could provide the flexibility needed to support companies in the industry.
Third, programs like the strategic innovation fund and clean fuels fund are great signals of the ambition the government has for Canada's clean-tech industry. The resource-intensive application process and long wait times are a deterrent to project proponents. We must commit to reasonable turnaround times for the SIF, CFF, CIB or any other future funding. Furthermore, we must consider how these programs and the ITC incentives interact with each other and help elevate each other.
This is a complex issue. Comparing the U.S. to Canada can seem like comparing apples to oranges, but that is a comparison that companies and investors in the sector make in their everyday decision-making.
In closing, Canada has always been at the forefront of the global hydrogen industry, but with the rapid development of the sector and our lack of action at home until today, Canada is falling behind. The fall economic statement is a solid first step to help us reclaim our leadership position. The devil, however, is in the details. We must invest smartly, heavily and rapidly to reclaim our leadership position in the hydrogen sector.
Thank you very much. I look forward to your questions.