Income Tax Act — I-3.3 127.48
CA Model in calculating the actual carbon intensity of the project; (b) subject to paragraph (j), in applying the Fuel LCA Model, an assessment of emissions from the production of hydrogen by the project and upstream emissions from the production of inputs to the hydrogen-production process shall be taken into account; (c) the quantity of hydrogen produced by the project is to be adjusted to take into account any hydrogen that is consumed in the production process; (d) if the taxpayer produces hydrogen from eligible hydrocarbons, (i) any captured carbon that is subject to an ineligible use is deemed not to be captured, and (ii) any captured carbon that is subject to an eligible use (as defined in subsection 127.44(1)) is deemed to be permanently stored; (e) if, in connection with hydrogen production, the taxpayer generates or purchases, or proposes to generate or purchase, electricity that is (i) generated, or to be generated, by the taxpayer from (A) an eligible electricity generation source, the contribution of the electricity to carbon intensity is to correspond with the input carbon intensity of the technology-specific electricity in the Fuel LCA Model, (B) on-site generation equipment that is used solely to convert any one or a combination of hydrogen, heat described in subparagraph (i)(i) or (ii) or eligible hydrocarbons (with carbon dioxide captured using a CCUS process) into electricity that supports the production of hydrogen from eligible hydrocarbons, the contribution of the electricity to carbon intensity is to be modelled as part of the project, (C) a generator used for startup or emergency backup operations, the contribution of the electricity to carbon intensity is to be modelled as part of the project, and (D) a generation source other than as described in any of clauses (A) to (C), the carbon intensity of the project is deemed to be greater than 4.5, (ii) purchased, or to be purchased, pursuant to an eligible power purchase agreement, (A) the contribution of the electricity to carbon intensity is to correspond with the input carbon intensity of the technology-specific electricity in the Fuel LCA Model, and (B) the contribution of the electricity to expected carbon intensity is to be calculated in proportion to the number of years for which the agreement will be in place during the first 20 years of the project’s operations, and (iii) otherwise sourced, or to be sourced, from a provincial grid, the contribution to carbon intensity of the net positive quantity of the electricity (after subtracting any electricity purchased by the taxpayer under an eligible power purchase agreement or generated by the taxpayer in respect of the project that is, in either case, transmitted to the grid by the taxpayer) is to be based on the input carbon intensity of the provincial grid in the Fuel LCA Model; (f) in calculating the quantity of electricity described in paragraph (e), if the sum of the quantities of electricity from sources described in subparagraphs (e)(i) and (ii) exceeds the total electricity consumed or to be consumed by the project, then the electricity consumed or to be consumed by the project is deemed to be generated (i) first, from the source described in subparagraph (e)(i), and (ii) second, from the source described in subparagraph (e)(ii) to the extent of any excess; (g) if the project uses, or proposes to use, eligible hydrocarbons for the purpose of producing hydrogen, (i) where the eligible hydrocarbon is an eligible renewable hydrocarbon in respect of the taxpayer, (A) the contribution of that eligible renewable hydrocarbon to carbon intensity is to be based on the most recent CFR carbon intensity that is determined under the Clean Fuel Regulations , adjusted as necessary, and (B) the contribution of that eligible renewable hydrocarbon to expected carbon intensity is to be calculated in proportion to the number of years for which that hydrocarbon will be used during the first 20 years of the project’s