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Nova Scotia’s Green Hydrogen Sector: 3 Key Legislative Developments

Published:

January 25, 2023

Author(s):

• Melanie Gillis
• Noah Entwisle

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Buzz around the potential of hydrogen as a green energy source has been growing. And the Atlantic Canadian provinces are poised to become a key hub in this expanding sector. In 2022, Nova Scotia implemented key legislative changes to pave the way for this expansion. If they work as intended, these changes will increase certainty for hydrogen project developers around the applicable codes and standards, access to electricity and environmental assessments that will apply to hydrogen projects – and spark increased investment and development in Nova Scotia’s expanding hydrogen sector. 

Nova Scotia has set ambitious emission reduction targets. The Nova Scotia Environmental Goals and Climate Change Reduction Act calls for a reduction of greenhouse gas emissions by 53% below 2005 levels by 2030, and the achievement of net-zero greenhouse gas emissions (GHGs) by 2050. Part of this push is paving the way for the development of new renewable energy sources – like green hydrogen. In an October 17, 2022 statement, Nova Scotia’s Minister of Natural Resources and Renewables stated that “…by updating and clarifying our legislation, we are positioning Nova Scotia as a leader in green hydrogen production and outlining a clear regulatory path for businesses.” The Fall 2022 sitting of the Nova Scotia legislature yielded a suite of legislative changes across the board on the hydrogen front. Here’s a snapshot of three key legislative developments that impact Nova Scotia’s green hydrogen sector.

1. Amendments to Nova Scotia’s Liquid Fuel Regime

In November 2022, Nova Scotia passed amendments to its Pipeline Act, Gas Distribution Act, and Subsurface Energy Storage Act (formerly known as the Underground Hydrocarbon Storage Act). These three Acts establish rules and standards for the storage, transportation and distribution of liquid fuels in Nova Scotia. The changes:

• Include hydrogen, ammonia, carbon sequestration and compressed air energy storage within the scope of the Underground Hydrocarbons Storage Act.
• Include pipelines built for hydrogen or hydrogen blends in the Pipeline Act.
• Allow the Nova Scotia Utility and Review Board to also consider hydrogen as part of a gas distribution system under the Gas Distribution Act.

By updating these three Acts, Nova Scotia has confirmed that its existing legal regime for liquid fuels now applies to new hydrogen fuels, helping to ensure businesses undertaking new green hydrogen projects will have clarity regarding the rules, procedures and standards they must follow.

2. Facilitating New Green Hydrogen Projects in Nova Scotia

In November 2022, Nova Scotia also introduced Bill 207 to amend its Electricity Act to:

• Establish a “Hydrogen Innovation Program” to facilitate green hydrogen projects.
• Allow eligible green hydrogen businesses to buy wholesale electricity on the open market via Nova Scotia’s Open-Access Transmission Tariff (OATT), which imposes a fee on buyers and sellers of wholesale electricity who make use of Nova Scotia’s power grid.

Subsection 4FA(1) of the amended Electricity Act will require the Minister of Natural Resources and Renewables to “develop and maintain a hydrogen innovation program for the interconnection of a hydrogen facility to the electrical grid of a public utility for the purpose of hydrogen production and processing.” Owners or operators of hydrogen processing or production facilities will be able to apply to the Minister to participate in the Hydrogen Innovation Program, subject to the terms and conditions to be established by new regulations passed pursuant to the amendment. Bill 207 provides relatively few concrete details regarding the Hydrogen Innovation Program. However, the regulatory powers created by Bill 207 provide some clues to what the Program will look like:

• The Program will create a pathway for the owners or operators of hydrogen facilities to interconnect with Nova Scotia’s power grid and purchase power on the open market to enable their operations. The purchase and sale of electricity through Nova Scotia Power’s grid is enabled by, and subject to, the Open-Access Transmission Tariff.
• To take advantage of the Program, owners and operators of hydrogen facilities must comply with the Program eligibility criteria, data reporting requirements and performance standards established by regulations passed pursuant to the amended Electricity Act.
• Reporting requirements and ongoing compliance obligations for participants in the program will be designed to (among other things): enable the government to monitor and measure the carbon emissions of new hydrogen projects; establish performance standards regarding the carbon intensity of these projects; establish penalties for hydrogen projects that fail to satisfy the performance standards; and establish requirements or conditions for the sale of hydrogen or electricity produced from hydrogen at participating hydrogen facilities.

Further details regarding the Hydrogen Innovation Program will likely be forthcoming in the months following the entry-into-force of Bill 207. Businesses interested in entering this exciting new sector should pay close attention to future developments as the Hydrogen Innovation Program takes shape.

3. Clarity on Environmental Assessments for Hydrogen Projects

In 2022, Nova Scotia also changed the Environmental Assessment Regulations and the Activities Designation Regulations to provide green hydrogen developers with clarity about their environmental assessment obligations in relation to these types of projects. As a result of the changes:

• Large-scale projects that produce and/or store hydrogen or ammonia will require a Class I environmental assessment.
• Facilities that produce and/or store hydrogen or ammonia will require operational approvals

Several operational approvals can be bundled under one clear, facility-level approval for hydrogen facilities.

Please contact your McInnes Cooper lawyer or any member of our Renewable Energy Team @ McInnes Cooper to discuss whether Nova Scotia is the right place for your hydrogen project.

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