Green Hydrogen: Nova Scotia Leading Legislative Development

Green Hydrogen: Nova Scotia Leading Legislative Development

November 21, 2022

In response to rapidly growing interest in green hydrogen in Nova Scotia, the Province has passed legislation last week that effectively integrates hydrogen into the province’s legislative system for energy production and transportation.

Green Hydrogen as Fuel

As a result of changes to the Gas Distribution Act, the Pipeline Act, and the Underground Hydrocarbons Storage Act, hydrogen effectively gets similar treatment to natural gas in the context of gas transportation, gas distribution and subsurface storage.

The legislation also allows the Nova Scotia Utility and Review Board (the “NSUARB”) to treat hydrogen as part of the Province’s gas distribution system. This means the NSUARB will have the power to issue licenses for the operation of hydrogen distribution systems in the province.

The Government has also amended the Pipeline Act to permit the NSUARB to regulate hydrogen pipelines.

The scope of the Underground Hydrocarbons Storage Act has been expanded to include hydrogen, ammonia, carbon sequestration, and compressed air energy storage.

These changes are designed to ensure that the Underground Hydrocarbons Storage Act, which was originally designed to regulate underground hydrocarbon storage developments, including, grants of licenses/leases for such projects, also applies to subsurface hydrogen storage facilities.

Changes to the Electricity Act

Currently, the Electricity Act considers only Nova Scotia Power and municipal utilities to be “wholesale customers”. Wholesale customers enjoy the right to purchase electricity directly from competitive suppliers.

Amendments to the Electricity Act update the definition of “wholesale customer” to include the owner or operator of a hydrogen production facility. This will allow hydrogen producers to tap into renewable energy suppliers for their hydrogen production – thereby putting the “green” in “green hydrogen”.

Amendments to the Electricity Act also require the government, specifically the Minister of Natural Resources and Renewables, to develop and maintain a “Hydrogen Innovation Program”. The aim of the program is to provide a system for interconnecting hydrogen facilities to the grid for the purposes of enabling hydrogen production. These amendments enable the owner or operator of a hydrogen facility to apply to the Minister for approval to participate in the Hydrogen Innovation Program.

Program details are to be further developed by the Province and will be implemented through the introduction of new regulations. Cabinet will have broad power and discretion in developing these regulations.

Note on Future Regulations

These legislative developments appear to specifically address those hydrogen producers intending to develop projects for supply to domestic customers in Nova Scotia and Canada. It is our understanding that the government is preparing a separate path for exporters of green hydrogen.

The government has signaled that the legislation does not represent the full extent of the regulatory regime that it hopes to put in place in relation to this industry. The government indicated that it will outline further changes in its “green hydrogen action plan” to be released next year after consultation with key stakeholders.

For any queries, please contact Mohammad Ali Raza and Ashley Dickey in the Halifax office of Cox & Palmer. This article was written with contributions by Haneen Al-Noman, an articling clerk at Cox & Palmer.

This article originally appeared on The Lawyer’s Daily website published by LexisNexis Canada Inc.

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