SMRs in Canada: federal-provincial cooperation in pursuing net-zero emissions

ABSTRACT

Over the last few years, there has been growing interest in developing/deploying Small Modular Reactors (SMRs) in many countries. This includes Canada which released a SMR roadmap (Fall 2018) and action plan (Fall 2020). At the provincial level, Ontario, Saskatchewan, and New Brunswick signed a MOU on SMRs in December 2019. Alberta later signed on. The role of federalism in the SMR case is fascinating from a number of political perspectives. It illustrates federal-provincial cooperation in the often-highly contested area of energy-environmental policy (i.e. interprovincial oil pipelines, carbon taxes, etc). For example, governments typically jealously guard their constitutional jurisdiction and political interests over energy and the environment. The fact that SMRs reveal cooperation between a Liberal federal government and four Conservative provincial governments is important. In addition, Ontario, Saskatchewan, and Alberta unsuccessfully sued Ottawa over the federal carbon tax that, like SMRs, is designed to reduce greenhouse gas emissions in the energy sector. This paper assesses the different motivations from the federal and key provincial governments to pursue SMRs. Through this process, this paper argues that the SMR case might provide a pathway for cooperation in energy-environment policy in Canada.

RÉSUMÉ

Au cours des dernières années, de nombreux pays ont manifesté un intérêt croissant pour le développement et le déploiement de petits réacteurs modulaires (PRM). Ces pays incluent le Canada qui a publié une feuille de route (automne 2018) et un plan d'action (automne 2020) sur les PRM. Au niveau provincial, l'Ontario, la Saskatchewan et le Nouveau-Brunswick ont signé un protocole d'entente sur les PRM en décembre 2019. L'Alberta s'est engagée par la suite. Le rôle du fédéralisme dans le cas des PRM est fascinant de plusieurs points de vue politiques. Il illustre la coopération fédérale-provinciale dans le domaine souvent très contesté des politiques énergétiques et environnementales (oléoducs interprovinciaux, taxe sur le carbone, etc.). Par exemple, d'une manière générale, les gouvernements gardent jalousement leurs compétences constitutionnelles et leurs intérêts politiques en matière d'énergie et d'environnement. Le fait que les PRM révèlent une coopération entre un gouvernement fédéral libéral et quatre gouvernements provinciaux conservateurs est important. En outre, l'Ontario, le Saskatchewan et l'Alberta ont poursuivi Ottawa sans succès, au sujet de la taxe fédérale sur le carbone qui, comme les PRM, est conçue pour réduire les émissions de gaz à effet de serre dans le secteur de l'énergie. Cet article évalue les différentes motivations du gouvernement fédéral et des principaux gouvernements provinciaux à poursuivre la mise en place des PRM. Par ce processus, il soutient que le cas des PRM pourrait ouvrir la voie à une coopération en matière de politique énergétique et environnementale au Canada.

KEYWORDS:

• Small modular reactors
• Canada
• provinces
• energy
• climate change

Introduction

Over the last few years, there has been growing interest in developing and deploying Small Modular Reactors (SMRs) around the world in order to combat climate change. This interest has extended to Canada. In Fall 2018, Natural Resources Canada (NRCan) released the SMR roadmap (Natural Resources Canada, 2018) and this was followed by the SMR action plan in Fall 2020 (Natural Resources Canada, 2020). At the provincial level, Ontario, Saskatchewan, and New Brunswick signed a MOU on SMRs in December 2019 (Ontario, 2019). Alberta announced its intention to join the MOU on August 7, 2020 (Kenney, 2020) and officially signed the document at a virtual press conference on April 14, 2021 (Alberta, 2021). The original three provinces (Ontario, Saskatchewan, and New Brunswick) also completed a feasibility study for SMRs in March 2021 (OPG et al., 2021). A year later, in March 2022, all four provinces (including Alberta) released a strategic plan (Ontario, 2022). These are not just paper promises, hard resources have already been allocated to SMRs. For example, over $200 million has already been dedicated to developing SMRs in New Brunswick and Ontario. The 2022 federal budget allocated a further $120.6 million over five years to help support the deployment of SMRs. NRCan will receive $69.9 million “to undertake research to minimize waste generated from these reactors; support the creation of a fuel supply chain; strengthen international cooperation agreements; and enhance domestic safety and security policies and practices” (Canada, 2022b). Meanwhile the Canadian Nuclear Safety Commission (CNSC) was allocated $50.7 million and a further $0.5 million ongoing “to build the capacity to regulate small modular reactors and work with international partners on global regulatory harmonization” (Canada, 2022b).

This paper argues that Canada is pursuing SMRs to reduce its greenhouse gas (GHG) emissions in order to meet its international and domestic climate change commitments, but also to capitalize on existing nuclear capabilities. The paper also shows that Canada is not unique in targeting SMRs; many other industrialized countries are doing the same. Canada’s domestic politics of SMRs is also fascinating. It illustrates federal-provincial cooperation in the often-highly contested area of energy-environmental policy (i.e. interprovincial oil pipelines, carbon taxes, etc). For example, governments typically jealously guard their constitutional jurisdiction and political interests over energy and the environment. This is why most provinces have Crown corporations with monopolies over electricity generation (i.e. SaskPower, BC-Hydro, Hydro-Quebec, etc) and often fight federal intrusions through court battles. The fact that SMRs reveal cooperation between a Liberal federal government and four conservative provincial governments of various political stripes is important. In addition, Ontario, Saskatchewan, and Alberta unsuccessfully sued Ottawa over the federal carbon tax that, like SMRs, is designed to reduce greenhouse gas emissions in the energy sector.

There are five parts to this paper. First, it describes the essential features of SMRs and their strengths and weaknesses. Second, it explains how COP26 illustrated the growing international role for nuclear energy, both traditional and SMRs, to be a tool in lowering global GHG emissions. Third, it briefly surveys the planned expansion of nuclear energy throughout the world, as well as some areas of resistance. This shows that Canada is not alone in pursuing nuclear energy and that there are international opportunities for Canadian firms in the area of SMRs. Fourth, it assesses the motivations of the Canadian federal government and the four provincial governments to pursue SMRs. Fifth, a concluding section examines how Canada is pursuing SMRs, in part, to achieve its international climate change commitments, but also the role that federalism is playing.

What are SMRs?

Nuclear energy produces electricity without emitting greenhouse gases. In addition, unlike wind or solar, it operates 24/7, not just when the wind is blowing or the sun is shining. Canada’s existing nuclear power plants (NPP) produce about 15 percent of Canada’s electricity and 58 percent in Ontario and 37 percent in New Brunswick respectively (Natural Resources Canada, 2022a). The Point Lepreau plant in New Brunswick completed its life extension in 2012 and is expected to be operational until about 2040. Most of Ontario’s nuclear fleet has also been going through a multi-billion dollar life extension that will allow its refurbished reactors to continue operating until the 2060s.

“Bigger is better” has long been the mantra of the nuclear energy industry. Nuclear companies and power utilities believed that for economies of scale they needed to consistently increase the size of nuclear reactors. For example, the reactors that Canada exported to India in the 1960s were 100–200 megawatts (MW), the Pickering reactors that were built in Ontario in the early 1970s were 500 MW, the Darlington reactors that were built in Ontario in the early 1990s were 900 MW, and the reactors that France is currently constructing are 1600 MW.

However, increasing the power output did not make the electricity cheaper. This is because each reactor seemed to be a first of a kind (FOAK), arising from design modifications due to geography, changing regulations, and finicky engineers trying to improve the design. Not only did building multiple FOAK reactors prevent the application of economies of scale, they also created construction delays and cost overruns (Lovering et al., 2016). This only increased the cost of nuclear energy. The nuclear industry realized that to solve the economics issue involved reversing course and going small.

How do SMRs differ from traditional reactors? The “small” part of SMRs is that they produce up to 300 MW of electricity (compared with over 1000 MW in traditional reactors). Micro reactors are even smaller at less than 20 MW. Smallness is not just in regards to power production, but extends to their physical size. They are “modular” because there would be standardized manufacturing at off-site factories, with the units shipped by rail and truck to be assembled at the sites. This production method would be substantially cheaper than previous models, where each new reactor is a FOAK (Hussein, 2020). SMRs also offer an opportunity to enhance the use of passive or inherent features that make them safer to operate. For example, the nuclear reaction can be slowed or shut down by using gravity to drop the control rods. In addition, some SMR designs use natural circulation, instead of pumps, to cool the reactor core. SMRs are still “reactors:” that is, they still produce electricity through the fission process, using uranium as fuel. Currently there are dozens of companies with SMR designs, although some, such as NuScale, Westinghouse, Terrestrial, ARC Clean Energy Canada, and Moltex are much further along.

Another potential benefit of SMRs is their fuel flexibility. Different SMRs can be fueled with spent fuel from the existing fleet of reactors, weapons-grade plutonium, depleted uranium (a byproduct of uranium enrichment), or thorium. There are also SMRs that use traditional natural uranium or enriched uranium, but would reduce the amount of produced waste. These innovative designs would help alleviate the nuclear waste disposal problem (Hussein, 2020).

SMRs are not new technology. The American and Soviet/Russian navies have used SMRs to power nuclear-powered submarines and aircraft carriers since the 1950s. The first set of demonstration civilian reactors that emerged in the 1950s and 1960s, based solely on their power production, would be considered SMRs. There were even attempts decades ago to try to commercialize smaller reactors for civilian electricity needs. Atomic Energy of Canada Limited (AECL) explored a nuclear battery in the early 1980s and a 300 MW CANDU-3 for Saskatchewan in the early 1990s. What is new is the entire package of SMRs. Existing individual traits of SMRs (smallness, modularity, inherent safety features, advanced fuel cycles, etc) that are found throughout much of the nuclear industry are enhanced and brought together. SMRs are also a “rebranding” exercise for the nuclear industry. The word nuclear, which has connotations with weapons as well as the high profile accidents at Three Mile Island, Chernobyl, and Fukushima, has been removed. Other aspects of the rebranding is to emphasize the new and innovative nature of SMRs and that it is clean energy.

The SMR Roadmap saw NRCan convene a group of stakeholders and experts (nuclear companies, power utilities, mining firms, academics) to examine the future of nuclear energy in Canada (Natural Resources Canada, 2018). The roadmap identified three major areas where this technology can play a role. First, SMRs can be used to power remote communities, primarily in northern Canada, which currently rely on diesel fuel that must be transported great distances in short summer periods (17–19). Diesel is a high emitting, expensive, and unreliable form of electricity. Second, they can be used to produce heat and power for heavy industry, i.e. the oil sands or mining (20–21). Third, provinces that are phasing out coal in the near future will require on-grid power generation, which can be provided by SMRs (15–16). Unlike traditional large reactors, SMRs are more suitable for small provinces such as Saskatchewan and New Brunswick. The deployment of SMRs in these three directions would reduce Canada’s greenhouse gas emissions, cut electricity costs, and would unlock economic opportunities. For example, the Ring of Fire, an area in northwest Ontario filled with many valuable rare earth minerals, could be unleashed through the deployment of SMRs.

Beyond these domestic opportunities, there are global opportunities presented by SMRs. Remote communities, heavy industry, and small jurisdictions exist around the world. Canada is also well positioned to take advantage of these opportunities. Canada is a “tier one” nuclear country with full-spectrum capabilities including experienced companies, operators, scientists, and regulators. Canada also has extensive uranium mines and firms such as Cameco operate mines around the world. Canada also has international experience with traditional CANDUs operating in India, Pakistan, South Korea, Argentina, Romania, and China. The potential value of SMRs in Canada is over $10 billion between 2030 and 2040 (Natural Resources Canada, 2018, p. 32) and globally over $150 billion between 2025 and 2040 (Natural Resources Canada, 2018, p. 37). However, countries such as the United States, United Kingdom, China, South Korea, Russia, and Argentina are also pursuing SMRs (Natural Resources Canada, 2018, pp. 37–38).

The SMR Roadmap identified over thirty pages of detailed recommendations that it grouped into four pillars:

• Demonstration and deployment – to realize benefits for Canadians and for Canada.

• Capacity-building and Indigenous and stakeholder engagement – to increase access to information.

• Policy, legislative and regulatory measures – to make the framework more efficient.

• International partnerships and marketing – to position Canada for leadership in global value chains (Natural Resources Canada, 2018, pp. 46–47).

A critical part of the original MOU between Ontario, New Brunswick, and Saskatchewan in December 2019 was to “prepare a feasibility report, including a business case for the development and deployment of SMRs in their jurisdictions” (Ontario, 2019, p. 3). At the April 2021 press conference announcing Alberta formally joining the MOU, the feasibility study was released (OPG et al., 2021). The study, conducted by Ontario Power Generation, Bruce Power, NB Power and SaskPower, identified three streams of SMR project proposals. Since Alberta joined the MOU late, SMR opportunities in the province were not part of the feasibility study. Stream 1 proposes the first on-grid SMR (300 MW at a cost of approximately $3 billion) constructed at Darlington by 2028. A fleet of four units in Saskatchewan would follow, with the first SMR projected to be in service in 2032 (21–25). Stream 2 focuses on building two generation-IV advanced SMRs in New Brunswick at the existing Point Lepreau nuclear site. An initial ARC Clean Energy unit would be built by 2030 and financed through a collaboration of the New Brunswick government, Canadian government, and private investors. Moltex Energy’s SMR and a nuclear waste recycling facility (to produce SMR fuel) is preparing to be ready by the early 2030s. Other provinces, such as Alberta and Saskatchewan, as well as the international market for generation-IV SMRs are also targeted in this stream (25-31). Stream 3 proposes a new class of micro reactors designed primarily to produce off-grid electricity to replace the use of diesel in remote communities and mines. A five MW demonstration reactor is underway at Chalk River, Ontario, with plans to be in service by 2026. New units are proposed throughout the late 2020s and 2030s (31–33).

Esam Hussein reviewed over 100 reactors in terms of “smallness (in power and size), modularity and the designs” and concluded that SMRs “offer a number of advantages over larger reactors.” In particular, costs could be driven down by shifting from “economy of scale” to “economy of multiples.” That is, a fleet of five 200 MW reactors would be cheaper than one 1000 MW reactor. “Modularity in SMR design, process intensification, manufacturing and construction offer additional cost savings via the associated standardization and shortening of on-site construction time” (Hussein, 2020). The SMR Feasibility Study also showed that “SMRs have the potential to be economically competitive, especially compared to other low carbon alternatives.” Moreover, “in some scenarios, SMRs compete with gas even without carbon pricing. Adding a price for carbon or carbon capture technology to gas fired generation will enhance the competitiveness of SMRs” (OPG et al., 2021, p. 34). Another advantage of modular reactors is maintenance flexibility. Particularly in smaller markets, an outage (whether because of maintenance/refueling/unplanned) of a single large reactor can severely stress the grid due to the need for replacement generation. With several modular reactors, it is less likely that all reactors will be offline at the same time, thereby reducing the need for replacement power during outages.

Nevertheless, there are critics of SMRs such as environmental groups and members of the Green Party, NDP, and Bloc Quebecois (Mandel, 2021). Much of the criticism is the same as that directed at traditional reactors: fear of accidents like at Three Mile Island, Chernobyl, and Fukushima; nuclear waste; nuclear is uneconomical; it crowds out investments in renewable energy such as wind and solar; and nuclear energy is linked to nuclear weapons (Bratt, 2012, pp. 32–37). However, there are other criticisms that are specific to SMRs. Froese, Kunz, and Ramana (2020) focus their critique on the alleged SMR opportunities of remote mining and northern communities in Canada. They compiled a database of remote mining sites (13 operational mines and 11 sites under development with a combined generation capacity of 617 MW) and northern communities (202 communities with a combined generation capacity of 506 MW) that are not connected to an electricity grid. They argue that the demand is too small to justify “setting up a factory to mass manufacture SMRs.” In addition, “there are alternative sources of electricity that are cheaper” such as “diesel, solar, wind, and a diesel-wind hybrid option.” They also find the claim of SMR proponents that “capital construction costs could be reduced through mass manufacture in factories and learning effects from experience” to be “dubious” because this relies on building reactors by the hundreds instead of the dozens. Other nuclear experts, claim that when compared to traditional light-water reactors, “SMRs will increase the volume and complexity” of spent nuclear fuel waste, which “will be an additional burden on waste storage, packaging, and geological disposal” (Krall et al., 2022, pp. 1–2).

Even Hussein, who is largely optimistic about SMRs, has acknowledged that the expectations around modular designs may be too high. Modularity may be difficult to achieve in “power-intensive mechanical systems” and could “lead to over-designed and less efficient systems.” It is even possible that “excessive modularity can hinder innovation” (Hussein, 2020). Another challenge with SMRs is choosing a design from among the 100 reported designs promoted by vendors. This is not a new problem, back in the early days of the development of civilian nuclear reactors, the technology selection issue was solved by Canada with the CANDU, but failed by the United Kingdom with their Magnox gas-cooled reactor design. The United Kingdom’s first reactors were Magnox and they built them in the 1950s and 1960s, but because they were not very fuel efficient, few other countries adopted the design and they were eventually phased out. Today, only North Korea operates a Magnox reactor.

Finally, there are regulatory challenges because the CNSC, which is supposed to be technology-neutral, has never licensed a SMR. The CNSC has acknowledged

[m]ost SMR concepts, although based on technological work and operating experience from past and existing plants, propose to employ a number of novel approaches. Novel approaches can affect the certainty of how the plant will perform under not only normal operation, but also in accident conditions, in which predictability is paramount to safety. These novel approaches and their corresponding uncertainties raise regulatory questions during the licensing process. (Canadian Nuclear Safety Commission, 2016)

As of January 2022, 10 SMR designs are at various stages of the CNSC’s pre-licensing vendor design review process (Canadian Nuclear Safety Commission, 2022). In May 2021, the CNSC announced that Global First Power Ltd’s (GFP) – a joint partnership between US-based Ultra Safe Nuclear Corporation and Ontario Power Generation – plan to build a 15 MW demonstration micro reactor at Chalk River Laboratories has moved to the License to Prepare Site phase that triggers a detailed technical review (Canadian Nuclear Safety Commission, 2021). This is the furthest that any SMR vendor has gone along the licensing process. GFP could be generating power by 2026.

COP26 and nuclear energy

The COP-26 summit in Glasgow, Scotland in 2021 was noted for the contentious debate over whether nuclear energy should be considered green energy. On the one hand, nuclear was not specifically identified in the Glasgow Climate Pact, climate activists dismissed it, and pro-nuclear presentations were slotted at side events. On the other hand, the Glasgow Climate Pact has taken a technology-neutral approach. It called on Parties

to accelerate the development, deployment and dissemination of technologies, and the adoption of policies, to transition towards low-emission energy systems, including by rapidly scaling up the deployment of clean power generation and energy efficiency measures, including accelerating efforts towards the phasedown of unabated coal power and phase-out of inefficient fossil fuel subsidies, while providing targeted support to the poorest and most vulnerable in line with national circumstances and recognizing the need for support towards a just transition. (United Nations Framework Convention on Climate Change, 2022)

Nuclear energy certainly meets that definition. Moreover, individual countries used COP26 to make announcements that they were developing SMRs in order to combat climate change (León, 2021). Even Canada, despite its advocacy at home towards SMRs, was divided about nuclear energy at COP26. Prime Minister Justin Trudeau said that getting off of fossil fuels “means investing more in wind, investing more in solar – and yes, exploring nuclear” (Chamandy, 2021). Meanwhile federal Environment and Climate Change Minister Steven Guilbeault, a former anti-nuclear activist from his days in Greenpeace, deflected all questions about nuclear energy.

International comparisons

COP26 provided some insight about how the world’s countries are debating the role of nuclear energy in addressing climate change. This section goes further by offering thumbnail sketches of many of the world’s most important countries’ current nuclear policies. It is important when we trace Canada’s pursuit of SMRs, that the larger international context is identified.

In February 2022, the European Union Commission, after years of internal debate among its member states, declared nuclear and natural gas as green energy that allowed them to classify private investments as “sustainable” (European Union Commission, 2022). European Commissioner Mairead McGuinness said, “we need to use all the tools at our disposal” to reach the climate-neutral target. Private investment was “key,” and the proposals were “setting out strict conditions to help mobilize finance to support this transition, away from more harmful energy sources like coal” (BBC, 2022). Including nuclear in the EU’s green energy plan had been advocated for by most EU countries such as France, Poland, Hungary, the Czech Republic, Bulgaria, Slovakia, and Finland. France, which is the country that generates the largest percentage of its electricity from nuclear, is aggressively pursuing new fleets of SMRs (Alderman, 2022).

However, other EU states, such as Germany, Austria, Spain, and Luxembourg fiercely opposed the decision to classify nuclear as sustainable energy. Germany is the major nuclear outlier in Europe. As recently as 2011, Germany had seventeen nuclear power plants that produced over 26 percent of Germany’s electricity generation (second in Europe only to France). Today, as a direct response to the 2011 Fukushima–Daiichi accident in Japan, Germany has only three operating reactors and they are scheduled to be shut down by the end of 2022, which would be 15 years ahead of schedule (World Nuclear Association, 2022). You cannot explain this shift in nuclear energy policy without recognizing that Germany has a very strong environmental movement – institutionalized with the Green Party – that, especially since Chernobyl, has sought to end the use of nuclear energy in that country.

Russia’s invasion of Ukraine in February 2022 has greatly complicated the future of Germany’s energy policy. On February 22, German Chancellor Olaf Scholz announced that the country would scrap the controversial Nord Stream 2, a $US 11 billion undersea pipeline that would transport natural gas from Russia to Germany. It was a dramatic move given that Nord Stream 2 was on the verge on being commissioned as well as the fact that previous German governments led by Schroeder and Merkel supported the project. Not only that, but Scholz had only been in power a couple of months and only governs with a “stop-light” coalition made up of his Social Democratic Party, Free Democrats, and the Greens. Already there is pressure to delay shuttering Germany’s last three nuclear power plants and even reversing the early closure of more of them in an effort to reduce Germany’s dependency on Russian gas (which was over 60% of its electricity supply before the crisis). As of August 2022, the Scholz government has admitted that it might not decommission its existing three reactors and, may, in fact, restart some additional reactors that it recently shuttered (Solomon, 2022).

The International Energy Agency (IEA) released A Ten-Point Plan to Reduce the European Union’s Reliance on Russian Natural Gas (2022) which included no new contracts with Russia, replacements from other countries, expanding storage capabilities, accelerating wind/solar/bioenergy capacity, providing short-term consumer subsidies to shield them from rising prices, replacing gas boilers with heat pumps, improving energy efficiency of buildings and industry, temporarily dropping thermostats by 1° Celsius, and increase efforts to diversify and decarbonize electricity grid flexibility to respond to peak hours and seasons. The same report noted

nuclear power is the largest source of low emissions electricity in the EU, but several reactors were taken offline for maintenance and safety checks in 2021. Returning these reactors to safe operations in 2022, alongside the start of commercial operations for the completed reactor in Finland, can lead to EU nuclear power generation increasing by up to 20 terawatt-hour (TWh) in 2022.

Without explicitly identifying Germany, the IEA remarked that

[a] new round of reactor closures, however, would dent this recovery in output: four nuclear reactors are scheduled to shut down by the end of 2022, and another one in 2023. A temporary delay of these closures, conducted in a way that assures the plants’ safe operation, could cut EU gas demand by almost 1 billion cubic meters (bcm) per month.

Beyond Nord Stream 2, Germany has already fundamentally altered many aspects of its foreign policy in response to Russian aggression (Landler et al., 2022). After initially opposing the idea, it supported economic sanctions against the Russian Central Bank and the SWIFT international banking system. It agreed to send millions of Euros in lethal military aid to Ukraine, and Scholz promised a rapid increase in German defence spending to the tune of tens of billions of Euros per year. Therefore, it would be foolish to rule out another dramatic shift this time involving nuclear energy.

Outside of the EU, the large civilian nuclear countries – United Kingdom, United States, Russia, China, Japan, and South Korea – are developing strategies, at various levels of actuality, to deploy SMRs.¹ The United Kingdom, which recently formally withdrew from the EU, is initiating a large nuclear build up that includes SMRs (United Kingdom, 2020). US-based NuScale is the world’s first company to have its SMR design approved by a regulatory body, and will complete its first 60 MW plant in 2027 at the Idaho National Laboratory with partial funding from the US Department of Energy. A much larger fleet deployment through the Utah Associated Municipal Power Systems – a consortium of six Western states (Utah, California, Idaho, Nevada, New Mexico, and Wyoming) – is expected to start producing electricity by 2029 (NuScale Power, 2022). The Tennessee Valley Authority, the largest power utility in the US, is also committed to a “new nuclear program” that would build starting with a GE-Hitachi BWRX-300 SMR (Patel, 2022). In short, Canada’s pursuit of SMRs is consistent with its closest allies (the US and the Europeans). This creates opportunities for technological cooperation, public acceptance, and economic benefits.

Canada’s motivations to pursue SMRs

Until recently, the federal government was not particularly supportive of nuclear energy. Following a high water mark when Prime Minister Jean Chrétien helped negotiate the sale of two CANDUs to China in 1996, for decades the federal government had to confront bad news from the nuclear sector. However, many of these problems have been resolved. The restructuring of Canada’s nuclear Crown corporation – AECL – is now complete. Its reactor division was privatized to SNC-Lavalin (and is now called CANDU Energy), and the research and development division is operating under a model where AECL owns the facilities and is responsible for legacy waste, while a private company, Canadian Nuclear Laboratories, runs the day-to-day operations. Periodic shortages of medical isotopes – caused by temporary shutdowns of the aging reactor at Chalk River, Ontario – have been addressed through a decentralized means of production, using different types of research facilities across the country. The delays and cost overruns in the refurbishment of the Point Lepreau reactor in New Brunswick are now in the past; today, Point Lepreau is running well. Debates over new developments in Ontario, which created severe tensions between Ottawa, Queen’s Park and industry, are now over; new nuclear builds (at least of the traditional design) are highly unlikely, but Ontario is refurbishing most of its fleet in a $26 billion project that will extend the life of its reactors into the 2060s.

Obviously, the federal government is motivated to pursue SMRs as part of its wider climate plan. Former Natural Resources Minister Seamus O’Regan had repeatedly stated, “[w]e have not seen a model where we can get to net-zero emissions by 2050 without nuclear” (Hall, 2020). This ambitious plan has already set targets, established (and then increased) a price on carbon, sought to improve energy efficiency, provided incentives for electric vehicles and mass transit, and made investments in renewable energy (Canada, 2021). However, if Canada is going to successfully phase out coal (or even natural gas, whose emissions are half those of coal, but 2000 percent of nuclear and renewables), it needs to transition to a cleaner and greener electricity. Expanding renewables is necessary, but nuclear energy is also going to have to maintain and even expand its presence. It is not just electricity generation; the federal government has also acknowledged that SMRs can help “electrify carbon-intensive industries such as mining and petroleum extraction” (Natural Resources Canada, 2021). When the federal government released its 2030 Emissions Reduction Plan, SMRs were identified as a key mechanism by which Canada could hit its target of 40% below 2005 levels by 2030 and net-zero emissions by 2050 (Canada, 2022a).

A secondary motivation to climate change, is capitalizing on Canada’s existing nuclear capabilities leading to economic opportunities both domestically and internationally. NRCan has written that SMRs

could be the future of Canada’s nuclear industry, with the potential to provide non-emitting energy for a wide range of applications, from grid-scale electricity generation to use in heavy industry and remote communities. Canada is well-positioned to become a global leader in the development and deployment of SMR technology. With over 60 years of science and technology innovation, a world-class regulator and a vibrant domestic supply chain, Canada’s nuclear industry is poised to be a leader in an emerging global market estimated at $150 billion a year by 2040. (Natural Resources Canada, 2021)

The involvement of four provinces – Ontario, New Brunswick, Saskatchewan, and Alberta – is similarly motivated by the same two themes: reducing GHG emissions and capitalizing on existing nuclear capabilities. Ontario was able to shut down its coal generating plants, and greatly reduce its GHG emissions, when it restarted some older nuclear reactors. Deploying SMRs would continue to reduce the province’s emissions. New Brunswick is also motivated to reduce GHG emissions, both within the province and throughout the Atlantic Canada region. Already clean energy supplies 80% of New Brunswick’s electricity from nuclear and renewables, but SMRs could bite into the remaining 20%. The rest of Atlantic Canada’s percentage of fossil fuel electricity is much higher and exports of SMR-generated electricity from New Brunswick could lower the region’s GHG emissions (Natural Resources Canada, 2022b). Saskatchewan has the highest per capita GHG emissions in Canada (Environment and Climate Change Canada, 2020). This is because of a combination of a fossil fuel intense electricity grid (almost 75% of electricity comes from coal and natural gas) and oil production. SMRs would displace coal-fired electricity in Saskatchewan thereby reducing its GHG emissions. Finally, Alberta has Canada’s highest overall GHG emissions at 272.6 metric tons (Mt) in 2018, and the second highest amount per capita (Environment and Climate Change Canada, 2020). Overall, 37.3% of Canada’s emissions are from Alberta. Alberta’s emissions are so high because of its oil and gas production, which represents 51% of its total emissions (Environment and Climate Change Canada, 2020). At the formal MOU signing ceremony in April 2021 when Alberta joined Ontario, New Brunswick, and Saskatchewan, Premier Jason Kenney said he was eager to work with the group because “[s]mall modular reactors are an exciting new technology that could be used in the future to significantly cut greenhouse gas emissions, for example by generating power for Canadian oil sands producers” (Alberta, 2021).

With regards to the second theme of leveraging existing nuclear capabilities, Ontario is the heart of Canada’s nuclear sector with 18 NPPs at three sites (Bruce 8, Pickering 6, and Darlington 4) that produce over 60% of Ontario’s electricity. Much of Canada’s nuclear research and development also occurs at Canadian Nuclear Laboratories located at Chalk River. The SMR Feasibility Study also noted

Ontario is home to a mature, multi-billion dollar nuclear industry that is a source of innovation in nuclear and non-nuclear applications. Ontario’s nuclear supply chain consists of more than 200 companies that manufacture major components and specialized equipment as well provide engineering services for nuclear power stations in Canada and around the world. Development and deployment of SMRs represent new opportunities for Ontario’s world-class nuclear industry to grow further and export their products and services around the world. (2021, p. 46)

New Brunswick has the only operating NPP outside of Ontario, and for several decades has hoped to leverage its existing Point Lepreau reactor into a greater role in Canada’s nuclear sector: it has tried to get a second traditional reactor built, decided to allow Point Lepreau to be the first CANDU to go through a refurbishment, and sought a center of excellence for nuclear research & development (Bratt, 2012, pp. 149–174). Even before the release of NRCan’s SMR Roadmap, New Brunswick had invested $10 million (matched by two SMR vendors: ARC Clean Energy Canada and Moltex Energy) to establish the Advanced Nuclear Research Center to pursue SMRs in conjunction with NB Power. In early 2021, further investments were made: New Brunswick government $20 million, Canadian government $50.5 million, and ARC $30 million (OPG et al., 2021, p. 12). Saskatchewan has no nuclear generation, but is home to the world’s highest-grade uranium ore and the headquarters of Cameco, the largest privately owned uranium mining company in the world. Successive Saskatchewan governments, especially those under former Premier Brad Wall, have tried to increase nuclear opportunities beyond uranium mining. This has included investigating opportunities in the nuclear fuel cycle (conversion, enrichment, reactor fuel manufacturing), building a research reactor, establishing a nuclear research center, and pursuing a NPP (Bratt, 2012, pp. 175–214). SMRs are just the latest opportunity to try to add value to its uranium-mining sector. This is why, in June 2020, the climate change branch of the province’s Environment Ministry formed a small “nuclear secretariat” to “coordinate nuclear policy and program work” across the Saskatchewan government (White-Crummey, 2020).

While all four of the provincial governments are led by conservative parties, and three² of them sued the Trudeau government over the carbon tax, Alberta is the most antagonistic. During the 2019 Alberta election, UCP leader Jason Kenney campaigned as much against Justin Trudeau as he did the incumbent NDP government of Rachel Notley, often referring to them as the Trudeau-Notley alliance. After Trudeau won re-election in October 2019, albeit with a minority government that had no seats between Winnipeg and Vancouver, the Kenney government responded by filing lawsuits filed against Bills C-69 (substantial changes to Canada’s energy regulatory framework) and C-48 (oil tanker ban off the northwest coast of BC) and appointed a Fair Deal Panel “to define and to secure a fair deal for Alberta” (Kenney, 2019).

This antagonism towards the federal government explains why, in the official Alberta government press releases surrounding the SMR announcement, the August 2020 video starring Premier Kenney and Energy Minister Sonya Savage, and the April 2021 press conference with the four Premiers, Kenney emphasized working with the other provinces and never once mentioned the federal government. This was despite the fact that the MOU explicitly states the commitments of the provinces:

• To work co-operatively to positively influence the federal government to provide a clear unambiguous statement that nuclear energy is a clean technology and is required as part of the climate change solution.

• To work co-operatively to positively influence the federal government to provide support for SMRs identified in the Canadian SMR Roadmap.

• To work co-operatively to positively influence the federal government to make changes as necessary to facilitate the introduction of SMRs (Ontario, 2019, p. 2).

Moreover, the federal government, which has the constitutional authority over nuclear energy and whose financial investments will be critical, is the key actor in the development and deployment of SMRs.

SMRs and cooperation in energy-environment policy in Canada

The SMR case may emerge as a successful form of quasi-multilateralism. With five participating governments (federal and four provinces) it is larger than bilateralism, but because it includes less than half of all provinces and territories it is not really multilateralism. In the early years of developing nuclear energy, there was close cooperation between the federal government and the province of Ontario. Similarly, the building of the Point Lepreau reactor required cooperation between the federal and New Brunswick governments in the 1970s. However, in the twenty-first century there have been significant clashes between Ottawa and the provinces over refurbishing the existing nuclear fleet (New Brunswick), purchasing new reactors (Ontario), and building a new major research reactor (Saskatchewan). However, as this paper has shown, there has been growing and significant intergovernmental cooperation on SMRs; even if among some strange bedfellows.

What can the SMR case tell us about energy-environment federalism? First, governments can compartmentalize, meaning that they can cooperate in some areas even while they are fighting over other areas. Therefore, even though three of the four provincial governments have significant issues with the federal government’s carbon tax, they can cooperate on SMRs. This is not new. There was a vicious political fight in the early 1980s between Prime Minister Pierre Trudeau and Alberta Premier Peter Lougheed over the National Energy Program. Yet they were still able to work together with the rest of the premiers in negotiating the patriation of Canada’s constitution during this same period.

Second, all five governments share common interests in wanting to reduce GHG emissions. The fight over the carbon tax was not necessarily over climate change, but in the tools that were being used to address climate change. In addition, leveraging Canada’s existing nuclear capabilities in a new form of nuclear energy that could create economic opportunities both at home and abroad unites the federal government, Ontario, New Brunswick, and Saskatchewan. Even Alberta, which lacks existing nuclear capabilities, is home to some of Canada’s largest energy companies who would welcome innovative technology to reduce the GHG emission-intensity of the oil sands. There is also a common interest, clearly articulated in both the SMR Roadmap and Action Plan, to pursue international markets. As this paper demonstrated, other countries are also pursuing SMRs, so if Canada does not work together, it could end up losing potential export opportunities.

Third, Canada’s constitution requires cooperation. Nuclear energy is under federal jurisdiction and energy production is under provincial jurisdiction. Therefore, SMRs cannot be developed or deployed in the absence of intergovernmental cooperation. Constitutional arrangements may have led to previous energy-environment fights, but in the SMR case, it has led to cooperation.

Fourth, the pursuit of a new technology such as SMRs is very expensive. The SMR feasibility study estimates the cost in the tens of billions over several decades if all three streams are pursued. This requires cost sharing between the federal government, provincial governments, and industry. No single entity has the financial wherewithal, or willingness, to undertake SMRs unilaterally.

So is the SMR case, although in its early stages, a potential new pathway for federal cooperation in energy-environment policy? Alternatively, is it an outlier that has unique features that are not easy to replicate in other areas? It is true that the SMR case has a whole host of unique features:

• there is greater constitutional certainty around nuclear energy in Canada than around other energy-environment issues,

• there are no transit provinces (unlike pipelines and electricity transmission lines),

• Canada’s east–west divide is less pronounced than in oil and gas (MacDonald, 2020, pp. 90–101),

• no disproportionate burden sharing is required of provinces (such as in other efforts to lower GHG emissions) (MacDonald, 2020, pp. 101–107), and

• provincial participation is not required, but voluntary (as evidenced in the MOU).

Nevertheless, intergovernmental cooperation on SMRs could lead to spinoff benefits. Governments can learn the benefits of cooperation that could then be applied to other energy-environment files. The SMR process is not just about cooperation between the federal government and a specific provincial government, but includes cooperation, as evidenced by the MOU, among provincial governments. Beyond the four provinces who have signed the SMR MOU, Prince Edward Island and the Yukon are participating in the SMR Action Plan. In addition, the SMR process is not just between governments, it also deliberately includes in the design and implementation of the Action Plan the following actors:

• Power utilities (Ontario Power Generation, Bruce Power, NB Power, and SaskPower),

• SMR vendors (ARC, Moltex, Terrestrial, Candu Energy, Hitachi, Holtec International, Nuscale, U-Battery, Ultra Safe Nuclear, Westinghouse, X-Energy),

• Nuclear industry associations (Canadian Nuclear Association, Organization of Canadian Nuclear Industries, etc),

• Heavy industry (Suncor, Mining Association of Canada, etc),

• Engineering, Procurement, and Construction Firms,

• Indigenous communities,

• Municipalities,

• Civil society and education, and

• Academia and research (Natural Resources Canada, 2021).

In total, there are 117 organizations participating in the implementation of the SMR Action Plan. This type of deep collaboration between different actors is probably the best lesson that the SMR case can apply to other energy-environment files, or for that matter federalism in general.

Acknowledgements

The author would like to thank Jeremy Whitlock, Tim Huyer, Jeremy Rayner, and Chuck Vandergraaf for their comments on an earlier draft. An earlier draft of this paper was presented at the 2021 Canadian Political Science Association conference.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Additional information

Notes on contributors

Duane Bratt

Duane Bratt is a Professor (political science) in the Department of Economics, Justice, and Policy Studies at Mount Royal University. His primary research interests are nuclear policy, Canadian foreign policy, and Alberta politics. Recent publications include Blue Storm: The Rise and Fall of Jason Kenney.

Notes

1 India is also expanding its nuclear fleet, but is focused on traditional reactors. None of the reactors being planned are SMRs.

2 Following the re-election of the Trudeau government in October 2019, Higgs announced that New Brunswick would abandon its legal challenge and instead create its own provincial carbon tax (Poitras, 2019).