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Federal gifts for the nuclear and mining industries
A “critical minerals strategy,” also released in December, reads like a mining industry wish list. (Pexels photo)
Canada’s nuclear industry got an important pre-Christmas gift from the federal government in the form of the announcement of its decision not to conduct an assessment under the 2019 Impact Assessment Act of a proposed small modular nuclear reactor (SMR) at the Point Lepreau site in New Brunswick.
The Lepreau SMR proposal has been highly controversial, given its reliance on technologies where the performance, costs and risks are essentially unknown. Moreover, serious questions have even been raised about whether the project, intended to reprocess fuel from the Lepreau CANDU reactors, would violate the Treaty on the Non-Proliferation of Nuclear Weapons. It would have seemed precisely the kind of situation where a very thorough, public review is needed before a project can proceed. The federal government has chosen otherwise.
The Lepreau decision capped a string of federal decisions and multi-billion-dollar announcements around technologies claimed to be essential to decarbonizing Canada’s economy. There was the $970-million investment through the Canada Infrastructure Bank in another SMR project at Ontario Power Generation’s Darlington facility. A “critical minerals strategy,” also released in December, reads like a mining industry wish list. Billions had already been committed to “critical minerals” projects and infrastructures. A tax credit for carbon capture, utilization and storage (CCUS), with a value in the range of $1.5 billion per year, was introduced in the March 2022 budget. Hundreds of millions more have gone into fossil-fuel-based “blue hydrogen-related” technologies.
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Many of the technologies being emphasized in these decisions are far from mature. Their potential contributions to achieving significant reductions in greenhouse gas (GHG) emissions within the timeframes required under the Paris Climate Agreement and the federal government’s own climate change commitments are open to serious question. Many also carry substantial environmental, social, cultural, economic, legacy and technological lock-in risks
The situation raises questions about the federal government’s decisions on where and how to invest in decarbonizing technologies and pathways. There appears to be no consistent framework for evaluating or making choices towards that end, other than to pursue “every tool in the toolbox.” The resulting state of affairs is, among other things, extremely vulnerable to the influence of well-established incumbent sectors and actors, who are able to reframe their long-standing agendas through a climate change lens.
Elements of the federal climate strategy, which remains grounded in the December 2020 paper A Healthy Environment and a Healthy Economy, show strong potential to advance decarbonization and energy sustainability with relatively low risks of adverse impacts or negative trade-offs. Carbon pricing, energy-efficiency improvements for buildings, nature-based responses, initiatives around waste management and the electrification of transportation might all fall into this category. Even here, careful attention needs to be paid to program design to ensure effectiveness and efficiency, and to avoid or mitigate deepening adverse impacts on marginalized communities.
The decarbonization of important but difficult-to-decarbonize sectors – such as heavy, long-distance transportation, steel and cement – may also qualify, but is more dependent on technological choices, such as the sources of hydrogen used for these purposes.
Other elements of the federal strategy present more complex challenges and trade-off risks. Assessments of hydrogen-based strategies depend greatly on how the hydrogen relied upon is generated (e.g. grey vs. blue vs. green vs. red). Serious concerns are also emerging regarding the economic viability of the rapid widespread adoption of hydrogen-based technologies, given the current lack of the necessary infrastructures, and questions concerning their economic and energy efficiency. As the federal environmental commissioner has noted, hydrogen’s role in a net-zero transition may be seriously overstated. It may well emerge as useful in certain specific applications, but is unlikely to be the panacea it is sometimes presented as being.
The SMR component of the federal government’s approach to “clean” electricity, for its part, carries high trade-off risks, ranging from direct impacts to questions of geopolitical security. At the same time, the technology remains immature and unlikely to make any contribution to the achievement of Canadian or global emission-reduction targets for 2030 or even by mid-century. Rather, it may represent a “dead-end” pathway – albeit one with very significant risks of major legacy costs and impacts.
Considerable trade-offs emerge in relation to the federal government’s strategies around the roles of CCUS and “critical minerals.” The federal focus on CCUS has been seen as politically essential in dealing with fossil-fuel export-dependent provinces and climate change. However — in addition to the issues related to its effectiveness, cost and the appropriateness of public subsidization of a highly profitable sector — CCUS raises larger and politically difficult questions about the long-term role of the upstream fossil fuel sector in a decarbonizing world.
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The development of “critical mineral” resources, although potentially important in energy storage technologies such as EV batteries, also carries risks of very significant environmental, social and cultural trade-offs, particularly in relation to Indigenous communities in regions where these minerals might be found. So far, these issues have been largely ignored in planning new strategies for the sector.
On the whole, the federal government’s approach to a net-zero energy transition contains elements with a strong potential to advance energy sustainability, but its overall effectiveness in achieving the government’s stated climate change goals remains an open question. At the same time, the power of incumbents — in the form of traditionally dominant actors in the fossil fuel, nuclear and mining sectors, backed by sympathetic provincial governments – is strongly apparent in the federal government’s plans. The results give rise to a range of critical trade-off risks in relation to a sustainable, net-zero energy transition.
A clearer, more transparent, and evidence-based approach to decision-making is needed – one which recognizes and acknowledges these trade-off risks, and provides a framework for dealing with them. The 2019 Impact Assessment Act was specifically intended to establish such a framework, making the decision not to employ it around the Lepreau SMR project deeply troubling, and inviting even deeper questions about what is guiding the government’s decision-making.
This article is based on a working paper for a forthcoming volume on environmental policy and politics in Canada.
This article first appeared on Policy Options and is republished here under a Creative Commons license.
