Clean Prosperity, a Toronto-based non-governmental organization focused on climate policy, has published a new report discussing how nuclear energy could help Canada reach its goal of net-zero emissions by 2050.
It says Canada first needs to figure out how to solve the problems of high costs and policy uncertainty that can get in the way of commercial nuclear reactors playing a bigger role in feeding the growing demand for electricity and helping to decarbonize the economy.
It highlights the refurbishments taking place at nuclear power generating stations in Ontario — Bruce and Darlington, with new reactors also proposed for each site. The report points out they are both on budget and ahead of schedule, which it says shows it is possible to overcome the cost challenges in Canada.
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But it also says the federal and provincial governments could do more on the policy side to help nuclear energy play a bigger role in the push for net-zero.
Here are the recommendations for provincial and federal policymakers from the executive summary of “Nuclear for a Net-Zero Canada: Pathways to scale by 2050.”
1. Commit to an ambitious and stable package of electrification and decarbonization policies that define stringency beyond 2035.
Ambitious nuclear policy and ambitious electrification policy are inseparable. Our modelling suggests that rolling back or weakening existing electricity and decarbonization policies would significantly weaken the case for new reactors. Therefore, to aid the buildout of a fully-scaled fleet of dozens or hundreds of reactors, nuclear and nuclear-ambitious provinces should clarify their long-term electrification and decarbonization policy objectives — ideally beyond 2035.
We point in particular to the design of Canada’s provincial industrial carbon markets, which put procurement of nuclear generation at a disadvantage. To correct this, provinces should set target dates for achieving a net-zero grid, set clear timelines for adjusting electricity performance benchmarks in their carbon markets to zero, and fully expose electricity generation to the carbon price.
2. Gradually shift to financial supports that reward results rather than effort.
Our analysis finds that Canada’s investment tax credits (ITCs) and bespoke support for nuclear power across Canada are a rightsized competitive response to the US Inflation Reduction Act. Over the longer run, however, Canada should shift away from ITCs for nuclear. ITCs can be claimed before a facility is operating; they reward effort, not results. Shifting from effort-based models of support to results-based approaches can accelerate buildout. We discuss the tradeoffs across three results-based financial instruments that could replace ITCs: power purchase agreements, production tax credits, and contracts for difference.
3. Prioritize fleet-based approaches to deploying commercial reactors.
Advanced reactors need to become progressively less expensive to build over time. To accelerate this process, policymakers should prioritize approaches that seek to build as few reactor models on as few sites as possible, in large quantities. Canada may ultimately need a small portfolio of reactor models — large, small, and micro — to ensure that nuclear fills as many cost-effective use-case niches as possible.
Read the full report originally published by Clean Prosperity on May 29, 2024.
