David Clinton

Based mostly on their 2024 budget, the federal government has promised $2.4 billion in support of artificial intelligence (A.I.) innovation and research. Given the potential importance of the A.I. sector and the universal expectation that modern governments should support private business development, this doesn’t sound all that crazy.

But does this particular implementation of that role actually make sense? After all, the global A.I. industry is currently suffering existential convulsions, with hundreds of billions of dollars worth of sector dominance regularly shifting back and forth between the big corporate players. And I’m not sure any major provider has yet built a demonstrably profitable model. Is Canada in a realistic position to compete on this playing field and, if we are, should we really want to?

First of all, it’s worth examining the planned spending itself.

• $2 billion over five years was committed to the Canadian Sovereign A.I. Compute Strategy, which targets public and private infrastructure for increasing A.I. compute capacity, including public supercomputing facilities.
• $200 million has been earmarked for the Regional Artificial Intelligence Initiative (RAII) via Regional Development Agencies intended to boost A.I. startups.
• $100 million to boost productivity is going to the National Research Council Canada’s A.I. Assist Program
• The Canadian A.I. Safety Institute will receive $50 million

In their goals, the $300 million going to those RAII and NRC programs don’t seem substantially different from existing industry support programs like SR&ED. So there’s really nothing much to say about them.

And I wish the poor folk at the Canadian A.I. Safety Institute the best of luck. Their goals might (or might not) be laudable, but I personally don’t see any chance they’ll be successful. Once A.I. models come on line, it’s only a matter of time before users will figure out how to make them do whatever they want.

But I’m really interested in that $2 billion for infrastructure and compute capacity. The first red flag here has to be our access to sufficient power generation.

Canada currently generates more electrical power than we need, but that’s changing fast. To increase capacity to meet government EV mandates, decarbonization goals, and population growth could require doubling our capacity. And that’s before we try to bring A.I. super computers online. Just for context, Amazon, Microsoft, Google, and Oracle all have plans to build their own nuclear reactors to power their data centers. These things require an enormous amount of power.

I’m not sure I see a path to success here. Plowing money into A.I. compute infrastructure while promoting zero emissions policies that’ll ensure your infrastructure can never be powered isn’t smart.

However, the larger problem here may be the current state of the A.I. industry itself. All the frantic scrambling we’re seeing among investors and governments desperate to buy into the current gold rush is mostly focused on the astronomical investment returns that are possible.

There’s nothing wrong with that in principle. But “astronomical investment returns” are also possible by betting on extreme long shots at the race track or shorting equity positions in the Big Five Canadian banks. Not every “possible” investment is appropriate for government policymakers.

Right now the big players (OpenAI, Anthropic, etc.) are struggling to turn a profit. Sure, they regularly manage to build new models that drop the cost of an inference token by ten times. But those new models consume ten or a hundred times more tokens responding to each request. And flat-rate monthly customers regularly increase the volume and complexity of their requests. At this point, there’s apparently no easy way out of this trap.

Since business customers and power users – the most profitable parts of the market – insist on using only the newest and most powerful models while resisting pay-as-you-go contracts, profit margins aren’t scaling. Reportedly, OpenAI is betting on commoditizing its chat services and making its money from advertising. But it’s also working to drive Anthropic and the others out of business by competing head-to-head for the enterprise API business with low prices.

In other words, this is a highly volatile and competitive industry where it’s nearly impossible to visualize what success might even look like with confidence.

Is A.I. potentially world-changing? Yes it is. Could building A.I. compute infrastructure make some investors wildly wealthy? Yes it could. But is it the kind of gamble that’s suitable for public funds?

Perhaps not.

From the Daily Caller News Foundation

By Audrey Streb

While the Trump administration has been sounding the alarm over an imminent national energy crisis, it has also set aggressive nuclear expansion goals that industry insiders told the Daily Caller News Foundation may be achievable despite their ambitious scale.

The Trump administration has set a goal to quadruple nuclear power in the U.S. by 2050 and has moved to boost the energy technology through a smattering of executive actions. Though not every nuclear target outlined by the administration may be met, Trump has signaled that the U.S. could dramatically expand nuclear power in the coming years which is vital as blackouts loom and the artificial intelligence (AI) race accelerates, industry insiders told the DCNF.

“It’s going to be tough, but America has stepped up to plenty of major challenges like this in the past,” Benjamin Reinke, senior vice president of nuclear company X Energy and former executive director of the Office of Strategic Planning in the Department of Energy (DOE) under Trump’s first administration, told the DCNF. “Renewed focus on energy reliability certainly is a tailwind for the nuclear sector because of the attributes of advanced nuclear power. The opportunity to capture and win the global AI race with China is something that the U.S. has [to do].”

President Donald Trump signed four May 23 executive orders to clear hurdles for nuclear energy and set ambitious goals to expand the industry. Several nuclear energy sector insiders that spoke with the DCNF are gambling that America will be able to accomplish several of the goals outlined by the Trump administration, even if they are hesitant to believe that power generated from nuclear power could quadruple as soon as 2050.

Several energy insiders warned that it is vital to expand nuclear power now as it is a highly reliable energy resource, and widespread rolling blackouts are being forecasted by several analyses including one July report by the DOE that states blackouts could increase by a factor of 100 by 2030. Power demand is surging for the first time in decades and electricity consumption is projected to surpass the all-time 2024 high, according to the Energy Information Administration (EIA).

As the sector continues to boom, the industry will bring new jobs, technological innovations and power-hungry data centers. Nuclear advocates argue that the energy resource is well equipped to do the heavy lifting for the U.S. power grid.

Nuclear power plant generation has been declining in the U.S. since the 1990s and America has only managed to build two large nuclear reactors in the last 20 years. The newest reactors came online in Georgia nearly two decades after the projects began, running billions over budget and years behind schedule.

Big Tech is looking to nuclear as an attractive option to power its data centers and has considered adding small modular reactors (SMRs) as well as reviving shuddered nuclear plants to solve their power problems. Several states are seeing a revival in nuclear technology, with Microsoft making a deal to resurrect Three Mile Island in Pennsylvania and New York moving to open a new reactor after shuddering one just a few years ago. Additionally, the Michigan Palisades plant scheduled to reopen in October will mark the first defunct nuclear plant to return from the dead.

“Unlocking nuclear energy will be critical for meeting growing demand for affordable, reliable baseload power needed to fuel the AI race – our next Manhattan Project – while powering Americans’ homes and businesses,” a DOE spokesperson told the DCNF. “Thanks to President Trump’s bold leadership, the United States is taking unprecedented steps to bring about the next American Nuclear Renaissance. As outlined in President Trump’s Executive Orders, DOE is leveraging the expertise of the Office of Nuclear Energy and our National Labs to accelerate next-generation nuclear technology, and to reshore the domestic supply chains needed for a secure American nuclear future. We are also working with the Nuclear Regulatory Commission to return its focus to the core mission of safety and unleashing nuclear power.”

Reinke noted that Trump’s policies during his first administration started to breathe life into the nuclear sector, and former President Joe Biden also moved to forward nuclear technology through signing the ADVANCE Act. However, Biden’s energy policy focus centered around pushing for wind and solar projects, which some energy experts, grid operators and grid watchdogs have argued primed America’s power grid for outages.

“Energy security is national security,” Reinke said, echoing the phrase that Trump’s DOE repeated during the president’s first administration and is yet again a common slogan among cabinet members in the energy space.

“Folks are going to be without power,” Chief Development Officer of the Nuclear Company Juliann Edwards told the DCNF, referencing DOE’s July report. “By 2030 we’re going to start to see massive deficits in various parts of the United States. … The role nuclear plays is [that] it balances that baseload energy, so you have less volatility on the lines.”

The Nuclear Company is partnering with Palantir to boost nuclear development and is looking to develop its first fleet of reactor sites by the mid 2030s. Edwards noted that the Trump administration opening up federal lands for nuclear development “was huge because it opens up a lot of opportunities that didn’t exist before.”

DOE announced its initial selections for a nuclear reactor pilot program in line with one of Trump’s executive orders aimed at advancing 11 projects on Aug. 12. Among the selections was the nuclear company that designs and deploys reactors known as Oklo, the only selection chosen for more than one nuclear project.

Communications manager at Oklo, Paul Day, told the DCNF that Trump’s nuclear goals are “massively ambitious,” though they mirror America’s power needs.

“But I think it’s almost like a manifestation — we need this power. How are we going to get it? If we put our heads to the grind, we can actually get nuclear to do this,” Day told the DCNF. “Whether we can quadruple nuclear capacity by 2050, well, that remains to be seen. But there is an enormous amount of dead wood being cleared out here for the nuclear industry, and I think that will take us … in the right direction.”

Head of communications at Oklo Bonita Chester emphasized that the Trump administration has translated its nuclear ambitions into actionable steps that look promising to those in the industry. The Trump administration wants to have three reactors go critical by July 4, 2026, which is “highly ambitious, but what I’ve appreciated about this administration is they have been able to back a lot of these really quite dramatic plans with actual actions,” Chester said.

Chester added that fuel remains to be a huge hurdle for the nuclear industry. Advanced reactors need particular kinds of fuel, and Chester listed enriched uranium, recycled nuclear fuel waste and plutonium as viable options. Currently, the U.S. cannot supply enough fuel to power the influx of nuclear reactors, Chester added.

During his presidency, Biden designated nearly 1 million acres in Arizona outside the Grand Canyon as a monument, which shut down potential uranium development in the resource-rich area. The U.S. is a net importer of uranium and has been since 1992, according to EIA data. Canada and Kazakhstan are the biggest uranium suppliers to the U.S., according to EIA.

One of Trump’s executive orders included calling for the conversion of surplus plutonium to allow the private sector to use it, which has “never been considered before, and it’s incredible,” Chester said.

Changes at the Nuclear Regulatory Commission (NRC) are also a good sign for the sector, as Trump limited the wait time for permits to 18 months.

“We’ve never seen the NRC being so vocal about this stuff,” Chester said, noting that the NRC has been very public about reviewing projects ahead of schedule. Energy policy experts previously explained to the DCNF that permitting delays presented a major obstacle for the nuclear industry.

Notably, Chester told the DCNF that fast reactors have been commercialized in China and Russia, yet not in the U.S. where they were invented.

“We would be failing if we were just trying to turn on one reactor,” Chester said. “The goal is to commercialize our technology.”