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Strong domestic supply chain an advantage as Canada moves ahead with new nuclear

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8 minute read

From the MacDonald Laurier Institute

By Sasha Istvan

Canada has two major advantages. We produce uranium and we have an established supply chain.

The pledge from 22 countries, including Canada, to collectively triple nuclear capacity by 2050 drew cheers and raised eyebrows at the United Nations Climate Change Conference last fall in Dubai. Climate commitments are no stranger to bold claims. So, the question remains, can it be done?

In Canada, we are well on our way with successful and ongoing refurbishments of Ontario’s existing nuclear fleet and planning for the development of small modular reactors, or SMRs, in Ontario, New Brunswick, Saskatchewan and most recently Alberta.

The infrastructure required to generate nuclear energy is significant. You not only need engineers and technicians working at a plant, but the supply chain to support it.

Over five decades worth of nuclear generation has allowed Canada to build a world class supply chain. Thus far it has focused on servicing CANDU reactors, but now we have the potential to expand into SMRs.

I first became interested in the CANDU reactor after working as a manufacturing engineer for one of the major fuel and tooling suppliers of Ontario Power Generation and Bruce Power. I witnessed firsthand the sophistication and quality of the nuclear supply chain in Ontario, being particularly impressed by the technical expertise and skilled workers in the industry.

The CANDU reactor is the unsung hero of the Canadian energy industry: one of the world’s safest nuclear reactors, exported around the world, and producing around 60 per cent of Ontario’s electricity, as well as 40 per cent of New Brunswick’s.

Having visited machine shops across Ontario, it’s evident that Canadians should take pride that the expertise and technology required for the safe generation of nuclear energy is available here in Canada.

As Canada looks to grow its nuclear output to achieve net-zero goals, its well-established engineering and manufacturing capabilities can make it a leader in the global expansion of nuclear energy as other nations work to make their COP28 declaration a reality.

Canada has two major advantages. The first is that it is a globally significant producer of uranium. We already export uranium from our incredible reserves in northern Saskatchewan and fabricate unenriched uranium fuel for CANDU. Canadian uranium will be an important ingredient in the success and sustainability of a nuclear renaissance, especially for our allies.

The second is that we have an established and active supply chain. While new nuclear builds have slowed dramatically in the western world — a result of the fallout from Chernobyl and Fukushima, as well as competition from cheap natural gas — Bruce Power and OPG are in the midst of major refurbishments to extend their operations until 2064 and 2055, respectively.

Bruce Power has successfully completed the first unit refurbishment on schedule and within budget, with ongoing work on the second unit. OPG has accomplished refurbishments for two out of its four units at Darlington, with the latest unit completed ahead of schedule and under budget. These multibillion-dollar refurbishments have actually grown our nuclear supply chain and demonstrate that it’s firing on all cylinders.

SMRs are the next phase of nuclear technology. Their size and design make them well suited for high production and modular construction. Investing in the supply chain for SMRs now positions Canada for significant economic gains.

OPG plans to build four GE-Hitachi BWRX-300 reactors, with the first slated for service as early as 2028. This first-of-a-kind investment will help identify and overcome design challenges and develop its own supply chain. That will benefit not only their project but those that follow suit.

SaskPower is planning to proceed with the same SMR design, as well as the first pilot globally of the Westinghouse eVinci microreactor; New Brunswick is moving ahead with the ARC-100, both for its existing nuclear site at Point Lepreau as well as in the Port of Belledune; and OPG and Capital Power recently announced a partnership to explore a nuclear reactor in Alberta, including the potential for the BWRX-300.

While the bulk of the nuclear supply chain is currently located in Ontario, other provinces have already been investing in the development of local capacity.

All this activity sets Canada up to leverage first-mover advantage and become a significant global provider of BWRX-300 components. Canada will not only see the economic benefits during initial construction but also through sustained demand for replacement parts in the future.

Nuclear energy has already made a significant contribution to the Canadian economy. In 2019, a study commissioned by the Canadian Nuclear Association and the Organization of Canadian Nuclear Industries showed that the nuclear industry accounted for $17 billion of Canada’s annual GDP annually and has created over 76,000 jobs.

Notably, 89 per cent of these positions were classified as high-skilled, and over 40 per cent of the workforce was under 40. This study, conducted before the announcement of SMR plans, was followed by a more recent report from the Conference Board of Canada on the economic impact of OPG’s SMR initiatives. The study found that the construction of just four SMRs at OPG could boost the Canadian GDP by $15.3 billion (2019 dollars) over 65 years and sustain approximately 2,000 jobs annually during that period.

Public perception of nuclear is improving. In 2023, the percentage of Canadians wanting to see further development of nuclear power generation in Canada grew to 57 per cent compared with 51 per cent in 2021.

As well, the Business Council of Canada has voiced its support for nuclear expansion, emphasizing Canada’s strategic advantages: political and public backing across the spectrum, coupled with a rich history of nuclear expertise.

Nuclear energy is dispatchable, sustainable and a proven technology. As nations move to achieve their climate goals, it has one other major benefit: a supply chain that is wholly western and in Canada’s case almost totally domestic.

While the critical minerals and manufactured goods required for batteries, wind and solar energy rely heavily on China and other politically unstable or authoritarian countries, nuclear provides energy independence. Canada is well positioned to help our allies improve their energy security with our strong, competitive nuclear supply chain.

Sasha Istvan is an engineer based in Calgary, with experience in both the nuclear supply chain and the oil and gas sector.

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Economy

Indigenous Loan Program Could Pave the Way for More Natural Resource Economy Ownership

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From EnergyNow.ca

By Resource Works

“We want to be part of the oil and gas industry”

Ottawa has promised a loan program for Indigenous communities to buy equity stakes in natural resource projects, but many questions are still unanswered.

Ottawa is currently under scrutiny as it prepares to incorporate an Indigenous loan-guarantee program into its 2024-2025 budget, aimed at assisting Indigenous communities in acquiring equity stakes in natural resource projects. This commitment was made in Finance Minister Chrystia Freeland’s fall economic statement on November 21.

The government will advance development of an Indigenous Loan Guarantee Program to help facilitate Indigenous equity ownership in major projects in the natural resource sector. Next steps will be announced in Budget 2024.

The federal budget is typically presented to Parliament in either February or March, with the 2023-2024 budget having been announced on March 28 last year. While Ottawa has engaged in consultations with Indigenous leaders and organizations, there remains a notable lack of specific details, including a critical issue – whether the program will permit investment in oil and gas projects.

The First Nations Major Projects Coalition, boasting over 145 members, strongly advocates for Indigenous peoples to have the autonomy to determine their investment choices without constraints imposed by Ottawa. Although the government did assert its commitment to ensuring Indigenous communities benefit from major projects within their territories on their own terms, First Nations groups worry that the loan-guarantee program might mirror the green restrictions of the current Indigenous loan program provided by the Canada Infrastructure Bank.

This existing program allows equity stakes only in infrastructure projects aligned with the bank’s investments, such as clean power, green infrastructure, broadband technology, and transportation. For some time, the First Nations Major Projects Coalition (FNMPC) and the Indigenous Resource Network have been at the forefront of campaigns urging federal loan guarantees to facilitate Indigenous participation in natural resource projects.

Sharleen Gale, Chair of FNMPC, argues that fossil fuel investments must be a component of any federal loan-guarantee program, as equity in the oil and gas industry can empower First Nations to thrive in alignment with their values.

“We want to be part of the oil and gas industry,” says Gale.

In 2022, the Indigenous Resource Network (IRN) initiated the “Ownership Changes Everything” campaign, advocating for Indigenous ownership in resource projects. This campaign calls upon Ottawa to implement a loan program modeled after similar initiatives in Alberta, Saskatchewan, and Ontario. Robert Merasty, highlights the challenges faced by Indigenous communities due to the Indian Act, which prohibits First Nations from using their land and assets as collateral. Consequently, they lack the necessary at-risk capital to secure favorable interest rates.

“The problems our communities are facing is that there are few mechanisms to access the necessary capital for investing in projects and having equity,” says Merasty.

In 2023, FNMPC penned an open letter to Finance Minister Chrystia Freeland, emphasizing the significance of advancing major resource projects for a successful energy transition and economic growth benefiting all Canadians. They also pointed out that the Indian Act remains a significant hurdle, preventing First Nations from leveraging their assets and land for borrowing.

FNMPC estimates that over the next decade, 470 major projects impacting Indigenous lands will require more than $525 billion in capital investment, with approximately $50 billion needed for Indigenous equity financing. An illustrative case from Alberta involved energy giant Enbridge, which partnered with 23 First Nation and Métis communities to sell an 11.57% interest in seven pipelines in northern Alberta. This partnership was made possible through a loan guarantee from the Alberta Indigenous Opportunities Corp., which provides financing to Indigenous communities seeking commercial collaborations, alongside various other financial supports.

Greg Ebel, CEO of Enbridge, has joined the campaign for a national program.

“Investment in the entire energy sector and many others could be accelerated by the immediate implementation of a federal Indigenous loan-guarantee program to ensure Canada’s Indigenous Peoples have a seat at the table while also having equity that helps them secure a more prosperous future,” says Ebel.

As we await further developments, the question remains: Will a federal loan-guarantee program come to fruition, one that encompasses loan guarantees for investments in natural gas and oil? We are hopeful for a positive outcome.

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Canadian Energy Centre

Nine major insights from Shell’s latest global LNG outlook

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A worker at Shell’s Hazira LNG import terminal, about 250 kilometers from Mumbai, India. Photo courtesy Shell

From the Canadian Energy Centre

By Deborah Jaremko

Led by growing demand in China and the need for energy security, LNG is playing an increasingly important role in global gas supply

Global energy giant Shell has released its latest outlook for world liquefied natural gas (LNG) supply and demand through 2040. Here are nine key insights about what to expect in the future.

1. LNG is playing an increasingly important role in global gas supply. Total world LNG demand is set to continue growing beyond 2040.

2. Global LNG trade reached 404 million tonnes in 2023, an increase of 7 million tonnes compared to 2022. Over the last five years, LNG demand grew by 45 million tonnes, or 13 per cent.

3. In 2040, the world is expected to consume up to 685 million tonnes of LNG, an increase of nearly 70 per cent compared to 2023.

4. The United States became the world’s largest LNG exporter in 2023, shipping 86 million tonnes, followed by Australia, Qatar, Russia and Malaysia.

5. By 2030, North America will supply about 30 per cent of global LNG demand, led by natural gas from major basins including the Appalachia (Marcellus) play in the eastern United States and the Montney play in Alberta and British Columbia. But the global gas market is increasingly exposed to U.S. risks like the Biden administration’s pause on new LNG approvals.

6. China is likely to dominate LNG demand growth as the country’s industries seek to cut carbon emissions by switching from coal to gas. With China’s coal-based steel sector accounting for more emissions than the total emissions of the UK, Germany and Turkey combined, gas has an essential role to play in tackling one of the world’s biggest sources of carbon emissions and local air pollution. China’s gas demand is expected to rise by more than 50 per cent by 2040.

7. Natural gas, delivered as LNG, provides flexibility to balance intermittent solar and wind power generation. In countries with high levels of renewables in their power generation mix, gas provides short-term flexibility and long-term security of supply. Gas provides grid stability, enabling a higher share of renewables in power grids.

8. LNG continues to play a vital role in European energy security, with European nations importing more than 120 million tonnes in 2023, assisted by new regasification facilities. Europe will continue to rely on LNG to support its energy mix through 2030, even as total European natural gas demand is expected to decline by about 25 per cent.

9. South Asia and Southeast Asia are emerging as major LNG import regions, with Vietnam, and the Philippines starting to import LNG to backfill domestic gas declines. From less than 10 million tonnes in 2020, LNG imports to Thailand, Bangladesh, Vietnam and the Philippines are expected to rise to about 40 million tonnes in 2030 and more than 60 million tonnes in 2040. 

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