Canada’s new federal emissions reduction plan has a goal of slashing greenhouse gas (GHG) emissions by 40 per cent by 2030. The need to do that and to get to net-zero by 2050 was recently highlighted by the Intergovernmental Panel on Climate Change.

The net-zero target changes everything. It will no longer be sufficient to reduce emissions in sectors such as electricity and transportation, where low-cost alternatives exist, while allowing the hard-to-decarbonize sectors to perform far short of the target. Every sector needs a path to full decarbonization.

Heavy industry and the oil and gas sector are important to Canada’s economy, yet will be hard to decarbonize. Heavy industry – such as refining, chemicals, steel, manufacturing and metals – accounted for 10 per cent of Canada’s total emissions in 2019. When fossil-fuel extraction and refinement, as well as mining, are included, industrial emissions accounted for 37 per cent of Canada’s total. In aggregate, these sectors also accounted for 18 per cent of the country’s gross domestic product (GDP).

While it can be expected that the oil and gas sector will shrink in a net-zero future, we will need to ensure stability for a just transition. As a result, the challenge of achieving net-zero emissions in industry is so pressing that we need to consider all potential options that could help achieve Canada’s targets while creating a sustainable economy that can benefit all.

What makes these sectors hard to decarbonize is their need for high-temperature heat – heat that is needed for industrial process themselves – either to make the material or to pump out thick bitumen from the oil sands. As much as 40 per cent of industrial emissions comes from burning fossil fuels to produce this heat, and it is difficult to get this heat from electricity.

Very few options exist to decarbonize industrial heating. The emissions reductions plan highlighted carbon capture, utilization and storage (CCUS), which will allow industry to keep burning fossil fuels for heat, with the idea that the emissions would be captured in some fashion. However, many environmentalists and environmental groups have come out against CCUS, arguing that it would lock in continued fossil-fuel use and that long-term storage of carbon has yet to be demonstrated successfully at scale.

Given the difficulty in decarbonizing industrial heat, we need to consider all potential options that could help achieve Canada’s target.

Another potential option is the use of small modular reactors (SMRs). These are advanced nuclear reactors that are designed to be much more compact and more modular than current ones. SMRs are modular in that they are designed for parts to be built in a factory, then the parts are transported and assembled at the site.

The perceived benefits of SMRs are linked to their size and form. Unlike larger reactors, which are custom-designed for the specific site, SMRs could be built on locations where you could not build a conventional nuclear plant. Prefabricating parts of SMRs in factories could create economies of scale, thereby driving down and providing certainty on costs, as well as speeding up deployment. There are many SMR designs, some of which use nuclear waste as fuel.

The federal government has developed an SMR roadmap, and perhaps by coincidence, the day before its emissions reductions plan was released, four provinces – Alberta, Saskatchewan, Ontario and New Brunswick – prepared a joint SMR strategic plan.

Remarkable signs of federal-provincial unity on small nuclear reactors

Ontario’s nuclear industry is necessary

In a new report, Potential of Small Modular Reactors in Hard-to-Decarbonize Industries, we at Pollution Probe used modelling to investigate SMRs’ potential roles in decarbonization. We also brought together diverse stakeholders from a range of industries that might use SMRs to reduce their GHG emissions. The research was funded by Ontario Power Generation, a nuclear developer.

Our modelling shows that SMRs have the potential to play a role in the range of options that Canada can use to achieve net-zero GHG emissions in some industrial sectors. SMRs could cost-effectively reduce emissions by between 19 and 59 Mt by 2050, a three- to nine-per-cent reduction from 2020 emissions, primarily in oil and gas, and manufacturing.

In a net-zero scenario, SMRs can lower the carbon intensity of refining, provide heat for steel, metal smelters and chemical, and meet low-carbon energy needs for mining, helping them move off diesel.

In addition, SMRs could play an additional role in decarbonization by producing hydrogen from excess heat or electricity that could be used to decarbonize other sectors, such as heavy-duty vehicles.

However, despite the modelling showing that SMRs could be a cost-effective option to reduce emissions, there are many barriers. Nuclear energy is an emotive topic, with strong opinions on either side, and its development is not inevitable.

Canada’s newest nuclear industry dream is a potential nightmare

Decolonizing energy and the nuclear narrative of small modular reactors

Europe, energy security, and a new role for Canada

The nuclear industry needs to address a number of barriers. At the top of the list is the need for Canada to have a clear and safe nuclear waste disposal plan. In addition, assurances need to be made that the new designs are as safe and as reliable as advertised, and that they can be cost-effectively deployed.

The government and the nuclear industry need to have open engagement with potential host communities and with the broader public to reduce these barriers. Early consultation and engagement with Indigenous Peoples and communities will also be critical.

An important consideration is that SMRs won’t be widely deployed until the 2030s, meaning they won’t contribute to meeting our near- or medium-term targets. Nonetheless, given the importance of core industrial sectors to Canada’s economy and jobs, and the pressing challenge of achieving the 2050 net-zero target, we need to consider all potential options.

No energy source is without trade-offs, and we will likely need contributions from a broad suite of technologies and practices to achieve our ambitious yet critically important goals. SMRs need to be included so we can have informed discussions on the hard choices on the trade-offs we need to make.

Do you have something to say about the article you just read? Be part of the Policy Options discussion, and send in your own submission, or a letter to the editor. 
Richard Carlson
Richard Carlson is director of energy policy at Pollution Probe, Canada’s oldest environmental non-governmental organization. Twitter @RichardKCarlson

You are welcome to republish this Policy Options article online or in print periodicals, under a Creative Commons/No Derivatives licence.

Creative Commons License

Related IRPP Research

Building a Package of Compromise Solutions for EI Reform

By Ricardo Chejfec and Rachel Samson December 7, 2022

Financing Employment Insurance Reform: Finding the Right Balance

By IRPP Working Group December 7, 2022

Related Center of Excellence Research

The Federal Spending Power in the Trudeau Era: Back to the Future?

By Peter Graefe and Nicole Fiorillo June 7, 2023

Federal transfers to provinces: public preferences

By Charles Breton and Andrew Parkin May 10, 2022