Government indicates clear support for the role of nuclear in Canada’s clean energy transition in Federal Budget 2022
On 7 April 2022, the Minister of Finance Chrystia Freeland tabled the Liberal Government’s 2022 Federal Budget titled “A Plan to Grow Our Economy and Make Life More Affordable”. The Budget represents a significant shift for the government’s position on the nuclear industry and includes positive steps in the inclusion and enablement of SMR development and deployment as well as uranium exploration and related supply chain opportunities in Canada.
The Budget indicates that the Government is committing to including nuclear technologies in efforts to shift towards a net zero economy and meet ambitious climate plans, with specific funding for small modular reactors (SMRs) and uranium exploration and development. This is the first documented government policy that provides explicit financial support for SMRs as a key solution for climate change.
For the expansion of clean electricity, the Budget proposes to provide:
- $250 million over four years, starting in 2022-23, to Natural Resources Canada to support pre-development activities of clean electricity projects of national significance, such as inter-provincial electricity transmission projects and small modular reactors.
- $2.4 million in 2022-23 to Natural Resources Canada to establish a Pan-Canadian Grid Council, which would provide external advice in support of national and regional electricity planning.
- $25 million starting 2022-23, to Natural Resources Canada to establish Regional Strategic Initiatives to work with provinces, territories, and relevant stakeholders to develop net-zero energy plans.
Small modular reactors (SMRs) are explicitly mentioned and included in the pathway to support Canada’s low carbon energy transition. The Budget allocates:
- $69.9 million for Natural Resources Canada to undertake research to minimize waste generated from these reactors; support the creation of a fuel supply chain; strengthen international nuclear cooperation agreements; and enhance domestic safety and security policies and practices; and,
- $50.7 million, and $0.5 million ongoing, for the Canadian Nuclear Safety Commission to build the capacity to regulate small modular reactors and work with international partners on global regulatory harmonization.
The Budget also identifies the need for a Critical Minerals Strategy that includes support for uranium exploration:
- Up to $1.5 billion over seven years, starting in 2023-24, for infrastructure investments that would support the development of the critical minerals supply chains, with a focus on priority deposits;
- $79.2 million over five years on a cash basis, starting in 2022-23, for Natural Resources Canada to provide public access to integrated data sets to inform critical mineral exploration and development.
- The introduction of a new 30 per cent Critical Mineral Exploration Tax Credit for specified mineral exploration expenses incurred in Canada and renounced to flow-through share investors. The tax credit would apply to certain exploration expenditures targeted at nickel, lithium, cobalt, graphite, copper, rare earths elements, vanadium, tellurium, gallium, scandium, titanium, magnesium, zinc, platinum group metals, or uranium, and renounced as part of a flow-through share agreement entered into after Budget Day and on or before March 31, 2027.
In 2020, the Canada Infrastructure Bank (CIB) announced its three-year, $10 billion Growth Plan, which included a goal of helping Canada achieve its emissions reduction targets. In this Budget, the mandate of the CIB was expanded to explicitly include SMRs.
- To increase the CIB’s impact, Budget 2022 announces a broadened role for the CIB to invest in private sector-led infrastructure projects that will accelerate Canada’s transition to a low-carbon economy. This will allow the CIB to invest in small modular reactors; clean fuel production; hydrogen production, transportation, and distribution; and carbon capture, utilization and storage. These new areas fall under the CIB’s existing clean power and green infrastructure investment areas.
- The budget proposes to establish the Canada Growth Fund to attract private sector investment into decarbonization and clean technology projects; help to promote the diversification of Canada’s economy; play a key role in helping to meet Canada’s climate targets. The fund will be initially capitalized at $15 billion over the next five years.
Finally, the Budget also announces that the Department of Finance will engage with experts to establish an investment tax credit of up to 30 per cent, focused on net-zero technologies, battery storage solutions, and clean hydrogen. The design details of the investment tax credit will be provided in the 2022 fall economic and fiscal update.
Media ContactChristopher Gully
Director of Communications