Canadian budget underlines government support for nuclear

The 2023 Federal Budget was released in the House of Commons by Deputy Prime Minister and Minister of Finance Chrystia Freeland on 28 March, who said that Canada will seize the "historic opportunity" of building a clean economy. "We are going to build a clean electrical grid that connects Canadians from coast-to-coast-to-coast, protects our environment, and delivers cleaner, more affordable electricity to Canadians and Canadian businesses," she said.

The budget introduces a new 15% refundable Investment Clean Electricity Investment Tax Credit. Nuclear projects - both large-scale and small modular reactors (SMRs) - are eligible for the credit, which is available to both new projects and the refurbishment of existing facilities. The credit will be available to both public and privately owned entities, and will also be available for equipment enabling the transmission of electricity between provinces and territories. It is expected to cost CAD6.3 billion (USD4.7 billion) over four years starting in 2024-25, and an additional CAD19.4 billion from 2028-29 to 2034-35.

The Clean Electricity tax credit is separate to, but complemented, by the Clean Technology Investment Tax Credit announced in the government's 2022 Fall Economic Statement, which provides credits of up to 30% for non-emitting electricity generation technologies, including SMRs.

The budget also included the announcement of a 30% Investment Tax Credit for Clean Technology Manufacturing for investments in new machinery and equipment used to manufacture or process key clean technologies, and extract, process, or recycle key critical minerals. The manufacture of nuclear energy equipment and the processing or recycling of nuclear fuels and heavy water are eligible for this credit, which is expected to cost CAD4.5 billion over five years starting in 2023-24, and an additional CAD6.6 billion from 2028-29 to 2034-35.

Nuclear will also be supported by other measures in the budget, including the extension of tax reductions for zero-emission technology manufacturers to include the nuclear power sector; the allocation of further funds to the Canada Infrastructure Bank - which last year committed a CAD970 million federal loan towards Ontario Power Generation Darlington New Nuclear Project - for accelerating the energy transition; an additional CAD1.3 billion to increase efficiencies with regulatory reviews and approvals, including for the Canadian Nuclear Safety Commission; and the provision of CAD500 million over ten years to the Strategic Innovation Fund, which has previously supported SMR projects.

Making nuclear eligible for such tax incentives, in addition to being included in the clean energy investment tax credit, has further levelled the playing field for clean energy technologies, enabling nuclear to compete fairly with other non-emitting sources of power, the CNA said.

"Today’s budget represents a significant change in how the Federal government is approaching nuclear power in Canada," the organisation's CEO and President John Gorman said. "No longer are we simply 'on the table' as Prime Minister Trudeau put it one year ago; nuclear is now recognised as a fundamental and necessary component of Canada's low carbon energy system."

Around 15% of Canada's electricity comes from 19 Candu nuclear power reactors, mostly in Ontario. For many years the world's biggest producer of uranium - until it was overtaken by Kazakhstan - the country's 2021 output of 4693 tU ranks it as third in the list of the world's uranium suppliers. OPG plans to build Canada's first commercial, grid-scale SMR - GE Hitachi's BWRX-300 - at Darlington site, eyeing commercial operation starting in 2029.