This story was originally published by Canary Media. It has been edited to conform with Corporate Knights style.

It’s typically depicted as green. It’s loved by some and feared by others. It had a heyday in the 1960s before drawing a political backlash that led to statewide prohibitions. Now, as it grows more popular with Americans than any time in recent memory, state after state is changing the law to once again legalize it.

The United States is racing to restore the might of its once-great nuclear sector and build new reactors to meet surging electricity demand and compete with China and Russia. It’s been a rapid change: a decade ago, at least 16 states restricted construction of new nuclear power plants, a legacy of the lasting reputational damage from Three Mile Island, the United States’ only major civilian nuclear accident.

Five states – Wisconsin, Kentucky, Montana, West Virginia and, most recently, Illinois – have fully lifted their moratoria since 2016. Others are loosening the reins, with Connecticut easing restrictions on small modular reactors and Rhode Island allowing utilities to buy electricity from neighbouring states’ nuclear plants.

Five more – California, Massachusetts, Minnesota, New Jersey and Vermont – are now weighing legislation to overturn their bans. Oregon, meanwhile, is considering a bill that would require a feasibility study to look into nuclear power. (In Hawaii, the results of such a study concluded in December that the state should maintain its moratorium on atomic energy.)

California lawmakers introduced a bill last month to repeal the state’s 50-year ban on new nuclear power. Legislators in New Jersey, where the recently elected Democratic Governor Mikie Sherrill campaigned on building a new reactor, advanced a bill earlier this month that would de facto overturn the state’s moratorium. Last week, a bipartisan band of lawmakers in Minnesota’s statehouse vowed to legalize reactor construction again in the state ​“because we have to.”

The legislative push offers the most significant evidence so far that blue states that once served as bastions of anti-nuclearism are embracing atomic energy. The shift comes amid a deregulatory campaign by the Trump administration that’s meant to clear bottlenecks in the nuclear supply chain and spur a new wave of reactor projects, both big and small. Nuclear power started attracting attention again in recent years as the trade-offs of relying on wind and solar alone grew clearer and demand for electricity soared in the near term from data centres and in the long term from forecasts on electrification of vehicles, heating and industry.

A global race is now underway that the United States and its allies are largely losing. On both sides of the Atlantic, the nuclear industry mostly stalled over the past few decades as flat electricity demand and cheap natural gas from the United States and Russia made atomic power plants seem like a 20th-century relic. But the geopolitical risk of relying on a fossil fuel that requires constant replenishing became undeniable as Russia started throttling shipments of gas to Ukraine’s allies after the war kicked off in 2022.

Now U.S., European and Japanese companies are scrambling to secure funding and offtake agreements for reactor designs that, in many cases, haven’t yet been built. Soaring oil and gas prices, which the International Energy Agency warned this week will take a long time to stabilize even after the U.S.-Israeli war against Iran ends, are expected to only further drive demand for nuclear power. France’s historic buildout of nuclear reactors, after all, started in response to the 1970s oil embargo.

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Meanwhile, Russia’s state-owned Rosatom dominates the nuclear export industry, actively building the first atomic power plants in newcomer countries such as Turkey, Egypt and Bangladesh. On Monday, the Kremlin announced its latest deal to build Vietnam’s debut nuclear plant. And China is building nearly as many reactors at home as the rest of the world combined, at a relatively rapid clip.

States started banning new nuclear power plants even before the partial meltdown in 1979 at the Three Mile Island nuclear plant in eastern Pennsylvania. The Atomic Energy Commission, the federal regulator in charge of both overseeing commercial reactors and promoting the industry, was increasingly seen as too cozy with the companies under its authority. An anti-war movement with limited options to slow the military’s atomic weapons race instead trained its attention on the civilian power industry, and environmentalists took issue with the relatively small but extremely long-lived volumes of radioactive waste that nuclear plants produce.

California enacted one of the nation’s first major statewide bans on building new nuclear plants in 1976, three years before Three Mile Island. Until then, states and municipalities had only minimal restrictions on nuclear power plants, which fell primarily under federal jurisdiction. But a 1974 law in California reorganized the Golden State’s bureaucracy, centralizing energy regulation for the first time in Sacramento and granting the newly established California Energy Commission powers to restrict permits for atomic energy facilities until a plan to permanently deal with nuclear waste came to fruition. Through its top cultural export, the state broadcast its skepticism of atomic energy: released just 12 days before the Three Mile Island accident, a Hollywood thriller starring Jane Fonda, ​The China Syndrome, depicts a dangerous cover-up of a problem at a nuclear power plant.

In the years that followed, more states, including Maine and Oregon, adopted California-inspired moratoria predicated on a permanent solution for nuclear waste coming into commercial use, according to data from the National Conference of State Legislatures. Others – including Hawaii, Massachusetts, Rhode Island and Vermont – effectively banned nuclear construction by making any new reactors subject to politically unattainable approval by the state legislature. A handful of states also rewrote rules to require a statewide referendum on building a new nuclear plant.

Some states enacted only partial bans. New York, for example, just barred construction of nuclear reactors on Long Island, where protesters blocked the Shoreham Nuclear Power Plant from coming online and financially crippled the region’s utility, forcing a state takeover.

Attitudes toward nuclear power have since evolved. Despite a drop in support following the meltdown at the Fukushima-Daiichi nuclear plant in northern Japan in 2011, a majority of Americans in both political parties have come to favour an expansion of nuclear energy. Polls from the Pew Research Center and Gallup show the highest support in years.

In 2016, Wisconsin became the first state to reverse course. Lawmakers in the factory-dense state pitched legislation to repeal the ban as a way to shore up the supply of reliable, clean power for manufacturers whose shareholders increasingly demanded a lower carbon footprint.

Seeking an alternative to fossil fuels that could make use of existing transmission lines and boilers at coal-fired plants, Kentucky followed suit a year later. Montana came next, in 2021, then West Virginia in 2022.

Illinois, by far the largest user of atomic energy of any state, only partially lifted its ban at the end of 2023, legalizing construction of as-yet-unbuilt small modular reactors with an output of 300 megawatts or less. While more than a dozen developers are racing to commercialize various kinds of so-called SMR designs, the promise of cheaply mass-producing identical reactors remains mostly theoretical. The only modern nuclear reactor design in operation in the United States, the 1,100-megawatt Westinghouse AP1000, remained effectively banned in Illinois until January, when Democrat Governor JB Pritzker fully repealed the moratorium and called for new plants.

The changing sentiment is a necessary but not sufficient precondition for more nuclear plants to start construction in the United States. Big questions remain about how to finance projects, train workers and establish supply chains for novel kinds of reactors.

Alexander C. Kaufman is a contributing reporter at Canary Media and an award-winning writer who has covered energy and climate change for more than a decade. 

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The post States are overturning nuclear power bans amid energy crunch appeared first on Corporate Knights.

Prime Minister Mark Carney and Ontario Premier Doug Ford have made common cause in promoting nuclear energy. Indeed, the prime minister has indicated that the federal climate strategy relies on construction of low-carbon power for a national electrification effort, and nuclear is central to that vision.

This fall, Carney and Ford together announced $3 billion in funding for Ontario’s purchase of four BWRX-300 SMR reactors from Hitachi GE Vernova, a joint Japanese and U.S. company. Ottawa will shoulder $2 billion of that amount through the Canada Growth Fund. In a news release, the two leaders boasted that Canada will become the first Group of Seven country to build an SMR reactor. The prime minister said the federal investment “will extend Canada’s world leadership in clean energy.” Ontario is also pursuing plans to build large-scale reactors.

However, critics argue that the industry’s cost estimates are unreliable. They point to overruns and delays at other “first of a kind” nuclear installations. At the same time, Ontario will rely on a U.S.-based supplier of enriched uranium to fuel the SMRs, unlike its current fleet of Candu reactors that run on non-enriched Canadian sources.

“They’re taking a flyer off Mount SMR and the world is sitting back to see how much of a splat there is,” says Mark Winfield, a professor of environmental studies at York University. The reliance on a U.S. fuel supplier “makes absolutely no sense given our quest for energy independence and security,” he adds.

Pitting nuclear against renewables

Provincially owned Ontario Power Generation (OPG) plans to purchase four Hitachi GE reactors for $20.9 billion, although it has committed to only one at a price of $7.7 billion, including $1.1 billion for infrastructure that would serve all four units.

In addition to the direct support, OPG will benefit from federal investment tax credits of 15% that support investment in clean electricity. The tax credits will be paid out in cash to provincial and municipally owned utilities that are not taxable.

OPG received a construction licence for the SMRs last April from the Canadian Nuclear Safety Commission. It is now preparing the ground at its Darlington site, which currently hosts four larger Candu reactors that have been refurbished in a decade-long, $12.8-billion project that was completed on time and on budget.

OPG cites work by the province’s Independent Electricity System Operator (IESO) to back its bet on SMRs as a cheaper alternative to hybrid options of wind, solar and batteries to supply an additional 2,200 megawatts of low-carbon, baseload power. An IESO paper released in August concluded that it would cost up to $34 billion to meet additional baseload demand with SMRs, while a hybrid renewable system would cost $47 billion. Wind and solar would also entail more transmission and land development costs, the IESO said.

Nuclear facilities operate at far higher capacity factors and, unlike wind and solar, the electricity is constantly generated. IESO assumes that nuclear plants operate at 93% capacity, while that figure for wind is only 38% and for solar, 24%.

OPG also defends the nuclear option by pointing to the large supply chain and workforce in the province that is currently focused on refurbishments at its Pickering site and at Bruce Nuclear and will benefit from further investment in reactors. However, critics argue that cost estimates for nuclear are notoriously unreliable, especially for first-of-a-kind projects like OPG’s deal for the BWRX-300. There have been SMRs of different designs built in the world: two in Russia, one in China and one in Argentina. In every case, there were delays and higher-than-promised costs.

How transforming Canada’s electricity grid could drive decarbonization, save billions

The Crown utility – and ultimately Ontario ratepayers and taxpayers – will be responsible for any cost escalation in the SMR deal.

A report prepared for the Ontario Clean Air Alliance compared the levelled cost of power – that is, the average cost of electricity generation over the plant’s lifetime. It concluded that, in 2030, electricity from SMRs would cost up to US$174 per megawatt/hour, while wind would be $93 and solar would be $41. Those costs do not include transmission or land development, nor do they account for capacity factors.

Ralph Torrie, research director for Corporate Knights, weighed capital costs for the nuclear options against alternatives in his Climate Dollars project, which provides a decarbonization analysis for each province. The report concludes that the upfront investment for reactors would far exceed the cost of renewables plus efficiency and other demand-management strategies.

“Public investment in new nuclear plants has a double-barrelled negative effect on addressing greenhouse gas emissions,” Torrie says in an email. “It diverts capital from efficiency and renewables that would increase the supply of emission-free electricity faster than nuclear at a lower cost and with less risk.”

“The government subsidies for nuclear expansion are driving electricity price increases in Ontario,” he adds, “and that slows down the switch to electricity that we need in buildings and vehicles to give our children and grandchildren a fighting chance against climate change.”

Shawn McCarthy is an Ottawa-based writer and senior counsel with Sussex Strategy Group.

The post Concerns loom over Canada’s nuclear renewal appeared first on Corporate Knights.

Nuclear power is routinely portrayed by proponents as the source of “limitless” amounts of carbon-free electricity. The rhetorical move from speaking about “renewable energy” to “fossil-free energy” is increasingly evident, and telling.

Yet nuclear energy production requires managing what is known as “spent” nuclear fuel where major problems arise about how best to safeguard these waste materials into the future – especially should nuclear energy production increase. Short-term storage facilities have been in place for decades, but the question of their long-term deposition has caused intense political debates, with a number of projects being delayed or cancelled entirely. In the United States, work on the Yucca Mountain facility has stopped completely leaving the country with 93 nuclear reactors and no long-term storage site for the waste they produce.

Nuclear power plants produce three kinds of radioactive waste: short-lived low- and intermediate-level waste; long-lived low- and intermediate-level waste; and long-lived and highly radioactive waste, known as spent nuclear fuel.

The critical challenge for nuclear energy production is the management of long-lived waste, which refers to nuclear materials that take thousands of years to return to a level of radioactivity that is deemed “safe.” According to the US Nuclear Regulatory Commission (NRC), in spent fuel half of the radiation in strontium-90 and cesium-137 can decay in 30 years, while it would take 24,000 years for plutonium-239 to return to a state considered “harmless”. However, exactly what is meant by “safe” and “harmless” in this context is something that remains poorly defined by international nuclear management organisations, and there is surprisingly little international consensus about the time it takes for radioactive waste to return to a state considered “safe” for organic life.

“Permanent” geological repositories

Despite the seeming revival of nuclear energy production today, very few of the countries that produce nuclear energy have defined a long-term strategy for managing highly radioactive spent fuel into the future. Only Finland and Sweden have confirmed plans for so-called “final” or “permanent” geological repositories.

The Swedish government granted approval for a final repository in the village of Forsmark in January 2022, with plans to construct, fill and seal the facility over the next century. This repository is designed to last 100,000 years, which is how long planners say that it will take to return to a level of radioactivity comparable to uranium found in the earth’s bedrock.

Finland is well underway in the construction of its Onkalo high-level nuclear waste repository, which they began building in 2004 with plans to seal their facility by the end of the 21st century.

The technological method that Finland and Sweden plan to use in their permanent repositories is referred to as KBS-3 storage. In this method, spent nuclear fuel is encased in cast iron, which is then placed inside copper canisters, which are then surrounded by clay and bedrock approximately 500 metres below ground. The same or similar methods are being considered by other countries, such as the United Kingdom.

Sweden and Finland have described KBS-3 as a world-first nuclear-waste management solution. It is the product of decades of scientific research and negotiation with stakeholders, in particular with the communities that will eventually live near the buried waste.

Critical questions remain about the storage method, however. There have been widely publicised concerns in Sweden about the corrosion of test copper canisters after just a few decades. This is worrying, to say the least, because it’s based on a principle of passive safety. The storage sites will be constructed, the canisters filled and sealed, and then everything will be left in the ground without any human monitoring its safe functioning and with no technological option for retrieving it. Yet, over 100,000 years the prospect of human or non-human intrusion into the site – both accidental or intentional – remains a serious threat.

The Key Information File

Another major problem is how to communicate the presence of buried nuclear waste to future generations. If spent fuel remains dangerous for 100,000 years, then clearly this is a time frame where languages can disappear and where the existence of humanity cannot be guaranteed. Transferring information about these sites into the future is a sizeable task that demands expertise and collaboration internationally across the social sciences and sciences into practices of nuclear waste memory transfer – what we refer to as nuclear memory communication.

In a project commissioned by the Swedish Nuclear Waste Management Company (SKB), we take up this precise task by writing the “Key Information File” – a document aimed at non-expert readers containing only the most essential information about Sweden’s nuclear waste repository under development.

The Key Information File has been formulated as a summary document that would help future readers understand the dangers posed by buried waste. Its purpose is to guide the reader to where they can find more detailed information about the repository – acting as a “key” to other archives and forms of nuclear memory communication until the site’s closure at the end of the 21st century. What happens to the Key Information File after this time is undecided, yet communicating the information that it contains to future generations is crucial.

The Key Information File we will publish in 2024 is intended to be securely stored at the entrance to the nuclear waste repository in Sweden, as well as at the National Archives in Stockholm. To ensure its durability and survival through time, the plan is for it to be reproduced in different media formats and translated into multiple languages. The initial version is in English and, when finalised, it will be translated into Swedish and other languages that have yet to be decided.

Our aim is for the file to be updated every 10 years to ensure that essential information is correct and that it remains understandable to a wide audience. We also see the need for the file to be incorporated into other intergenerational practices of knowledge transfer in the future – from its inclusion into educational syllabi in schools, to the use of graphic design and artwork to make the document distinctive and memorable, to the formation of international networks of Key Information File writing and storage in countries where, at the time of writing, decisions have not yet been made about how to store highly radioactive long-lived nuclear waste.

Fragility and short-termism: a great irony

In the process of writing the Key Information File, we have discovered many issues surrounding the efficacy of these strategies for communicating memory of nuclear waste repositories into the future. One is the remarkable fragility of programs and institutions – on more than one occasion in recent years, it has taken just one person to retire from a nuclear organisation for the knowledge of an entire programme of memory communication to be halted or even lost.

And if it is difficult to preserve and communicate crucial information even in the short term, what chance do we have over 100,000 years?

International attention is increasingly fixated on “impactful” short-term responses to environmental problems – usually limited to the lifespan of two or three future generations of human life. Yet the nature of long-lived nuclear waste requires us to imagine and care for a future well beyond that time horizon, and perhaps even beyond the existence of humanity.

Responding to these challenges, even partially, requires governments and research funders internationally to provide the capacity for long-term intergenerational research on these and related issues. It also demands care in developing succession plans for retiring experts to ensure their institutional knowledge and expertise is not lost. In Sweden, this could also mean committing long-term funding from the Swedish nuclear waste fund so that not only future technical problems with the waste deposition are tackled, but also future societal problems of memory and information transfer can be addressed by people with appropriate capacity and expertise.

This story was first published on The Conversation. Read the original article here.

Thomas Keating is a postdoctoral researcher at Linköping University. Anna Storm is a professor of technology and social change at Linköping University.

The post Nuclear is back. Dealing with radioactive waste is tomorrow’s problem. appeared first on Corporate Knights.

Decades later, that consensus is now breaking down. The environmental and economic risks of nuclear power are being overshadowed by mounting anxiety around the climate crisis. Pushed by governments in Europe and North America, the responsible finance industry is revisiting the nuclear energy exclusion.

“Nuclear energy will be an essential source of fuel in the transition to the renewable sources required to support a low-carbon economy,” said Marian Macindoe, head of ESG stewardship at San-Francisco-based Parnassus Investments, as the veteran sustainable fund company announced last year that it was dropping its nuclear exclusion, which had been in place since 1984.

More managers are dropping their nuclear exclusions. In a survey of 200 European and North American fund managers with social and environmental exclusions, 37% of funds reported having a nuclear energy screen in 2022, down from 43% in 2021.

This turnabout has been most pronounced in the green bond market, where power utilities have, controversially, been adding nuclear energy as an option for green bonds.

In a 2023 report, the International Energy Agency (IEA) estimates that to meet net-zero goals, electricity’s share of total energy demand needs to double between now and 2030 to accommodate the electrification of transportation, building heat, industrial processes, agriculture and information technology. At last year’s COP28 climate conference, 22 nations pledged to triple their nuclear energy capacity by 2050 to generate a large source of low-carbon “dispatchable” energy – meaning it can provide power when intermittent renewable energy isn’t available.

With this in mind, nuclear green bonds promise to help fund decades of net-zero energy for the public and years of clean financial returns for investors. But are nuclear green bonds suitable for ESG-focused investors, given the long delays, cost overruns, and safety and waste risks of nuclear plants? Is the nuclear industry using a smokescreen of net-zero to cover up its sustainability problems?

Nuclear green bonds hit the market 

The movement to think about nuclear as a green investment began in 2021, when seven European Union member countries – led by nuclear-heavy France – began pressuring the European Commission to ensure that the EU’s climate policy included nuclear. 

Meanwhile, Canada, and specifically the province of Ontario’s two nuclear utilities, became the first to push the envelope. The world’s first nuclear green bond was issued by privately owned Bruce Power, operator of the Bruce Nuclear Generating Station three hours north of Toronto, the world’s largest nuclear plant. The company issued a $500-million offering in late 2021 and two additional issues of $600 million each for a total of $1.7 billion. Proceeds are financing a refurbishment and 30-year extension at Bruce, in service since the 1970s and 1980s.

Investors – particularly institutions – welcomed the bond issues. Demand for both issues was about six times higher than the amount issued.

By 2022, the conversation around nuclear was shifting around the globe. After months of contentious debate, the EU agreed to add natural gas and nuclear to its EU taxonomy, the official list of acceptable sustainable investments to help Europe finance its ambitious climate goals. That same year, Ontario Power Generation, owned by the provincial government, issued $300 million in nuclear green bonds to refurbish its Darlington Nuclear Generating Station.

This year, the Canadian federal government became the first national government to issue a green bond that included nuclear expenditures.

The bonds are ranked “medium green” by investment rating service S&P Global. Refurbishments are ranked higher than new builds, and Canadian CANDU reactors are ranked higher than other reactors because CANDU reactors use natural, rather than enriched, uranium. The depleted natural uranium in spent CANDU fuel bundles is considered at lower risk of being turned into weapons, which typically use enriched uranium. Also, recent refurbishments in Ontario have been completed on time and on budget, in contrast with cost overruns and delays typical of the nuclear industry.

However, Canadian reactors lose points in the S&P Global ratings because Canada hasn’t yet developed a permanent nuclear-waste disposal solution, something environmental advocacy groups say should negate nuclear bonds from being labelled green.

In January of this year, the government of Ontario went ahead and added nuclear energy to its green bond framework in anticipation of a planned major expansion, including refurbishment of its Pickering Nuclear Generating Station, construction of four new small modular reactors and a new plant capable of almost doubling Bruce’s output. If implemented, the plan will be the largest nuclear construction program in the Americas or Europe, although approvals from the Canadian Nuclear Safety Commission and other bodies such as local First Nations could present roadblocks. 

A few weeks after Ontario’s announcement, the Canadian federal government became the first national government to issue a green bond that included nuclear expenditures.

Canada is no longer the only hot spot for nuclear bonds. In France, Électricité de France  – the country’s publicly owned power utility – issued a €1-billion nuclear green bond for refurbishments in November, making it Europe’s first green bond for nuclear energy. A few weeks later, Teollisuuden Voima Oyj, Finland’s privately owned nuclear utility, launched a €280-million nuclear green bond to refinance a new plant and to refurbish two older plants.

These offerings are just the beginning, says Nick Pfaff, deputy CEO of the International Capital Market Association. In an interview with Responsible Investor, he said nuclear green bonds could make up more than 10% of energy sector green bonds, especially in jurisdictions like Canada and France where nuclear energy is predominant.

The state of the debate 

Both sides of the nuclear ESG debate agree that a reduction in carbon dioxide emissions and fossil fuel use is desperately needed. Some climate deniers argue for nuclear energy, but the disagreement in the ESG community is whether nuclear qualifies as a sustainable energy option. 

A long-standing thought leader in this debate is Amory Lovins, co-founder of the Rocky Mountain Institute (now called RMI), the famous Colorado-based think tank and advocacy centre for low- and renewable-energy alternatives. He argues that by conserving energy and creating it more sustainably through wind, solar and other small-scale, distributed and renewable  “soft-energy” paths, large-scale and centralized “hard-energy” systems like fossil fuels or nuclear power aren’t needed.

Lovins, now 76, argues that renewables are cheaper and much more efficient than nuclear power, which requires at least a decade of planning and construction. “It’s better to use fast, cheap and certain rather than slow, costly and speculative,” he said in a recent interview in The Denver Post.

It’s better to use fast, cheap and certain rather than slow, costly and speculative.

 

– Amory Lovins, co-founder of the Rocky Mountain Institute

While nuclear megaprojects like Britain’s Hinkley Point C lumber along overbudget and years late, lower-cost renewable energy grew by 50% in 2023, the 22nd year in a row that global renewable capacity additions set a new record, according to the IEA.

Environment professor Mark Winfield, at York University in Toronto, shares Lovins’s view that nuclear energy could serve to delay the energy transition, rather than accelerate it. Winfield argues that efficiencies are reducing electricity demand, and even if more generation is needed for electric vehicles and heat pumps, this doesn’t mean that this “demand can only be served by large centralized, capital-intensive, high-risk and inflexible generating assets like nuclear power plants.”

One of the leaders on the other side of the debate is climate scientist James Hansen, who is famous for raising awareness of the climate threat at U.S. congressional hearings in the 1980s.

Nuclear is “one among several technologies that will be essential to any credible effort to develop an energy system that does not rely on using the atmosphere as a waste dump,” he wrote in a letter to world leaders in 2013 with other climate scientists.

Hansen notes that nuclear can provide enough power for “whole civilizations,” something that would make it easier for small-scale and intermittent renewable energy to fill any remaining gap in fossil-free generation. 

Samuel Miller McDonald, a geographer and the author of a forthcoming book on the science and history of progress, steers a middle ground and warns against listening to commentators who make strident claims in one direction or the other. 

In a 2021 article in the Boston Review, he argues that nuclear energy could accelerate the energy transition and reduce emissions in places with stable, centralized grids, but these hard-energy systems are dependent on bureaucratic state planning. Renewable energy – by contrast – holds potential for cooperative ownership and local management. Choosing between these doesn’t doom societies for all time, he argues, but it does narrow the range of short-term possibilities.

“The debate that needs to occur around nuclear is not just whether it can reduce carbon emissions or provide efficient electricity, or whether it is ‘safe and clean,’” McDonald says, “but also whether it should be part of the vision for how human societies adapt and, with any luck, thrive in the new and more dangerous world we have created.” 

Eugene Ellmen writes on sustainable business and finance. He is a former executive director of the Canadian Social Investment Organization (now Responsible Investment Association).

The post The nuclear option appeared first on Corporate Knights.

The Manhattan Project spawned a trinity of interconnected legacies. It initiated a global arms race that threatens the survival of humanity and the planet as we know it. It also led to widespread public health and environmental damage from nuclear weapons production and testing. And it generated a culture of governmental secrecy with troubling political consequences.

As a researcher examining communication in science, technology, energy and environmental contexts, I’ve studied these legacies of nuclear weapons production. From 2000 to 2005, I also served on a citizen advisory board that provides input to federal and state officials on a massive environmental cleanup program at the Hanford nuclear site in Washington state that continues today.

Hanford is less well known than Los Alamos, New Mexico, where scientists designed the first atomic weapons, but it was also crucial to the Manhattan Project. There, an enormous, secret industrial facility produced the plutonium fuel for the Trinity test on July 16, 1945, and the bomb that incinerated Nagasaki a few weeks later. (The Hiroshima bomb was fueled by uranium produced in Oak Ridge, Tennessee, at another of the principal Manhattan Project sites.)

Later, workers at Hanford made most of the plutonium used in the U.S. nuclear arsenal throughout the Cold War. In the process, Hanford became one of the most contaminated places on Earth. Total cleanup costs are projected to reach up to US$640 billion, and the job won’t be completed for decades, if ever.

Victims of nuclear tests

Nuclear weapons production and testing have harmed public health and the environment in multiple ways. For example, a new study released in preprint form in July 2023 while awaiting scientific peer review finds that fallout from the Trinity nuclear test reached 46 U.S. states and parts of Canada and Mexico.

Dozens of families who lived near the site – many of them Hispanic or Indigenous – were unknowingly exposed to radioactive contamination. So far, they have not been included in the federal program to compensate uranium miners and “downwinders” who developed radiation-linked illnesses after exposure to later atmospheric nuclear tests.

On July 27, 2023, however, the U.S. Senate voted to extend the Radiation Exposure Compensation Act and expand it to communities near the Trinity test site in New Mexico. A companion bill is under consideration in the House of Representatives.

The largest above-ground U.S. tests, along with tests conducted underwater, took place in the Pacific islands. Meanwhile, the Soviet Union and other nations conducted their own testing programs. Globally through 2017, nuclear-armed nations exploded 528 weapons above ground or underwater, and an additional 1,528 underground.

Estimating how many people have suffered health effects from these tests is notoriously difficult. So is accounting for disruptions to communities that were displaced by these experiments.

Polluted soil and water

Nuclear weapons production has also exposed many people, communities and ecosystems to radiological and toxic chemical pollution. Here, Hanford offers troubling lessons.

Starting in 1944, workers at the remote site in eastern Washington state irradiated uranium fuel in reactors and then dissolved it in acid to extract its plutonium content. Hanford’s nine reactors, located along the Columbia River to provide a source of cooling water, discharged water contaminated with radioactive and hazardous chemicals into the river through 1987, when the last operating reactor was shut down.

Extracting plutonium from the irradiated fuel, an activity called reprocessing, generated 56 million gallons of liquid waste laced with radioactive and chemical poisons. The wastes were stored in underground tanks designed to last 25 years, based on an assumption that a disposal solution would be developed later.

Seventy-eight years after the first tank was built, that solution remains elusive. A project to vitrify, or embed tank wastes in glass for permanent disposal, has been mired in technical, managerial and political difficulties, and repeatedly threatened with cancellation.

Now, officials are considering mixing some radioactive sludges with concrete grout and shipping them elsewhere for disposal – or perhaps leaving them in the tanks. Critics regard those proposals as risky compromises. Meanwhile, an estimated 1 million gallons of liquid waste have leaked from some tanks into the ground, threatening the Columbia River, a backbone of the Pacific Northwest’s economy and ecology.

Radioactive trash still litters parts of Hanford. Irradiated bodies of laboratory animals were buried there. The site houses radioactive debris ranging from medical waste to propulsion reactors from decommissioned submarines and parts of the reactor that partially melted down at Three Mile Island in Pennsylvania in 1979. Advocates for a full Hanford cleanup warn that without such a commitment, the site will become a “national sacrifice zone,” a place abandoned in the name of national security.

A culture of secrecy

As the movie “Oppenheimer” shows, government secrecy has shrouded nuclear weapons activities from their inception. Clearly, the science and technology of those weapons have dangerous potential and require careful safeguarding. But as I’ve argued previously, the principle of secrecy quickly expanded more broadly. Here again, Hanford provides an example.

Hanford’s reactor fuel was sometimes reprocessed before its most-highly radioactive isotopes had time to decay. In the 1940s and 1950s, managers knowingly released toxic gases into the air, contaminating farmlands and pastures downwind. Some releases supported an effort to monitor Soviet nuclear progress. By tracking deliberate emissions from Hanford, scientists learned better how to spot and evaluate Soviet nuclear tests.

In the mid-1980s, local residents grew suspicious about an apparent excess of illnesses and deaths in their community. Initially, strict secrecy – reinforced by the region’s economic dependence on the Hanford site – made it hard for concerned citizens to get information.

Once the curtain of secrecy was partially lifted under pressure from area residents and journalists, public outrage prompted two major health effects studies that engendered fierce controversy. By the close of the decade, more than 3,500 “downwinders” had filed lawsuits related to illnesses they attributed to Hanford. A judge finally dismissed the case in 2016 after awarding limited compensation to a handful of plaintiffs, leaving a bitter legacy of legal disputes and personal anguish.

Cautionary legacies

Currently active atomic weapons facilities also have seen their share of nuclear and toxic chemical contamination. Among them, Los Alamos National Laboratory – home to Oppenheimer’s original compound, and now a site for both military and civilian research – has contended with groundwater pollution, workplace hazards related to the toxic metal beryllium, and gaps in emergency planning and worker safety procedures.

As Nolan’s film recounts, J. Robert Oppenheimer and many other Manhattan Project scientists had deep concerns about how their work might create unprecedented dangers. Looking at the legacies of the Trinity test, I wonder whether any of them imagined the scale and scope of those outcomes.

William J. Kinsella is professor emeritus of communication at North Carolina State University.

This article is republished from The Conversation under a Creative Commons license. Read the original article.

The post The toxic nuclear legacy that Oppenheimer left behind appeared first on Corporate Knights.

None of the plants were ever built. Peak power demand in 1997 was 22,000 megawatts (MW), not the 57,000 that Hydro had predicted. But the cost of the Darlington nuclear station and the other power plants that were already under construction or approved in the 1970s represented an investment overshoot that would plague Ontario ratepayers and taxpayers for decades.

It was 1989. I was 37, married with two toddlers. My partner and I were running a research and software firm. We had been retained to conduct an independent analysis of Ontario Hydro’s new capital expansion plan, this time calling for 10 new nuclear power reactors, as well as several large fossil-fuelled plants. Ontario Hydro was forecasting peak demand would grow at 2.5% per year and top 35,000 MW by 2014, 50% above its 1989 level. The plan was withdrawn before environmental assessment hearings were even convened and the proposed power plants were never built. Peak demand in 2014 was lower than it was in 1989.

It was 2005. I was 53, vice-president of ICF International, my children were grown, and my wife and I had moved to Cobourg to care for my ailing mother. More than $10 billion in write-offs in the 1990s had effectively bankrupted Ontario Hydro.

The newly formed Ontario Power Authority forecast that peak demand for electricity would start growing nearly twice as fast as it had over the previous 15 years, reaching 30,000 MW by 2025. OPA hired my team at ICF to take an independent look at their projections and we concluded that demand would not grow that fast and could even decline. Nevertheless, the government expedited approval of new gas power plants, and we all know how that went. The gap never materialized. Demand for power reached its all-time high of 27,000 MW in the summer of 2006 and declined to 22,600 MW by 2022.

Now it is 2023. I have two young grandchildren who face a future of climate chaos, my work focuses on the pattern of investments needed for the sustainability transition; and “gap-ology” is once again afoot in Ontario’s electricity planning.

The Ontario Power Authority has been absorbed by the Independent Electricity System Operator (IESO), and it is forecasting an eye-watering 60,000 MW of peak demand by 2050 for Ontario to successfully decarbonize the provincial economy. Like all the ones that came before it, it’s a forecast that will surely be proven both wrong and costly.

It puts the price tag at $400 billion over the next 27 years, not counting the conversion costs for households and firms to electrify, or the costs for local distribution utilities to cope with the transition. Much of the money is earmarked for unproven prototype technologies that have never been built or licensed before, like the four 300-MW enriched uranium light-water reactors slated for Darlington, which will not put power on the grid until who knows when and at who knows what cost.

The government also plans to add four giant 1.2 GW reactors to the Bruce Power nuclear facility, which would make it the largest nuclear plant in the world.  It seems unlikely these will be the Canadian-developed CANDU technology. The newest reactor in this country was built 30 years ago; the supply chains for many of the components are long gone. It’s a perfect storm of risk. 

Yes, it stands to reason that the shift to electric vehicles and heat pumps will add new electricity consumption to the system. But there is a global energy transition underway, and while electrification is a central theme, so too is the development of technologies, materials and techniques that reduce the amount of electricity and the peak consumption required to meet the demand for human amenities that drive all economies.

These new technologies could keep peak demand growth in Ontario well under 1% per year, even as we electrify our vehicles and our natural gas-heated homes and buildings. They are being researched and deployed in countries where natural resources are scarcer and electricity is more expensive than in Canada, but once they’re developed, they move through the global economy in less time than it takes to design, build and license a multibillion-dollar nuclear power plant prototype.

History continues to outrun electricity planning in Ontario, as it has been doing for decades now, and we all pay for the overshoots and malinvestment that result. We cannot afford another round of ill-conceived commitments to multi-billion-dollar megaprojects that will be left half-built and stranded just as technology, market forces, and common sense are converging on a smarter, less expensive, more distributed and renewables-based energy system. One my grandchildren, and yours, can feel good about.

Ralph Torrie is Corporate Knights’ director of research.

A version of this article was first published in the Globe and Mail.

The post Here we go again: Ontario’s reckless nuclear gamble appeared first on Corporate Knights.

The federal government considers nuclear energy—including small modular reactors (SMRs) that are touted as easier to build and run than traditional nuclear plants—as key to meeting energy needs while aiming for net-zero by 2050.

In Finance Minister Chrystia Freeland’s 2023 budget in March, investments for nuclear power and SMRs were included alongside hydropower and other “non-emitting electricity generation systems” eligible for a $25-billion, 15% tax break from the Clean Electricity Investment Tax Credit.

And Trudeau has since made multiple public statements in support of nuclear energy. “Nuclear is on the table, absolutely,” he said, during a speech in British Columbia earlier this month. And at a University of Ottawa visit, he said investment in nuclear and SMRs is something Canada is “very, very serious” about, reported the Canadian Press.

“We’re going to have to be doing much more nuclear over the coming decades,” Trudeau said.

But on April 25, anti-nuclear activists and a cross-partisan group of MPs held a media conference on Parliament Hill, urging Ottawa to rethink its stance on nuclear and calling the energy source a dangerous distraction from climate action, reported CBC News.

Speakers in the group said Trudeau and his cabinet are getting bad advice about nuclear energy.

“The nuclear industry, led by the United States and the United Kingdom, has been lobbying and advertising heavily in Canada, trying to convince us that new SMR designs will somehow address the climate crisis,” said Prof. Susan O’Donnell, a member of the Coalition for Responsible Energy Development in New Brunswick (CRED-NB). The reality, she added, is that SMRs will produce “toxic radioactive waste” and could lead to serious accidents while turning some communities into “nuclear waste dumps”.

Moreover, there is “no guarantee these nuclear experiments will ever generate electricity safely and affordably,” O’Donnell said, since SMRs are still relatively untested.

Green Party Leader Elizabeth May called government funding for nuclear projects a “fraud.”

“It has no part in fighting the climate emergency,” May said. “In fact, it takes valuable dollars away from things that we know work, that can be implemented immediately, in favour of untested and dangerous technologies that will not be able to generate a single kilowatt of electricity for a decade or more.”

Liberal MP Jenica Atwin, New Democrat Alexandre Boulerice, and Bloc Québecois MP Mario Simard also attended the media event, the National Post reports. Atwin, who was first elected as a Green in 2019 before crossing the floor, “is the only Liberal to publicly break ranks so far, but said she has had conversations with colleagues who appear to be ‘open-minded’ to learning more about her concerns,” the Post says.

Advocacy groups like the Canadian Environmental Law Association (CELA) have also pushed back against SMRs, arguing they “pose safety, accident, and proliferation risks” akin to traditional nuclear reactors. CELA urged the federal government to “eliminate federal funding for SMRs, and instead reallocate those investments into cost-effective, socially responsible, renewable solutions.”

The International Energy Agency (IEA) says renewables will “lead the push to replace fossil fuels” but that nuclear can help in countries where it is accepted. As of 2022, there were only three SMR projects in operation—one each in Russia, China, and India, CBC News reported.

Canada’s first SMR passes pre-licencing

In Ontario, which currently produces 60% of its electricity from conventional nuclear stations, plans for one such SMR passed a regulatory checkpoint in March. Slated to be Canada’s first new nuclear reactor since 1993, the BWRX-300 is being built by Ontario Power Generation (OPG) and North Carolina-based GE Hitachi.

The Canadian Nuclear Safety Commission (CNSC) said it found “no fundamental barriers to licencing” the BWRX-300 after a pre-licencing vendor design review. As an assessment requested by the developer, the design review makes a preliminary identification of shortcomings. It is an integral part of the regulatory process, aimed at providing feedback to the vendor about “how it is addressing Canadian regulatory requirements and CNSC expectations in its design and design activities,” a CNSC spokesperson told The Energy Mix in an email.

The BWRX-300 is the first SMR to pass such a review, reported the Globe and Mail. It is also expected to be North America’s first grid-scale deployment of an SMR. The CNSC nod of approval is a checkpoint in OPG’s plans for the Darlington New Nuclear Project (DNNP), which will bring the BWRX-300 SMR to the existing Darlington nuclear station in Bowmanville.

Darlington is Canada’s second-largest nuclear facility by energy output, capable of meeting around 20% of Ontario’s current power demand. It is also the only site in Canada licenced for a new nuclear build with an accepted environmental assessment, thanks to a prior application process from 2006. The project that underwent assessment was cancelled in 2014, but OPG maintained the licence and resumed planning activities for the site in 2020, with operations set to begin in 2028.

It has no part in fighting the climate emergency.

 

– Elizabeth May, Green Party leader

CNSC staff concluded in their review that GE Hitachi “understands and has correctly interpreted the intent of regulatory requirements for the design of nuclear power plants in Canada” and that they “did not identify any fundamental barriers to licencing.”

The review is not binding on the commission and does not involve the issuance of a licence, but its completion does give OPG “a head start on licencing,” said GE Hitachi spokesperson Jonathan Allen.

However, the pre-licencing review also revealed “some technical areas that need further development,” CNSC said. The commission will require OPG to supply further details on severe accident analysis and the engineered features credited for mitigation. OPG must also demonstrate that the reactor’s design meets the requirement for two separate and diverse means of reactor shutdown (or an alternative approach) and provide further information “on the protective measures for workers in the event of an out-of-core criticality accident.”

“From the list of areas needed for further development, it looks like [GE Hitachi] has some work to do,” said Allison Macfarlane, director of the University of British Columbia’s public policy school, who chaired the U.S. Nuclear Regulatory Commission (NRC) between 2012 and 2014.

BWRX-300 raises safety questions

But Edwin Lyman, director of nuclear power safety for the Union of Concerned Scientists, told The Mix he has concerns about the design. He pointed to a joint CNSC-NRC review that identified several issues associated with reactor containment, including a potential for “reverse flow” of steam from the containment back into the reactor vessel under certain accident conditions. The review also found that the reactor’s reliance on isolation condensers may not always be effective to remove heat from the reactor during loss-of-coolant accidents.

“The consequences of a failure of isolation condensers is apparent from the fate of Fukushima Daiichi Unit 1, which experienced a core melt only hours after the system was lost,” Lyman said, citing the 2011 nuclear disaster in Ōkuma, Japan.

He added he is “extremely skeptical” that the BWRX-300 design will mature quickly enough to allow CNSC to make a meaningful determination of its safety in time for the anticipated 2028 start date. SMR designs need to undergo further testing and analysis before they can be considered safe, and yet vendors are rushing to deploy new, untested reactor designs without going through the necessary stages of technology development, including testing of full-scale prototypes, Lyman said.

“History has shown that shortcuts in this process are an invitation to disaster,” he added.

SMRs fall under the same Class 1A Nuclear Facilities Regulations as traditional reactors, so they do receive the same level of CNSC scrutiny. With its mandate to ensure the safe conduct of nuclear activities in Canada, the commission “will only issue a licence if the applicant has demonstrated the reactor can be operated safely,” the spokesperson said.

Next steps for the DNNP include a CNSC assessment, already under way, to review OPG’s licence application. This will result in a Commission Member Document that offers results and recommendations to an independent commission. Then there will also be two public hearings. The first is slated for January 2024 and will consider the applicability of the previous environmental assessment to the BWRX-300. A separate, future hearing will determine whether to issue a construction licence for the DNNP.

“It is the independent commission who will make the decision as to whether the licensee or applicant is qualified to carry on the proposed activities and in a safe manner that protects the public and the environment,” the CNSC spokesperson said.

This article by The Energy Mix is published here as part of the global journalism collaboration Covering Climate Now.

The post Are small modular reactors a dangerous distraction from climate action? appeared first on Corporate Knights.

Now Canada is seeing yet another promised resurgence for the nuclear industry. And this time, it comes in a size small. On December 1, Ontario Premier Doug Ford participated in a groundbreaking at Darlington nuclear facility, where provincially owned Ontario Power Generation (OPG) plans to build a small modular reactor (SMR).

If the Darlington project gets a green light on the final investment decision, the unit will be the first new reactor built in Canada in nearly 40 years, as other companies are pursuing plans to build SMRs across the country. (The nuclear sector has, however, been buoyed by massive reactor refurbishment projects at Darlington and Bruce Power’s eight-reactor site on Lake Huron.)

The industry’s latest hope, SMRs have a capacity of up to 300 megawatts and modular design features that are meant to keep construction costs under control (nuclear projects are notorious for their multibillion-dollar cost overruns). Micro reactors can be as small as five megawatts and are touted as an energy solution for remote communities and industrial sites like mines.

That’s in sharp contrast with the 1,000-megawatt behemoths that were marketed around the world in the first decade of the century by reactor manufacturers, including then federally owned AECL, Westinghouse Electric Co. and others.

The federal government and four provinces – Ontario, New Brunswick, Saskatchewan and Alberta – are lining up to support the commercial deployment of SMRs as low-carbon sources of electricity.

However, big questions remain about SMRs as the technology is largely untested. It’s unclear what the electricity from SMRs will cost and whether the technology can compete with cheap renewable sources like wind and solar backed up by storage. The prospect of micro reactors dotting remote Canadian landscapes also raises serious issues around safety and management of highly radioactive wastes.

Corporate Knights does not consider new nuclear power projects to be “green” in its Sustainable Economy Taxonomy. In July, the European Union overturned a draft proposal and included nuclear in its taxonomy for the purposes of green investing, though that controversial decision is being challenged in court by Austria, backed by several environmental groups.

In its fall fiscal update, the federal government introduced an investment tax credit of up to 30% for clean energy technologies, including SMRs. Ottawa has also committed $970 million in low-interest financing through the Canada Infrastructure Bank for the Darlington SMR project.

A bad day to go nuclear

Last decade was not kind to the nuclear industry, as Japan’s Fukushima meltdown after a tsunami in 2011 was the worst nuclear disaster since the Chernobyl accident of 1986 and led to the shutdown of all the country’s reactors. Those safety threats loom large today as Russia has attacked Ukraine’s nuclear energy site.

As well, the economic case for large new reactors has taken a beating over the years, as projects have been plagued by delays and cost overruns. Two signature projects in recent years have been particularly poorly managed: Areva’s plant in Finland and Westinghouse’s effort to build an advanced power reactor in Georgia. Westinghouse, which was then owned by Japan’s Toshiba Corp., was forced to declare bankruptcy in 2017 and was purchased by Toronto-based Brookfield Business Partners in 2018 for US$4.6 billion for its ongoing maintenance business.

But industry hopes are rising again, as the energy crisis in Europe has pushed Germany to extend the life of three nuclear plants it was set to close. And even Japan is looking to restart around 30 decommissioned reactors in pursuit of decarbonization.

And then there are SMRs. At the National Energy Roundtable’s conference at the end of November, several speakers argued for the inclusion of nuclear in Canada’s strategy to electrify the economy. Energy ministers from Ontario and New Brunswick touted the benefits of SMRs, saying the technology can provide affordable, continuous, non-emitting power.

The two provinces – in addition to Alberta and uranium-rich Saskatchewan – have agreed to work together on the commercialization of SMRs.

Ontario Energy Minister Todd Smith said the province is facing an energy supply shortage toward the end of the 2020s and sees SMRs as one of several generation technologies that will be needed to address it. (This expected electricity crunch in Ontario is in large part due to the Ford government ripping up contracts for more than 700 renewable energy projects.)

“It’s going to take an all-hands-on-deck approach to meet the demands of the future,” Smith said. And he urged the federal government to ensure that projects don’t get stalled in lengthy environmental assessment hearings.

SMRs have been a decade away from deployment for the last 30 years, while wind and solar are actually being deployed.

-Keith Stewart, senior energy strategist with Greenpeace

At Darlington, OPG expects to receive a construction licence in 2024 and will release detailed cost estimates as design and regulatory work proceeds, OPG spokesman Neal Kelly said in an email.

Former mayor of Iqaluit Madeleine Redfern said at the roundtable discussion that SMRs can help northern communities and industry end their reliance on expensive, dirty and often unreliable diesel generators. Small reactors, she said, would be more reliable than intermittent electricity production from wind or solar projects. (Redfern is also chief operating officer of CanArctic Inuit Networks and an Indigenous advisor to nuclear energy developer USNC-Power, which is partnering with OPG on a demonstration reactor project, as it seeks approvals from the federal nuclear regulator.)

Critics argue that SMRs pose the same problems of safety and waste disposal that have bedevilled the nuclear industry for decades. The future “lies in capturing the sun and wind, not in splitting atoms,” Greenpeace campaigner Keith Stewart said in an email. “SMRs have been a decade away from deployment for the last 30 years, while wind and solar are actually being deployed.”

Still, Ontario is betting heavily on nuclear to decarbonize the electricity grid even as demand for power could double or even triple as we move to electrify transportation, home heating and industrial energy needs.

Ontario will continue to rely on natural gas in the medium term to keep electricity costs down while the refurbishments at Darlington, Bruce and possibly Pickering can be completed. The Ontario plan anticipates that SMRs would also help end the reliance on natural gas. The Progressive Conservative government is even reviving conservation programs after killing them when Premier Ford first came to power in 2018.

Smith said Ontario is committed to electrification but will need the federal government to be a reliable partner to help keep costs down. “If the price of electricity soars, we’re not going to see electrification unfold,” he said.

However, whether SMRs can be a timely source of cheap and low-carbon electricity for Ontario and beyond remains to be seen.

The post Will small modular reactors seed a nuclear renaissance? appeared first on Corporate Knights.

The move followed a controversial decision in the European Union to classify natural gas and nuclear investments as green.  

OPG had previously limited its green bond financing to hydroelectric and renewable projects. However, nuclear is a key technology in the corporation’s plan to achieve net-zero carbon emissions by 2040, says chief financial officer Aida Cipolla. OPG closed a $300-million green bond issue in July whose proceeds will help pay for the refurbishment of the Darlington Nuclear Generating Station.  

OPG was the first corporation in Canada to issue green bonds, and the July issue brings its total financing to $2.8 billion.  

The green financing demonstrates to investors and ratepayers OPG’s commitment to the environment, Cipolla says. “OPG strongly believes nuclear will be a critical part of the energy transformation and of handling the increased load” on the power system from decarbonization efforts, she says.  

OPG’s electricity generation was 94% free of carbon emissions in 2021. 

For the $300-million issue, OPG faced demand for the bonds that was six times greater than the supply, as investors are keen to decrease the carbon intensity of their portfolios. 

Cipolla says the “green” label allowed OPG to charge a premium of an estimated three-to-five basis points on the bonds. Many large institutional investors such as pension funds and banks have targets to make their portfolios more sustainable, and green bonds are part of that mix. 

However, the inclusion of nuclear in sustainable financing remains controversial, given ongoing concerns about long-term disposal of radioactive waste.  

The federal government specifically excluded nuclear power projects as well as fossil fuels in its green bond framework released last March. 

OPG strongly believes nuclear will be a critical part of the energy transformation and of handling the increased load.

–Aida Cipolla, chief financial officer for Ontario Power Generation

The European Union produced a draft taxonomy that excluded nuclear but, under pressure from certain national governments, later amended it to include both natural gas and nuclear. The European Parliament approved that version in a July vote, but the Austrian government has said it will challenge it in court. 

Many environmental organizations were dismayed at the EU decision and broader efforts to include nuclear and gas in transition taxonomies.   

“The more they water down the green-ness of these bonds, the more they lose credibility and undermine the very reason for doing it in the first place,” says Matt Price, director of corporate engagement for Investors for Paris Compliance, a non-profit that monitors sustainable finance activity. “Nukes are only in for relative reasons – [they’re cleaner] relative to fossil fuels. But does that make them objectively green? Nope.”  

OPG’s decision to include nuclear in its green bond framework follows a similar move by Bruce Power, which is refurbishing its massive reactor site on the shores of Lake Huron in Ontario. Last November, Bruce Power issued $500 million in green bonds to finance the extension of the life of its units and to increase output. TC Energy holds a 48.8% stake in Bruce; other equity owners are the Ontario Municipal Employees’ Retirement System (OMERS), the Power Workers’ Union and the Society of United Professionals.  

Both Ontario power generators relied on an outside party to certify the use of proceeds for green bonds for nuclear: CICERO Shades of Green AS, a Norwegian firm that is billed as the world’s largest green bond certifier. 

“Our methodology is based in climate science and provides transparency on climate risk to investors,” Christa Clapp, CICERO’s managing partner, said in an email. “Nuclear power generation is a low carbon energy source that can make it easier to achieve the Paris Agreement emissions targets, but that comes with serious risks that need to be managed carefully.” 

OPG’s Cipolla says the power company had been planning to expand its green bond framework to include nuclear but held off on the announcement until the European Parliament approved its taxonomy. 

In Canada, a private-sector-led effort to publish a transition taxonomy for sustainable financing has been bogged down over disagreements as to whether nuclear and emission-reducing fossil fuel projects should be included.  

The federal government needs to engage more directly to ensure the credibility of the green bond market rather than leaving it to companies to set their own frameworks, Price argued. 

Decisions as to whether nuclear or natural gas should qualify under green finance frameworks should not be left to the private sector, Price argues. 

“In the vacuum left by the feds refusing to run a credible taxonomy process, anything goes,” he says. 

The post Ontario Power Generation includes nuclear energy in green bonds appeared first on Corporate Knights.

I’m reminded of this debate amid the current turmoil over a green investment label in Europe, a situation caused largely by the unwillingness of the sustainable investment sector to create its own industry standard.

Back then, some members of the SIO, the precursor to today’s Responsible Investment Association (RIA), felt the lack of a sustainability label placed the industry at risk of greenwashing.

Yet, when we put the question to our advisor and money manager members, a strong message came back: don’t touch it.

Some said a single label would lock in a niche standard, discouraging adoption by mainstream finance. Others argued a label could pose a governance conflict, making SIO both a promoter of social and environmental investing and a de facto industry regulator. And still others, including some labelling proponents, feared a weak label would perversely encourage greenwashing by giving investors a false sense of assurance.

Informed by this debate, the SIO adopted a “big tent” strategy, welcoming a wide variety of environmental, social and governance (ESG) strategies and membership from players across the investment industry. The RIA continues to follow this playbook in Canada, as do sustainable investment networks in other countries and regions.

The European Commission has allowed European governments to drag this Taxonomy Act into the gutter – and this fiasco is going to create a huge mess in financial markets.

-Sebastien Godinot, economist for the World Wildlife Fund

This hands-off approach to labelling has achieved its intended effect of spreading the practice of responsible investing, with more than $35 trillion worldwide invested under ESG strategies, up from about $14 trillion in 2012, when these figures were first gathered. But it has also led to a proliferation of ESG rating and investment methodologies, many that focus more on the risk to revenues or stock prices posed by social and environmental controversies than real human or planetary impacts of business practices.

All of this brings me to the current crisis surrounding the European Union’s ambitious initiative to establish a green label for social and environmental investing. The fear 20 years ago that a green investment label could itself enable greenwashing is now playing out two decades later in Europe.

In 2019, European policy-makers launched a project under the obscure and uninspiring title of EU Taxonomy to combat real and perceived greenwashing in the sustainable investment industry fuelled by the lack of an industry-wide standard. 

The taxonomy establishes firm technical standards to determine which economic activities can be considered sustainable under six environmental objectives: climate change mitigation and adaptation, use of water resources, transition to a circular economy, pollution prevention, and ecosystem protection.

As an example, the taxonomy recognizes that the steel industry is generally not low carbon but that it can contribute to climate change mitigation by drastically lowering its CO2 emissions, while doing no significant harm to other environmental objectives and respecting human rights and labour standards. This incentivizes the industry to switch to net-zero technologies like electric arc furnaces and green hydrogen steel-making.  

By identifying these promising activities, the EU aims to unlock billions of euros in a “green list” of climate-friendly investments to help finance its target to lower CO2 emissions by 55% by 2030 (compared to 1990 levels) and to net-zero by 2050.

Until very recently, the initiative has been considered a success. The financial and environmental communities widely supported draft proposals to exclude coal projects and endorse renewable energy.

If we lose the trust of the investors by selling something as a green project, which turns out to be the opposite, then we cut the feet on which we are standing.

-Werner Hoyer, president of the European Investment Bank

But opposition formed late last year when EU bureaucrats proposed concessions to include some natural gas and nuclear projects in a new “transition activities” category. France, eager to expand its atomic energy industry, pressed for the nuclear concessions. Poland, Hungary and the Czech Republic, faced with politically contentious fast-rising electricity prices, pushed for gas concessions to finance new gas-fired power plants. Both industries lobbied heavily for the changes.

The concessions were included in a final set of proposals on February 2 for adoption by the European Parliament, prompting swift reaction.

“The European Commission has allowed European governments to drag this Taxonomy Act into the gutter – and this fiasco is going to create a huge mess in financial markets,” World Wildlife Fund economist Sebastien Godinot said in a statement.

The president of the €550-billion European Investment Bank (EIB), the largest infrastructure bank in Europe, also expressed big disappointment in the new proposals, saying the EIB has no plans to invest in gas or nuclear.

“If we lose the trust of the investors by selling something as a green project, which turns out to be the opposite, then we cut the feet on which we are standing,” said EIB president Werner Hoyer in late January.

The European Parliament could still vote to reject the concessions within the next six months, in which case EU bureaucrats could bring it back without the gas and nuclear concessions. There could also be an alternative framework such as an “amber” category for greenhouse-gas-reduction investments that aren’t necessarily net-zero aligned. Green Party members of the European Parliament are mobilizing a “no” vote among their own members and those of other parties.

But even if changes are made, the taxonomy has been dealt a heavy blow. The project appears to have lost the trust of important stakeholders since it has shown it can be manipulated by political and business agendas. The Institutional Investors Group on Climate Change (IIGCC), whose members manage €50 trillion in assets, hinted it will switch its focus to its own voluntary net-zero investment framework.

The IIGCC framework is similar to the Paris Aligned Investment Initiative model, in which holdings and portfolios are managed under climate metrics and methodologies in accordance with a global temperature increase of no more than 1.5°C.

The model is generating a lot of excitement in the sustainable finance community, especially given the recent carbon-neutrality pledges by members of the Glasgow Financial Alliance for Net Zero, a network of companies managing $130 trillion in assets. 

Although flawed, the EU Taxonomy still has great value as a tool for educating investors and businesses on which economic activities contribute to environmental objectives. 

But the Paris Aligned model, shielded from political and business interference by its scientific basis, is emerging as a more reliable investor assurance model for financing a net-zero future. 

Eugene Ellmen was executive director of the Social Investment Organization between 1999 and 2012. He now writes on sustainable business and finance and lives in Hamilton.

The post EU ‘green’ label for gas and nuclear sparks sustainable investing crisis appeared first on Corporate Knights.