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Nuclear’s winter is over. It’s hard to imagine five years ago thousands of people would have trekked to Ottawa to talk nuclear. But a decarbonizing drive and a global pledge to triple nuclear energy by 2050 at COP28 has given the low-carbon source plenty of momentum.
Scores of engineers, financiers, and policy makers from around the world descended upon the nation’s frigid capital this week to discuss the prospects of a tried-and-tested tech, but with a new twist: small modular reactors (SMRs).
The new darling of energy transition was the theme of the invitation-only OECD Nuclear Energy Agency (NEA) event in Ottawa last week. It’s not hard to understand why. There’s a comfort level with SMRs since they are based off conventional nuclear reactors that are operational since the 1950s. The modular approach to manufacturing reactor parts also holds the promise of lower costs, compared to onsite construction. That’s an alluring quality as conventional nuclear projects have a long history of cost overruns, that’s led to losing taxpayer and political support.
Event participants were bullish on SMR’s ability to decarbonize hard-to-abate sectors. Their reasoning: Ontario’s 50-year nuclear pedigree. The province’s experience with the Bruce and Darlington nuclear plants is seen as a springboard for SMRs, leveraging a deep pool of skilled labour and technical knowledge, social licence, and a regulatory framework that’s best in class.
Yet, being an SMR first-mover comes with an eye-watering price tag of at least $1 billion in design costs. That’s even before construction begins. It has led to a waiting game with many in heavy industries and oil and gas sitting on the sidelines in the hope that a competitor makes the first move. The industry would need to move quickly to test SMR’s potential. Until SMRs’ high capital costs industry can be sufficiently de-risked, its potential to decarbonize sectors such as oil and gas and mining will remain on ice.
Canada faces a triple economic challenge, and with it, a triple economic opportunity that can lay the foundation for growth through the 2030s.
The three points of this new growth triangle—economic reconciliation, productivity and climate action—are mutually dependent. In other words, you can’t have one without the others.
This was clear at COP28 in December, where there was an emphasis on growth, capital formation and economic inclusion to reach our climate goals. And it can be Canada’s strategic advantage if we make some important adjustments.
Let’s start with climate action, and a blunt reality: Net Zero is going to require a scale of investment that we have not seen in our lifetimes.
RBC’s Climate Action Institute recently published a report on the state of the transition in Canada, called 
Cleantech is in correction mode. Last year’s CleanTech Forum, in Palm Springs, was brimming with measured optimism, although there were whispers of some impending corporate failures wafting down the halls.
Clean technology fortunes between the commercially viable and the questionable had already begun to diverge in 2023, a trend that will only deepen.. At this year’s forum in San Diego, there was a full-throated acknowledgement of a much-needed cleantech shakeup in the offing.
This year will almost certainly see further retrenchment from the US$40 billion capital flows into clean technology companies and national and corporate climate commitments of 2023, according to BloombergNEF.
Companies with weaker economics or technical fundamentals are struggling, while venture and growth dollars for new industrial technologies are waning. Dozens of cleantech companies have seen their values drop and financial flows dry up as financing becomes more difficult to obtain. Further declines and eventual consolidation in the industry seems inevitable.
Still, that’s in Silicon Valley’s DNA: test, crash and burn until a unicorn rises. On repeat.
To be clear, there’s plenty of optimism, too: project financing and job creation for clean technology manufacturing facilities have never been stronger. Meanwhile, government measures, such as the U.S. Inflation Reduction Act, and climate-focused investors will sustain the best companies as they commercialize.
North America’s manufacturing renaissance is underway with technologies graduating from demonstration to deployment. Factories for electric vehicle batteries, electrolyzers, carbon dioxide pipelines, and low-carbon steel, cement, and ammonia plants are coming online across the continent.
Other bright spots are the opportunities in emerging economies, especially in Asia Pacific. Highly susceptible to climate change’s impacts as they raise their standards of living, India, South Korea, and China, for example, are bucking the Western downturn and are happy hunting grounds for clean technology investors and entrepreneurs.
By the end of the year, the role of politics, another key variable in forward climate trajectory, will also become clearer. Electoral unease has already manifested in the rollback of climate policies around electric vehicles and strengthened oil and gas licensing in the U.K., and calls for axing the carbon tax in Canada.
In the conference halls of San Diego Bay Mission Resort there were whispers of further headwinds with a potential return to a Donald Trump presidency. But with Red States securing most of the capital flows emanating from IRA incentives, climate policies may yet not be dumped by Trump. Of course, another Joe Biden term could cement climate policies in the American economy.
Also on Finance Day, Canada was on the global stage talking Indigenous equity. Chana Martineau (right, below), the CEO of Alberta Indigenous Opportunities Corporation, took the stage with Alberta Premier Danielle Smith (left) to explain how the province’s $3 billion loan guarantee facility has helped Indigenous communities gain a share and say in economic development. In just four years, the AIOC has helped produce thousands of jobs, $27 million a year in new income for communities and a clear path for $1.5 billion in benefits over the next 30 years.
Think what Canada could do with a national Indigenous loan guarantee, like the one promoted in the Fall Economic Statement. A great moment for reconcili-action.
It’s Energy Day at #COP28 in Dubai, and given the location for the big UN Climate Conference, you might think it means oil and gas. Think again.
Fossil fuels are, of course, a focus of COP, but there’s also emphasis on renewables and nuclear. This region is fast becoming a centre for solar and wind power. It’s also one of the many growth regions for nuclear, which it wants to help champion. COP28 has already won agreement by 50 countries to triple nuclear production by 2050; one of them, China, is building 22 nuclear plants (although it has 5,000 coal-fired electricity plans). And in Europe, Germany is close to 50% renewable.
For many here, the focus of Energy Day was fixed was less on energy supply and more on energy security — at the national and household level. Countries on every continent continue to exhibit scar tissue from Russia’s Ukraine invasion, which caused prices to spike. They seem to generally too adhere to the new American doctrine that energy security is national security.
African leaders, in particular, spent the day voicing concerns about their own vulnerability to energy shortages and shocks. Many of those countries are still reliant on biomass to heat and cook, and could use better access to natural gas before they transition fully to renewables.
Into the gap come newer energy technologies like hydrogen and fusion, as well as abatement technologies like carbon capture and nuclear fusion. John Kerry, the US special envoy on climate, said he’s finally convinced fusion is no longer “30 years away.” And if that’s the case, it has the potential to transform the way the world powers itself.
Europe continues to push hydrogen, but the economics may not work.
Kerry was frank in his assessment that energy demand will continue to rise with economic and population growth: “Demand needs to be addressed.”
He urged the UN conference to set two priorities. One is to ensure all production is abated; that is, producers capture emissions that leave a plant, refinery or well. Second is to focus on methane reduction, where the sector is making enormous gains. More than 50 companies at this COP have signed the Global Methane Pledge.
With one week to go at COP28, the Dubai leadership at COP wants to maintain that focus, believing the sector can engineer itself to a cleaner future. In the coming days, it will try to make the case that in the long run, climate security will require energy security.
It was Buildings Day at COP28, and where better to discuss the climate impact of office towers and urban sprawl than Dubai.
Like many cities in emerging markets, Dubai’s shimmering skyline used to epitomize the human quest for progress and prosperity. Now, all that glass and steel is shrouded by climate anxiety.
Construction contributes to 40% of global emissions, sending 38 billion of tonnes of carbon dioxide into the atmosphere every year, largely from the intense heat required to make steel and concrete. At recent growth rates, emissions could double in the next 25 years, as hundreds of millions of people move to cities. And the climate oil pact would be severe. Think of all the heat needed to make all the steel and glass.
I was part of one COP28 panel that included cement companies and engineers explaining what’s possible and not. We agreed the building sector needs to find new ways to bundle climate friendly buildings, for investors and tenants, and disaggregate elements of them for investors who may want to own part of a building, like a solar-paneled rooftop, and others to stick to the main course.
Governments can do more with procurement, too, instructing developers to ensure new schools, hospitals and public office spaces are as close to Net Zero ready as possible.
The consulting firm McKisney & Co. estimates 11% of all building’s emissions could be cut with better management practices, and that don’t add to the construction costs of a building. Those savings could grow to 22% by 2030, and 40% if some costs were absorbed.
A city like Dubai could probably pay for that, using current oil and gas revenues. But it may need support to invest more.
Further down the road, new approaches like offsite construction, electrified site equipment and recycled scrap steel could help. And there are new technologies like heat pumps that can dramatically change local energy systems.
Dubai — and fast-growing cities like it — could be a good test case. The conference centre where the United Nations is gathering is more like a campus of low-rise and open buildings, each repurposed this week for climate. Such unobtrusive buildings could be a template for a new kind or urbanism — if rapidly developing countries are willing to forego skyscrapers.
Diane Hoskins, a leading architect who is co-CEO of Gensler, told our COP gathering that architects and engineers need to be more flexible, as do local governments. And they need to ensure buildings not only fight climate change, but are resilient to its harsh impacts, including heat.
The best efforts may emanate from successful business models, as the profit motive becomes an ever-more powerful driver of climate action.
A good example can be found in Hong Kong, where MPD Energy has helped the construction industry get off fossil fuels by deploying portable batteries to power equipment. Just three years ago, 100% of construction in Hong Kong relied on fossil fuels. Today, it’s 40%, thanks to batteries that can produce up to 500 kW of power and have already helped the industry cut its emissions by 40%.
Get used to the word “unabated.” It’s a clunky term that’s fast-taking centre stage at the United Nations climate conference in Dubai. The world’s major economic powers and oil producers, including host country United Arab Emirates, want COP28 to call for the winding down of “unabated” fossil fuel production, meaning anything that doesn’t capture greenhouse gas emissions at source.
Opponents of the term fear it will give oil and gas producers carte blanche to produce as much as they want, as long as they’re using carbon capture technologies. They fear such an enthusiasm for abatement overlooks the emissions caused by the combustion of fossil fuels when people drive their cars or heat their homes. And they worry there’s not enough proof that abatement technologies work at the scale that will be needed.
The abate debate will likely define COP28, which is living up to its nickname as the “Oil and Gas COP.” Not surprisingly, given its location, the conference has attracted large delegations from oil producing countries, as well as executive teams from many of the world’s biggest oil and gas companies.
They’re promoting a view that the world relies heavily on fossil fuels and won’t reduce that dependency any time soon, no matter how fast the growth of renewable energy. One astonishing fact that a UAE oil executive shared today: at the time of the world’s first climate summit, in 1992, roughly 82% of the world’s energy came from oil, gas and coal; today, during COP28, that share is 80%. Surprisingly, more than a quarter of the world’s energy still comes from coal.
Such slow progress has many climate activists pushing for more radical solutions, to force wholesale change to renewable energy. But they’re swimming against some strong currents of both supply and demand. The United States, which is now the world’s largest oil producer, is on course to pump a record amount this year and may look to increase that again next year — an election year, no less – to keep gas prices low. That’s fueling speculation that Saudi Arabia will ramp up its own production, to drive prices even lower and drive US producers out of business.
The potential of another oil war drew an unlikely visitor, Vladimir Putin, to the UAE this week. The Russian leader didn’t attend COP but he did meet with Emirati leaders, before heading to Saudi Arabia, to talk about oil production. The UAE is the world’s eighth largest oil producer and is looking to increase supply by 40% this decade.
Can all that production be abated? It’s a question COP28 likely can’t answer. But it will try to challenge the world with it.