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Energy transition leading to small modular reactors, Part 2

The economic landscape with a $170 per tonne federal carbon tax could look very different from what we have today. It might even make more sense for farmers to grow trees than grain, for instance.
small modular discussion

The economic landscape with a $170 per tonne federal carbon tax could look very different from what we have today. It might even make more sense for farmers to grow trees than grain, for instance. And this carbon tax could be a driving force for nuclear power development. 

That was one of the prospects laid out by Robin Woodward, a retired senior utility executive in his presentation to the Feb. 26, Chartered Financial Analysts (CFA) Society Saskatchewan “dinnerless dinner” online. That event focused on the development of small modular reactors in this province.

Three speakers addressed the online event, with Dean Reeve and Robin Woodward, speaking on “Transform Saskatchewan’s Stranded Assets – profit from the Climate Economy”; Howard Schearer speaking on “The Promise – Small Modular Nuclear Reactors Offer Saskatchewan”, with the event moderated by Costa Maragos. Reeve is a retired utilities senior executive, formerly with TransGas, SaskEnergy and Atco while Woodward is the principal with RW Consulting, a Regina-based consulting firm focussed on alternative energy development, agriculture and municipal policy and growth. Shearer is chief executive with Hitachi Canada. He pointed out he was speaking on his behalf, not his company’s.

(This is the second part of a three-part story.)

“There’s change ahead, folks, so we need to become part of that change,” Woodward started out with.

It won’t be to a single new energy source but rather multiple forms, like hydrogen and nuclear energy, blending in with the old, he explained.

“What can we do to become leaders and not just become stranded and dependent upon an energy system that is about to pay $170 a tonne in new taxes? $170 a tonne, it's a game changer. It's expected to increase natural gas prices from $2 to $10 to $12 a gigajoule. The price of electricity may go up by as much as $60 a megawatt. And if you're running a farm, a 5,000-acre farm here in Saskatchewan, expect to add $60,000 annually to the price of the operation of that farm. Spend a moment and think about what that means to your farm or your community or your personal expenses,” Woodward said. 

“These increases will happen at the same time that there's dramatic price reductions in solar and wind infrastructure. They're expected to decline in price between 40 and 70 per cent between now and 2030 battery storage is expected to go down by as much as 80 per cent over that same timeline. In business and planning terms, that's fast. This province is good at adopting new tech.”

The first step, according to Woodward, is to build a plan that fits your needs or profile. There is provincial and federal money available to do this, with $2 billion in federal funds out there. By attracting more federal funding to this province, “We can help reduce the pain of the transition to come,” he said. 

Secondly, he said spreading risk can be done by investing in distributed or own-source energy. This includes solar and wind power generation. 

“For larger farms, a wind or solar project can offer multiple benefits. Payback periods are getting shorter, and own-source power can heat from power a shop, help a farm dry and screen and support new business ventures.”

Communities can sell excess power to the grid or do something with it.

“As communities, position green energy as a business attraction tool. Today's global investment is focused on green and renewables,” he said.

Woodward said biodiesel from canola and corn is viable. Grain ethanol is being marketed, and cellulose ethanol from straw, wood waste and municipal waste is being commercialized.

He said a community or farm could produce hydrogen and anhydrous ammonia locally. ATCO is developing a blended hydrogen/natural gas system. Another company is working on farm nitrogen fertilizer production. He said, “Imagine making your own fertilizer on your own farm to your own specs using your own power.”

Woodward noted that producing one tonne of nitrogen fertilizer produces 1.5 tonnes of CO2, and alluded to the dramatic increase the carbon tax will have on the cost of that fertilizer. 

Batteries are also being worked on by multiple companies for power storage.

He said, “One of the things that has got good potential is designing a system to keep the money that's going to be generated to the tax actually here, in Saskatchewan. Right now, a lot of the tax that's being defined is going to send money to Ottawa, why not keep it here? Design, a carbon trading system.”

He noted carbon trading has been done in other jurisdictions. 

Woodward pointed to a recent opinion piece by former long-time Saskatchewan Liberal MP Ralph Goodale, which talked about withdrawing carbon from the air and sequestered into soil or into trees.

“In Saskatchewan, trees sequester a lot of carbon, upwards of 10 tonnes per acre per year. So if you're interested in $1,700 per acre per year off of some of that land that is getting harder to farm because we've got larger equipment, growing carbon may make sense for you.

“On a 5,000 acre farm, plant 50 acres of trees. If you up gross $80,000 a year, more than offsetting what that the APAS cost metrics say is that $62,000 tax burden that's going to come into play by 2030. Yeah, plant a tree and grow carbon. Think of the tree is another crop that's integrated into a firm's overall rotation plans.”

Earning $1,700 per year, watching trees grow, isn’t such a bad thing, he said.

“By creating carbon credits in Saskatchewan, we'd be able to create our own circular economy. Farmers could grow and generate credits, communities could establish green energy systems that offset taxed energy sources, and businesses, big and small, could access these credits, probably at rates well below the tax burden level that's to come.”

“These systems can, and should include, a solid assessment of nuclear potential for Saskatchewan, a solid assessment of how to profitably integrate new energy sources and options at the farm and community level, in a distributed way, creating a made in Saskatchewan system to measure, certify and trade carbon credits for profit, and open the door to position communities and farmers and businesses as leaders in helping us, and helping Canada, solve our carbon problem rather than having our fate dictated to us as the price starts to move ever higher.”

He warned that if the U.S., Europe and global players move towards a carbon-taxed economy, “if we don’t move with it, we won’t be able to participate.”

Woodward said we could be subject to trade sanctions. “For us, the global impact is going to be measured in terms of our ability to become carbon neutral, and our ability to maintain an economic station in that globe.”

“I think Saskatchewan has a different moral responsibility to look at nuclear in a different way. We've looked at nuclear as a mining industry. We need to step back and take a look at this, with a moral lens that says we should be doing more and we should be investing more into the full chain of cost for nuclear. And part of that means answering a fundamental question around when and how do you deliver a nuclear energy answer into Saskatchewan,” Woodward said.

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