Clean Technology: Targeted Regulatory Review – Regulatory Roadmap

Overview

Clean technology includes any process, product, or service that reduces environmental impacts. As such, clean technology identifies solutions to help address climate change and other pressing environmental challenges, while contributing to Canada’s economy.

Canada’s diverse and rapidly developing clean technology sector includes both producers, which develop new clean technology for sale; and adopters, which aim to improve the environmental performance of their operations by adopting new technology or processes.

The continued growth and competitiveness of the clean technology sector will be essential for Canada and the world to transition to a low-carbon and prosperous economy. The clean technology industry is expected to be worth $2.5 trillion globally by 2022. As elaborated in the “Building Canada’s Clean Industry Advantage” pillar of Canada’s enhanced climate plan, A Healthy Environment and A Healthy Economy (2020), countries that succeed in mobilizing solutions through innovation in clean technologies will have a competitive advantage in the economy of the future.

Canada’s clean technology sector is comprised of many small and medium sized enterprises (SMEs) across all aspects of our economy. This includes many small firms engaged in early stage research, development and demonstration (RD&D). Some companies are scaling-up to, or have already achieved, commercial stage, while others are active across the full innovation and commercialization spectrum. The Canadian clean technology sector includes producers and users, both of which have unique challenges.

Given the clean technology sector’s innovative, diverse, and cross cutting nature, it does not comprise a typical regulated community. Innovations in this space have widespread effects across the Canadian economy as low-carbon and environmental solutions are adopted by numerous economic sectors. From manufacturing and transportation, to recycling and wastewater, clean technology innovations create efficiencies and growth in numerous industries.

Clean technology producers (or developers) tend to be growing SMEs that can encounter challenges moving from research and development to scale-up and commercialization. However, Canada also has larger firms that develop and produce clean technology, either as their primary business line or as part of their suite of offerings.

One of the primary challenges for producers is that the environmental issues (e.g., air and water pollution) and associated costs that they are addressing are not explicitly valued in the marketplace except through regulation. In addition, many of these companies collectively face delays, barriers, and costs associated with securing approvals for new clean technologies, especially if the technology does not readily fit within existing definitions or parameters already found in regulation. Small firms may also lack the resources to engage in regulatory consultation processes, necessitating the need for different engagement approaches. With the rapid development of new technologies, regulators may lack sufficient understanding of upcoming technology solutions that could support the development of performance standards and establish the ‘regulatory pull’ for clean growth.

With regard to non-regulatory issues, many early stage companies operate with minimal to no revenues. Clean technology RD&D ventures can be capital intensive and face long timelines to bring innovations to market. Furthermore, these companies may struggle to attract the patient capital required to grow and scale-up amidst perceptions of investment risk. Parts of the Canadian clean technology sector are also highly export dependent, particularly to the United States.

Clean technology users (or adopters) tend to be larger firms, spanning different sectors. These companies are often subject to regulatory requirements that drive their demand for innovative clean technology products and services that will help them remain compliant.

Clean technology users tend to be active participants in the regulatory development process. Large industry associations often represent them since they are likely to become regulated entities. These companies can face challenges demonstrating that the adoption of a new technology will allow them to comply with existing regulations. This can discourage adopters from taking risks on a new technology. In addition, innovation and adoption of clean technologies is traditionally driven by regulation. As such, as regulated entities, clean technology users play an important role in creating widespread demand for new clean technologies.

Economic impacts

Canadian clean technology companies are often world leaders in their fields, and they are making important contributions to the Canadian economy. Canada ranks fourth globally and first in the G20 on potential to produce clean tech start-ups. Canada holds 11 percent of the world’s environmental patents, despite having just 0.5 percent of the world’s population. Eleven Canadian companies are included in the 2021 Cleantech 100 annual ranking of the world’s most innovative for-profit, privately held clean technology companies.

Not surprisingly, the sector’s contributions to the Canadian economy are significant, and they support various economic sectors, from natural resource extraction to digital industries and advanced manufacturing. In 2019, the environmental and clean technology sector contributed $70.5 billion and accounted for 3.0 percent of Canadian gross domestic product. The sector provides approximately 341,000 high-paying jobs, and it has shown signs of significant growth over the past 10 years, particularly in exports. Additionally, clean technology exports grew by 36 percent since 2012, with energy efficiency and transportation technologies as Canada’s leading clean technology exports.

Pandemic Response and Recovery

The COVID-19 pandemic and its effects across the economy intensified a number of challenges for the clean technology sector. In the immediate aftermath of the pandemic, clean technology companies reported challenges with liquidity, loss of deal-flow, access to labs, supply chain disruptions, and a range of other issues. Based on a survey deployed by clean technology associations and conducted during the initial period of the pandemic, almost 80 percent of survey respondents identified a need for immediate financial and sales support.

Through the Clean Growth Hub, federal departments and agencies and clean technology associations across Canada have communicated regularly throughout the pandemic. Clean technology associations were able to share impacts and concerns and provide feedback regarding government responses and support programs.

In a follow-up survey conducted from August to September 2020, survey respondents indicated the pandemic’s impacts on the clean technology sector include:

• Ongoing revenue shortfalls;
• Pressing need for capital;
• A stop or strong slow down in export activity (over 50 percent of respondents); and
• Impacts on their supply chains (65 percent).

Canada will need clean technology companies and expertise to address the ongoing challenge of climate change and other environmental issues. To meet our climate targets and emerge from the pandemic with a sustainable, secure and low carbon economy, Canada needs a competitive and innovative clean technology sector.

It is notable that even during the pandemic, clean technology industry associations continued to highlight the need for a review of regulatory barriers to clean growth. Furthermore, the Industry Strategy Council Report released a report in December 2020 on the impact of COVID-19 on industry, as well as recommendations to position various sectors for recovery, including clean technology. This report specifically highlighted the need for fast tracking a regulatory review for clean tech and removing regulatory barriers to Canada’s promising clean technology sectors.

Federal Government Support for the Clean Technology Sector

The federal government has supported the clean technology sector for many years, spending more than $3 billion on clean technology between 2016 and 2020. Building on the Pan-Canadian Framework on Clean Growth and Climate Change (2016), the government released A Healthy Environment and A Healthy Economy in December 2020. This plan contains 64 strengthened and new federal policies, programs and investments to cut climate pollution and build a stronger, cleaner and more resilient and inclusive economy. The plan builds on the 2020 Speech from the Throne, when the Government of Canada committed to “make Canada a world leader in clean technology.” The Speech also emphasized the government’s commitment to ensuring that “Canada is the most competitive jurisdiction in the world for clean technology companies.”

Many federal departments and agencies undertake measures to support and de-risk clean technology innovation and adoption, including funding for early stage RD&D and pilot projects; financing for first of kind technologies and commercial deployment; and expediting the patent process. Additional support includes government procurement, investments, and tax measures. As such, the Clean Growth Hub—which was announced by the government in 2017 and proposed for renewal in Budget 2021—provides a whole-of-government focal point for clean technology. The Clean Growth Hub supports companies and projects, coordinates federal programs, and tracks performance and results.

Furthermore, Budget 2021 also includes investments in clean technology initiatives. Two notable examples include:

• As announced in A Healthy Environment and a Healthy Economy, Budget 2021 proposes to provide $1.5 billion over five years, starting in 2021-2022 to Natural Resources Canada to establish a Clean Fuels Fund to support growth in clean fuel production capacity, establish biomass supply chains, and develop and align essential codes and standards for clean fuels. This fund would help support early actions outlined in the Hydrogen Strategy for Canada.
• Budget 2021 also proposes to provide $5 billion over seven years to the Net Zero Accelerator, which will spur Canada’s shift to innovative net-zero technologies and attract the large-scale investments needed to meet our goal of net zero by 2050.

In addition to existing policy and program measures, the Government of Canada has undertaken efforts to enhance its understanding of the challenges facing the clean technology sector. To this end, the government appointed members to the Clean Technology Economic Strategy Table (CTEST) made recommendations in 2018 to the federal government on the growth of the clean technology sector, including on regulatory matters. The CTEST recommendations were considered closely in the development of this regulatory review. In continuation of the Economic Strategy Table work, the Industry Strategy Council recently included further recommendations regarding regulatory barriers to the clean technology sector.

Regulatory framework

Due to the crosscutting nature of where and how clean technology products and services are developed and deployed, there is no single federal regulatory framework for the sector. Clean technology may be affected by a variety of federal legislation and regulations that affects its development and adoption. Moreover, clean technology is often the subject of regulation at the provincial, territorial, and municipal levels.

Key federal legislation that can result in driving demand for clean technology innovation and adoption includes the Canadian Environmental Protection Act, 1999, the Energy Efficiency Act, the Greenhouse Gas Pollution Pricing Act, the Fisheries Act (pollution prevention provisions), the Impact Assessment Act, and the Species at Risk Act. Other legislation with relevance to clean technology can include the Canada Transportation Act, the Weights and Measures Act, Patent Act, and the Electricity and Gas Inspection Act.

Broader environmental matters that are relevant to both development and adoption of clean technology often fall under both federal and provincial jurisdiction in Canada. In many cases, regulations relevant to clean technology production and adoption are provincial. However, there are some cases where there is overlap, such as in the case of industrial air pollutants. As such, certain issues and irritants may stem from regulatory complexity and overlap of requirements between jurisdictions.

Addressing regulatory issues can support economic growth and competitiveness. Clean technology development and adoption may be limited when new solutions do not neatly align with existing regulatory requirements. Ensuring that the regulatory system provides producers and adopters flexibility to meet regulatory requirements allows for innovation in the adoption of clean technology solutions and technologies.

Most federal environmental regulations are performance based and technology neutral. However, it can be challenging for regulators to stay abreast of new developments in clean technologies that might affect the ability of a sector or regulated entity to reach higher levels of performance. Small firms producing new clean technologies may also lack the resources to engage in regulatory development processes, including the Canada Gazette process and public consultation initiatives. Fragmented regulatory frameworks and cases where well-defined regulatory landscapes do not exist for emerging technologies may lead to challenges for certainty, clarity and transparency. The increasingly global nature of the clean technology marketplace increases the need to reduce barriers to trade and adoption in domestically and abroad. Within Canada and internationally, harmonization and alignment may also benefit Canadian producers.

Government organizations involved

The following federal departments and agencies participated in this Regulatory Review. They participated in different ways, from submitting and supporting proposals, to guiding and supporting the development and implementation of this Roadmap.

• Natural Resources Canada (NRCan)
  • Canadian Nuclear Safety Commission (CNSC)
• Innovation, Science and Economic Development Canada (ISED)
  • Measurement Canada (MC)
  • National Research Council Canada (NRC)
  • Standards Council of Canada (SCC)
• Environment and Climate Change Canada (ECCC)
• Health Canada

While this Review benefited from the participation of the departments and agencies listed above, not all departments and agencies have proposed initiatives to be advanced through this Regulatory Roadmap. Specific leads for the initiatives proposed are identified the section, Clean Technology Regulatory Review Roadmap initiatives.

The Clean Technology Regulatory Review consultation process took place from summer 2019 to spring 2020 and included opportunities for stakeholders to provide input by submitting written comments to Canada Gazette consultation, participating in stakeholder webinars and interviews, and taking part in engagement sessions across Canada.

Published on June 29, 2019, the Canada Gazette notice invited comments on several regulatory modernization initiatives, which included the second round of Regulatory Reviews. To promote awareness of the Canada Gazette consultations, Government of Canada officials hosted three webinars with representatives of the clean technology sector. The government hosted the first two webinars—one in English and another in French—on August 7, 2019, and reached over 90 participants, including clean technology users and adopters, industry associations, and think tanks. A second webinar took place on September 5, 2019, with representatives of Canadian clean technology associations.

Stakeholders submitted over 90 written responses to the Canada Gazette consultation related to the Regulatory Reviews process, of which 54 included comments on clean technology. The majority of the clean technology submissions came from industry associations and clean technology users, with limited input from SMEs and clean technology producers. 

Themes that emerged from the stakeholder submissions include the need to streamline federal regulatory requirements; enhance federal-provincial-territorial cooperation and harmonization; increase international cooperation; develop outcomes based regulations and adopt clean technology innovations; establish novel regulatory approaches to support innovation; and ensure regulatory certainty and competitiveness. For more details, please see the What We Heard Report (What We Heard: Report on Regulatory Modernization) for a summary of stakeholder feedback on regulatory modernization.

To ensure the perspectives of clean technology SMEs were considered during the regulatory review, government officials organized targeted in-person sessions in Vancouver, BC (February 2020) and Toronto, ON (March 2020). A planned engagement session for Montreal, QC in early March 2020 was cancelled due to the COVID-19 outbreak and replaced with bilateral stakeholder discussions. These sessions provided an opportunity for clean technology SMEs to identify their issues and provide direct feedback to the Regulatory Review. During these sessions, stakeholders emphasized the importance of regulations in helping drive innovation and demand for clean technology products and service adoption. They also noted the challenges for SMEs to understand and navigate the regulatory system and stressed that a clear regulatory environment is critical to the industry’s success as it provides signals for investors and buyers.

Finally, it is important to acknowledge that while the government appreciates all of the input it received during this review process, there were several issues raised by stakeholders that fall outside of the scope of this Review. Those out of scope issues include regulations currently under development, or under review, and recently completed, as well as any specific provincial or territorial regulatory issue. For topics raised by stakeholders but not addressed in this Roadmap and those being addressed in other ways, please refer to the section, “Initiatives not being addressed.”

In addition to the proposals to address regulatory issues and barriers described in this Roadmap, federal departments had already begun to advance efforts to modernize regulations that are under their purview. These regulatory modernization efforts are summarized below.

Natural Resources Canada

The mandate of NRCan includes the sustainable development and use of the country’s natural resources. The mandate letter for the Minister of Natural Resources also sets out the priority to position Canada as a global leader in clean technology. Furthermore, the 2021 supplemental mandate letter prioritizes building retrofits, reallocating surplus power within regions, promoting zero-emissions vehicles and investing in vehicle charging stations as key focus areas.

The department administers over 30 Acts, a number of which provide authority for making regulations and set out who or what entity has the responsibility for the day-to-day administration of the regulations. There are over 90 sets of regulations that exist already or that are being developed that apply to energy, minerals and metals, forests, and earth sciences. NRCan also has responsibility for, or advises the Minister, on regulations implemented and enforced by independent lifecycle regulators in the Minister’s portfolio, such as the Canada Energy Regulator and the Canadian Nuclear Safety Commission.

NRCan brings innovation to natural resources by advancing clean technologies, developing new knowledge and advancing emerging technologies to commercialization. The department drives innovation through its funding for research, development and demonstration of clean technology through several programs, including the Energy Innovation Program, the Program of Energy Research and Development, and the Clean Growth Program. In 2020-2021, NRCan will also support breakthrough solutions to complex problems by awarding four grand prizes for Clean Technology Challenges as part of the Impact Canada Initiative.

NRCan also oversees funding programs included in the Pan Canadian Framework on Clean Growth and Climate Change that aim to fight climate change, build resilience and drive economic growth. These include investments in clean energy and energy efficiency through Green Infrastructure Programs, which support research, development, demonstration and development projects in areas such as Smart Grid, Energy Efficient Buildings, Emerging Renewable Power, Clean Energy for Rural and Remote Communities, Electric Vehicle and Alternative Infrastructure Deployment Initiative, and the Electric Vehicle Infrastructure Demonstrations. Several of these programs focus on ensuring that the regulatory environment is ready for new innovative clean technology products.

Furthermore, the department will work with provinces and stakeholders to implement recommendations from the Canadian Small Modular Reactor Roadmap, which will support efforts to diversify access to clean electricity and reduce greenhouse gas emissions. Additional information on efforts to implement recommendations from the Canadian Small Modular Reactor Roadmap can be found in the SMR Action Plan and the federal government’s strengthened climate plan, A Healthy Environment and a Healthy Economy.

In addition, NRCan recently released its Forward Regulatory Plan 2021-2023, which is a publicly available list, with descriptions, of planned or anticipated regulatory changes (regulatory initiatives) that the department intends to propose or finalize in that period. NRCan also recently released its Regulatory Stock Review Plan 2021-2023, which is a public list and description of planned reviews of regulations that NRCan is proposing within the next two fiscal years.

Innovation, Science and Economic Development Canada

ISED and its portfolio are actively working to achieve market transformation for clean technology in Canada, using a broad range of levers at its disposal.

Through the department’s Innovation Canada programs and Regional Development Agencies, funding is provided to innovative clean technology projects across the country and in all industrial sectors that will simultaneously advance Canada’s economic development and climate change objectives. In addition, Sustainable Development Technology Canada, an arms length foundation that reports to Parliament through the Minister of Innovation, Science and Industry, commits to continuing its proven track record of supporting clean technologies with the potential to deliver significant economic and environmental benefits.

ISED also works closely with its portfolio partners to develop programs that support the deployment of clean technologies more broadly as well as support the modernization of regulations related to the clean technology sector. Examples of these portfolio partners and their initiatives that support the clean technology sector include:

• Since 2011, the Canadian Intellectual Property Office (CIPO) offers an accelerated prosecution of patent applications relating to environmental (green) technologies at no additional cost. This initiative helps to expedite commercialization of technologies that could help to resolve or mitigate environmental impacts or to conserve the natural environment and resources. CIPO also collaborates with the World Intellectual Property Organization (WIPO) and is a member of the WIPO GREEN network, which facilitates commercial relationships and transactions by connecting green technology providers and seekers.
• Measurement Canada (MC) is undertaking a review of its legislation and regulations to ensure it has an agile regulatory system that enables innovation and clean technology adoption, particularly in the energy and clean sectors as well as small businesses. Examples of new measuring technologies include charging stations that measure the amount of electricity used to charge an electric vehicle. Modernizing the legislative framework is part of a broader initiative at MC to move to a more digitally enabled environment and a more risk-based operational model.
• The National Research Council (NRC) is a signatory party to the Regulatory Reconciliation and Cooperation Table (RCT) Reconciliation Agreement on Construction Codes. Through this work, the NRC is working with provincial and territorial jurisdictions to modernize the National Code development system to reduce variations between provincial and territorial codes while ensuring faster adoption – within 24 months of 2020 National Model Code publication and within 18 months for subsequent code cycles.  For example, the 2020 edition of the National Model Codes is expected to introduce performance tiers enabling provinces and territories to move towards net-zero energy ready building codes consistent with commitments under the Pan Canadian Framework on Clean growth and Climate Change.  Minimum energy efficiency requirements for the design and construction of all new buildings will incentivize the adoption of clean technology solutions and reduce regulatory compliance costs for companies operating in multiple jurisdictions.

Clean Growth Hub

The Clean Growth Hub, co-led by ISED and NRCan, is a whole-of-government focal point for clean technology focused on supporting companies and projects, coordinating programs and tracking results. In its first four years, the Hub has helped over 2,000 clean technology stakeholders—including small and medium enterprises, clean technology innovators with high potential for disruption, and large adopters in critical, heavy-emitting industries—navigate the federal ecosystem of supports and services available to them. The Hub leverages its 16 member departments and agencies, bringing their knowledge, expertise, and networks to provide real-time, tailored advice and information regarding policy, regulation, standards, and procurement issues related to clean technology.

The Hub also supports the Clean Technology Data Strategy, which aims to improve the consistency of terminology and data collection practices to strengthen the evidence-base for decisions, improve the understanding of the emerging clean technology landscape, and ensure the creation of impactful policies and programs to support the production and adoption of clean technology. Budget 2021 proposes to renew both the Clean Technology Data Strategy and the Clean Growth Hub until fiscal year 2023-24.

Environment and Climate Change Canada

ECCC is one of the federal government’s most active regulators. It has full or shared responsibility for Acts and regulations that cover a wide range of issues, including toxic chemicals, air pollution, greenhouse gas (GHG) emissions, wastewater, environmental emergencies, migratory birds, and species at risk.

Clean technology is central to the Government’s agenda to address fundamental environmental challenges in ways that lead to strong economic opportunities. As such, clean technology development is emphasized in the Pan-Canadian Framework on Clean Growth and Climate Change and the federal Government’s strengthened climate plan published in 2020, A Healthy Environment and a Healthy Economy. Similarly, the Canada-wide Strategy on Zero Plastic Waste focuses on stimulating the development and deployment of clean technology solutions.

ECCC is strongly committed to supporting clean technology. ECCC’s default approach to the design of regulations is to use market-based or performance-based regulations. These technology-neutral approaches provide flexibility to find the least-cost method of achieving the stipulated outcome. In turn, this creates incentives to businesses, including clean technology companies, to create new, lower cost ways to meet environmental outcomes.

In this section:

• Theme 1: Getting Ready – Ensuring Regulatory Readiness to Facilitate Adoption
  • Launching the Offshore Renewable Energy Regulations Initiative
  • Reviewing Liability Limits for Small Modular Reactors
  • Examining Regulatory Readiness to Review Fusion Technology
  • Improving Nuclear Regulations Costing
  • Evaluation of the Use of Artificial Intelligence Safety Cases in the Canadian Nuclear Industry
• Theme 2: Coordinating Approaches – Enhancing Coordination across Jurisdictions
  • Developing and Harmonizing Codes and Standards for the Production, Distribution, and Use of Clean Fuels
  • Innovation and Electricity Regulation
• Theme 3: Novel Regulatory Approaches
  • Reducing Barriers to Innovative Measuring Devices
  • Clean Technology Foresight Exercise

The Clean Technology Regulatory Roadmap identifies a number of proposed actions. It includes proposals to address a range of issues identified by stakeholders and advance initiatives identified by participating departments and agencies to increase/support competitiveness of Canada’s clean technology sector. The Roadmap also identifies opportunities for novel approaches to support innovation. These proposals are organized into three themes:

1. Getting ready – Ensuring regulatory readiness to facilitate adoption;
2. Enhancing coordination across jurisdictions; and
3. Novel regulatory approaches.

In addition to nine proposals, it is worth noting that there are efforts in the International Standards Regulatory Roadmap also relevant to clean technology. For instance, the International Standards Roadmap includes a proposal from NRCan to develop a framework to increase Canada’s leadership in developing international standards for the natural resource and clean technology sectors. Additional information on this initiative can be found in the International Standards Regulatory Roadmap. For further information on other Regulatory Roadmaps, please see the Targeted Regulatory Reviews.

Theme 1: Getting Ready – Ensuring Regulatory Readiness to Facilitate Adoption

Despite the COVID-19 crisis, the Canadian economy is rapidly changing as the country transitions to a low carbon economy. The regulatory system must keep pace with this transformation, create demand where it does not exist, and be ready to assess new technology when these innovations come to market so that businesses and consumers can adopt them.

However, stakeholders have indicated that they often face barriers when new cutting-edge technology does not align with existing regulatory requirements. Notable examples include regulatory gaps, outdated approaches, and difficulties verifying the performance of environmental technologies.

To overcome these challenges, regulators must prioritize performance-based regulations that set outcomes and provide innovators and adopters flexibility to meet the requirements. Furthermore, regulations must not inadvertently limit the adoption of clean technology by being overly prescriptive.

The Roadmap identifies five (5) proposals that support key actions under this theme.

Launching the Offshore Renewable Energy Regulations Initiative

According to the International Energy Agency, the offshore renewable energy industry has the potential to become a $1 trillion industry over the next two decades.  However, there are currently no renewable energy projects in federal offshore areas in Canada. The lack of a clear regulatory framework may be a disincentive to future project proponents and could create concerns for potentially impacted stakeholders, such as fishing groups.

To address this issue, NRCan launched the Offshore Renewable Energy Regulations initiative, which will develop safety and environmental protection regulations for offshore renewable energy projects in federal offshore areas. The regulations will adopt an outcomes-based approach to ensure they remain applicable over time, promote innovation and enable cost reductions in a nascent industry.

The proposed Offshore Renewable Energy Regulations will look to enable future offshore renewable energy projects to adopt best in class safety and environmental protection measures. They will pre-emptively fill a regulatory gap and bring clarity to future offshore renewable energy project proponents. Regulatory clarity will improve competitiveness of the industry; and the outcomes-based approach will promote innovation, continual improvement, and cost reductions for proponents.

NRCan launched the engagement process for the Offshore Renewable Energy Regulations initiative in fall 2020. The department anticipates launching Canada Gazette Part I stakeholder consultations in fall 2022 and publication of the final regulations in Canada Gazette Part II in spring 2023. The engagement process will include the following three phases:

• Phase 1: Fall 2020 - Pre-engagement on general approach, including public release of a Discussion Paper;
• Phase 2: Summer 2021 - Pre-engagement on technical requirements to be proposed in the regulations; and
• Phase 3: Fall 2022 - Pre-publication of the Offshore Renewable Energy Regulations in the Canada Gazette, Part I for public comments.

Lead: Natural Resources Canada

Contact:
Renewable and Electrical Energy Division
Electricity Resources Branch
Natural Resources Canada
nrcan.offshorerenewables-renouvelablesextracotieres.rncan@canada.ca

Reviewing Liability Limits for Small Modular Reactors

Small modular reactors (SMRs) could be the future of Canada’s nuclear industry, with the potential to provide non-emitting energy for a wide range of applications, from grid-scale electricity generation to use in heavy industry and remote communities. The 2020 Fall Economic Statement and the SMR Action Plan highlighted the importance of this technology as a source of carbon-free heat and electricity. To ensure this technology reaches its potential, stakeholders have encouraged the government to update the liability limit for SMRs, which are in their view, lower risk installations relative to full-scale nuclear power reactors.

To address this issue, NRCan will review the regulatory liability pursuant to the Nuclear Liability and Compensation Act to:

• Assess, in consultation with the CNSC and stakeholders, the risks associated with SMRs and potential regulatory gaps;
• Engage nuclear insurers to obtain their perspectives on SMR liability coverage as well as their capacity to provide coverage for this first-of-a-kind technology; and
• Conduct a review of international standards and practices to inform government decision-making.

NRCan’s efforts to engage federal partners on potential risks and regulatory gaps has already begun, and feedback from stakeholders will be sought commencing in 2021. Once the risks associated with SMRs are properly understood, NRCan will determine whether updates to the Nuclear Liability and Compensation Act and its regulations are required. Moreover, the results of this review will enable nuclear operators to make informed decisions regarding the development and deployment of SMRs in Canada.

Lead: Natural Resources Canada

Contact:
Uranium and Radioactive Waste Division
Electricity Resources Branch
Natural Resources Canada
Jamie.Fairchild@canada.ca

Examining Regulatory Readiness to Review Fusion Technology

Several provinces—including Ontario, New Brunswick, Alberta, and Saskatchewan—have expressed interest in exploring the feasibility of new nuclear reactor designs to meet climate change goals and respond to increasing energy demand. While stakeholders have signaled their comfort with the CNSC’s Regulatory Framework for assessing novel technologies, they called for greater clarity on licence application requirements. Specifically, they noted that the regulatory framework should be agile and technology neutral while maintaining consistent safety standards.

To address this issue, CNSC proposes to review its regulatory framework and readiness to review fusion technology applications. The Centre for Regulatory Innovation is funding this initiative. In the short-term, this work will focus on an independent review, led by academics and other experts, who will assess the existing regulatory framework. This assessment would focus on a range of issues, including reactor design, safety, management systems, personnel and equipment credentialing, environmental protection and waste management.

The long-term objectives of this work will include:

• Identifying gaps that the CNSC would need to address through amendments or modifications to its regulatory framework;
• Clarifying the areas in which the CNSC requires enhanced technical capabilities related to fusion; and,
• Conducting a practical test with a specific technology to determine whether the regulatory framework is sufficiently agile, technology-neutral, and adaptable to external innovations.

This initiative will improve regulatory flexibility while helping to establish clarity for industry proponents who are developing project proposals involving novel nuclear technologies. Such innovations, including fusion, have potential to provide Canadians with a clean, safe, and inexpensive source of electrical power.

This initiative will also broadly align with a February 2020 commitment made by the federal Minister of Natural Resources and his counterparts in Saskatchewan, Ontario and New Brunswick that confirmed their governments’ commitments to toward the safe establishment of a Canadian small modular reactor or advanced reactor technology industry.

The review began in fall 2020 and will conclude in fall 2021 upon completion of the final report.

Lead: Canadian Nuclear Safety Commission

Contact:
Regulatory Analysis Division
Regulatory Affairs Branch
Canadian Nuclear Safety Commission
Gavin.lemieux@canada.ca

Improving Nuclear Regulations Costing

CNSC’s stakeholders have expressed interest in working with the regulator to more accurately determine the financial impacts resulting from regulatory amendments.

In response, the CNSC will undertake efforts to better assess costs associated with federal nuclear regulations. The Centre for Regulatory Innovation is funding this initiative. Specifically, the regulator will establish a contract with external parties to examine the current costing model as part of a review that will seek feedback from external stakeholders and develop training tools, processes and guidance documents to help establish internal costing expertise.

CNSC expects this initiative to have the following positive impacts:

• Increased communication with industry regarding the optimal methods to gather and assess regulatory costing data;
• Improved costing models associated with changes to nuclear regulations;
• Increased internal capacity to manage and direct costing assessments for any regulatory changes; and
• Enhanced understanding of costing techniques that can be shared with the federal family of regulators.

The study will conclude by spring 2022 upon completion of the final report.

Lead: Canadian Nuclear Safety Commission

Contact:
Regulatory Analysis Division
Regulatory Affairs Branch
Canadian Nuclear Safety Commission
Gavin.lemieux@canada.ca

Evaluation of the Use of Artificial Intelligence Safety Cases in the Canadian Nuclear Industry

In response to a known industry challenge, CNSC is launching an initiative to determine the best course of action regarding the incorporation of expectations for the use of artificial intelligence (AI) into the nuclear regulatory framework. This work will also provide insights regarding the expertise required to assess AI in the context of nuclear safety. The Centre for Regulatory Innovation is funding this initiative.

This research initiative will feature a third-party literature study and evaluation of:

• The information required for the demonstration of a safety case for the use of AI in licensed nuclear activities;
• The evaluation of the potential challenges for effective regulatory oversight; and
• Research and evaluation of the use of AI by domestic and international regulators in their inspection and compliance programs.

Over the short-term, the initiative aims to provide the CNSC with an environmental scan of the incorporation of AI considerations into regulatory frameworks as well as a compendium of best practices. Furthermore, this project will provide the CNSC with relevant information on the types of AI and the means of adoption globally within the regulatory community.

Over the longer-term, the initiative aims to assist the CNSC identify the best course of action regarding AI implementation requirements in the nuclear industry as well as provide CNSC with insights regarding the resources required to achieve this objective.

CNSC expects this initiative to be complete by March 31, 2022, and result in an AI Action Plan as well as workshops with relevant CNSC staff.

Lead: Canadian Nuclear Safety Commission

Contact:
Regulatory Analysis Division
Regulatory Affairs Branch
Canadian Nuclear Safety Commission
Gavin.lemieux@canada.ca

Theme 2: Coordinating Approaches – Enhancing Coordination across Jurisdictions

In many instances, clean technology is subject to different regulations at multiple levels of government and across jurisdictions, which can create a burden or confusion for industry and encumber the deployment of these innovations.

To address this issue, stakeholders urged the federal government to enhance regulatory cooperation and harmonization across jurisdictions. For those instances in which regulatory authority falls to provinces and territories, stakeholders note that the federal government should use its convening power to enhance coordination across jurisdictions. Examples of these multi-jurisdictional regulatory challenges include developing codes and standards for alternative fuel infrastructure deployment and supporting a coordinated approach to modernizing the electrical grid.

Furthermore, as Canada is a small market, Canadian clean technology companies need to look to export to scale up their endeavours. Harmonization of domestic standards with international ones, help facilitate movement into foreign markets.

By enhancing coordination, clean technology companies will have increased clarity to deploy their innovations in the domestic and international marketplace, which will lead to important economic and environmental benefits for Canadians.

The Roadmap identifies two (2) proposals that support key actions under this theme.

Developing and Harmonizing Codes and Standards for the Production, Distribution, and Use of Clean Fuels

As new technologies evolve and enter the market, stakeholders have emphasized the importance of ensuring codes and standards are continuously evaluated and updated to ensure large-scale commercialization of low carbon fuel technology and infrastructure. They also noted the importance of ensuring the safe and efficient operation of the vehicles, end-use equipment, and infrastructure by developing and aligning codes and standards for these technologies. Moreover, these components must be fully compatible and interoperable across jurisdictions.

NRCan is expanding existing programs to provide cost-shared contributions to standards development organizations and industry to address gaps in codes, standards, and regulations for end-use equipment (e.g., vehicle components) and infrastructure that produces, distributes, or uses low-carbon fuels (e.g., pipeline and refuelling nozzles). In addition to these cost-shared contributions, NRCan will continue to work with federal partners and stakeholders to harmonize codes and standards, develop performance-based standards, and lead international standard and certification efforts. This work also contributes to commitments made through the Canada-United States Regulatory Cooperation Council.

This initiative will provide a clear market framework for low-carbon fuel producers, retailers, end-users, importers and exporters. It will also remove barriers that impede technologies from entering the market and enable switching to clean fuels like hydrogen and advanced biofuels. Moreover, it will reduce costs for clean technology companies since it would enable them to adhere to a common set of specifications for their products across jurisdictions. Finally, Canadians will benefit from this work as it will provide them with greater assurance that they will have opportunities to refuel and recharge their low emission vehicle when required.

This initiative will support key Government of Canada policies, such as the Pan Canadian Framework for Clean Growth and Climate Change and Canada’s strengthened climate plan, A Healthy Environment and a Healthy Economy as well as the Regulatory Cooperation Council Low Carbon Transportation Technologies and Infrastructure Workplan. It will also contribute to early implementation of the recommendations outlined in the Hydrogen Strategy for Canada. Specifically, NRCan will work with the Standards Council of Canada on a Standardization Collaborative to identify and prioritize codes and standards for hydrogen technologies and infrastructure.

In 2021, NRCan will establish a codes and standards working group tasked with developing a multi-year workplan to address codes and standards gaps for low carbon fuel technology and infrastructure. This initiative aims to revise or create at least seven codes and standards per year until the program concludes on March 31, 2026.

Lead: Natural Resources Canada

Contact:
Fuel Diversification Division
Clean Fuels Branch
Natural Resources Canada
aaron.hoskin@canada.ca

Innovation and Electricity Regulation

Stakeholders in Canada’s electricity sector consistently report challenges related to obtaining regulatory approval to implement technological solutions that modernize the electricity grid in support of Canada’s net-zero emissions by 2050 targets. Provincial and territorial electricity regulators are exploring pathways to regulating investments in innovation and are interested in implementing new approaches to evaluating and incentivising innovation projects, while also respecting legislated mandates. Other stakeholders with an interest in energy system transformation have pointed to the role of ‘innovation sandboxes’ to better address regulatory and non-regulatory issues that are blocking innovation and the adoption of solutions at scale. For example, CTEST in 2018 recommended creating a regulatory sandbox for utilities seeking to increase adoption of clean technologies, such as energy storage, renewable natural gas, and water technologies. According to CTEST, the regulatory sandbox would facilitate the establishment of a common framework for the adoption of new technologies on which technical and economic regulators had previously agreed.

In response, NRCan plans to explore new approaches to evaluating innovative electricity system projects, and elaborate pathways for scaling successful innovations through stakeholder consultations in support of net-zero by 2050 targets. The Innovation and Electricity Regulation Initiative will leverage federal expertise and experience from electricity grid modernization and research, development, and deployment programs. In addition, NRCan will consult with interested regulators, provincial governments, and electricity stakeholders to develop options to accelerate grid modernization within the regulatory construct in support of a high-electrification future. It would also enable the federal government to collaborate with provincial and territorial regulators to generate the data to inform benefit/cost models to evaluate business cases for wider deployment of piloted solutions.

According to Statistics Canada, domestic sales of smart grid and energy storage goods and services grew from $223 million in 2017 to $355 million in 2018, an increase of 40 percent over this time period. To support further growth and deployment, this initiative will facilitate utility investments by enabling the evaluation of electricity innovation projects. Furthermore, it will accelerate the pace of grid modernization in Canada and the energy sector’s transformation through the electrification of heat and transportation, which will reduce greenhouse gas emissions. This initiative would also satisfy a federal commitment under the Clean Power Roadmap for Atlantic Canada and would enable collaboration and mutual learning between provinces and territories.

Building on preliminary engagement activities, this initiative will initially focus on sharing highlights of what was heard, including a workshop in collaboration with CAMPUT and the Canadian Electricity Association (June 2, 2021). Afterwards, the focus will turn to conducting detailed bilateral stakeholder consultations to explore potential federal program offerings (beginning summer 2021). These consultations will be driven by provincial and territorial interest for further engagements.

This initiative’s engagement development work will end March 31, 2023. It will result in a collaborative framework for enhancing federal programs to support provincial and territorial processes that can accelerate grid modernization and scale innovative solutions for the energy sector transformation in Canada.

Lead: Natural Resources Canada

Contact:
Energy Science and Technology Programs Division
Office of Energy Research and Development
Natural Resources Canada
nrcan.sg-ri.rncan@canada.ca

Theme 3: Novel Regulatory Approaches

Novel approaches include projects that make use of innovation methods to help in managing work related to regulations as well as actions to develop the regulatory regime in support of new clean technologies (e.g., a regulatory sandbox to test a new technology).

The Roadmap identifies two (2) proposals that supports novel regulatory approaches in the clean technology sector.

Reducing Barriers to Innovative Measuring Devices

The Electricity and Gas Inspection Act (enacted in 1980), the Weights and Measures Act (enacted in 1970) and their associated regulations focus on traditional measuring devices and have not been adjusted to address innovative measuring technologies. For instance, in the emerging zero emissions vehicle industry, there are barriers to Measurement Canada’s (MC’s) ability to approve electric vehicle charging stations and hydrogen vehicle fueling stations. Currently, Canadian consumers pay for a period of time to connect to electric chargers rather than for the amount of charge they receive. As a result, the quantity of the charge and costs vary greatly, which creates an unfair marketplace for businesses and consumers.

During recent stakeholder engagement there was some discussion that current federal regulations related to measurement devices and meters are outdated, restrictive, and may impede the deployment and adoption of new metering and measurement technologies. Stakeholders in the electric vehicle industry, from manufacturers to end-users, have consistently emphasized that the current charging approach is neither sustainable nor reflective of the actual energy consumed during a typical charge. By contrast, the ability to charge a fee for the actual energy consumed for a given charge is the most accurate and fair method to bill end users. The current regulations therefore hinder the adoption and deployment of clean technology related to zero emission vehicle charging and fueling into the Canadian market.

In addition, MC has experienced challenges in keeping pace with advances in measurement technologies. Outdated laboratory standards and methods and insufficient knowledge of new innovations are additional barriers to efficiently regulate new technologies with a measurement component. Allowing innovative measuring technologies that cannot meet the current regulatory requirements to be used in the market with proper regulatory oversight requires the use of a novel regulatory approach.

To address this issue, MC proposes new authorities to create innovation spaces through the second Annual Regulatory Modernization Bill to enable rapid market access for innovative measurement devices. This work will involve:

• Amending the Weights and Measures Act to create innovation spaces within the legislative framework; and
• Amending the Weights and Measurements Regulations to increase flexibility in the regulations that will support the innovation space.

MC is proposing this novel regulatory approach to enhance regulatory flexibility and foster the competitive economic conditions that will attract new public and private investments in clean technologies. Enabling businesses to expeditiously introduce new measuring technologies to market will create both economic and environmental benefits. Furthermore, Canadians will have earlier opportunities to adopt new technologies with the assurance that they are “getting what they paid for” when they utilize cleaner technologies. This proposal will also support recent federal commitments to fight climate change and promote the adoption of zero emissions vehicles, including those outlined in the 2020 Speech from the Throne.

Once the authorities are in place and the innovation space has been implemented, it will have immediate and long-term benefits for Canadian consumers and for Canadian manufacturers of products related to the clean growth sector. There are measurement aspects at all key points along the zero emissions vehicle production supply chain, from the key minerals used for battery production to the charging stations required to power zero emissions vehicles. Several industries within the clean growth sector are expected to expand rapidly. For example, the hybrid and electric vehicle industry is predicted to grow 28 percent annually and create 14 times more jobs in 2030 than in 2020. Moreover, annual investment will grow from $1.7 billion to $7.0 billion.

As more Canadians purchase zero emission vehicles, the ability for government to ensure accurate measurement along the supply chain will become key to preventing the economic growth from slowing. This proposal will respond to several elements of Canada’s strengthened climate plan, A Healthy Environment and a Healthy Economy, including commitments to ensure charging capacity for urban and rural Canadians as well as ensuring legislation aligns with the ability to support a flourishing market for clean fuels.  Based on the declining costs of zero emissions vehicles, consumer preferences, and current federal and provincial policies, the zero emissions vehicle economy is projected to grow to $43 billion of gross domestic product and 342,000 workers by 2040. The innovation space proposed by MC will permit pre-market testing of new measurement technologies and allow Canadian manufacturers to avoid regulatory slowdowns once the technologies are ready to be placed on the market.

Budget 2021 proposes to provide $67.4 million over seven years to MC to ensure that commercial transactions of low-carbon fuels are measured accurately just as they are for conventional fuels. This work will involve modernization of the current prescriptive provisions within existing regulations, creation of a regulatory innovation space to encourage new and emerging technologies in the Canadian market and enhanced communication and engagement with stakeholders and Canadians.

In 2021-2022, MC will launch a public engagement process, and it will propose legislative amendments in 2022. Additionally, MC will propose regulatory changes to the Electricity and Gas Inspection Regulations and the Weights and Measures Regulations through the Canada Gazette (Part I) in fall 2022 that will aim to be published in Canada Gazette (Part II) in winter 2023.

Lead: Measurement Canada

Contact:
Legislative Policy and Regulatory Affairs
Measurement Canada
Small Business and Marketplace Services
Innovation, Science and Economic Development Canada
ic.mcinfo-infomc.ic@canada.ca

Clean Technology Foresight Exercise

Stakeholders have highlighted the need for the federal government to better understand challenges facing clean technologies and foresee disruptions to existing regulatory regimes. Furthermore, stakeholders recommended that the government conduct more direct research activities and publish regular foresight reports on emerging issues and trends in the clean technology sector. As the COVID-19 pandemic has highlighted, better tools can help anticipate future events and challenges and how best to respond to them.

ECCC invests considerable resources and effort in following developments in emerging clean technologies related to issues such as energy efficiency, decarbonization, greenhouse gas emission sequestration, vehicles, engines, fuels, plastic waste, and water and air pollution. To supplement this work, ECCC with support from the Centre for Regulatory Innovation, proposes to carry out a clean technology “foresight exercise.” Foresight enables organizations to anticipate and prepare for future challenges and problems.

Foresight can support innovation by exploring how issues and problems can evolve, thereby improving policy and regulatory outcomes and reducing unintended consequences. The objective is not to predict the future, but to prepare strategies that are robust across a range of plausible futures. Therefore, this initiative would involve identifying emerging issues and future trends, exploring opportunities for creative solutions, including the potential of clean technologies to help regulatees meet regulatory requirements.

This initiative will enhance cooperation between regulators and stakeholders in the clean technology sector. The use of foresight analysis has potential to shape policies and regulations related to clean technology, which will support the ability of the clean technology sector to innovate and grow. This clean technology foresight exercise is underway and its findings will be reported in 2022.

Lead: Environment and Climate Change Canada

Contact:
Astrid Telasco, Director, Regulatory Innovation and Management Systems
Environmental Protection Branch
Environment and Climate Change Canada
astrid.telasco@canada.ca

While all comments provided by stakeholders were carefully considered, some of the issues raised are not being addressed in this Roadmap. There are three general categories into which issues that are not being addressed fall (see below).

Issues covered by other federal initiatives

Climate change and environmental protection

Various stakeholders commented on the Impact Assessment Act and the Output-Based Pricing System Regulations. Both of these measures had been finalized at the time the Regulatory Review consultation was initiated in June 2019:

• The Impact Assessment Act and supporting regulations came into force on August 28, 2019, repealing the Canadian Environmental Assessment Act, 2012. The Impact Assessment Agency of Canada has since published various policy and guidance materials on its website.
• The Greenhouse Gas Pollution Pricing Act received Royal Assent on June 21, 2018, and the Output-Based Pricing System Regulations were published in the Canada Gazette, Part II on July 10, 2019.

Some stakeholders commented on ECCC’s regulatory and program initiatives that are ongoing or under development. These include the following measures.

• In 2019, the Government of Canada adopted a comprehensive approach to meet Canada’s target of zero plastic waste by 2030. It is investing in science, industrial and technology innovation, and community action to reduce plastic waste and pollution. In October 2020, the government announced further details on its agenda in a Discussion paper, which described a proposed integrated management approach for plastic products, a proposed list of single-use items to be banned or restricted, as well as other measures to increase Canada’s ability to recycle and recover plastics. It recently added “plastic manufactured items” to Schedule 1 of the Canadian Environmental Protection Act, 1999, in order to access regulatory authorities as needed. Further information is available on the Zero Plastic Waste webpage.
• The proposed Clean Fuel Regulations were published in the Canada Gazette, Part I, on December 19, 2020, for a 75-day comment period that ended March 4, 2021. Publication of final regulations is targeted for the fall of 2021. Further information is available through the Clean Fuel Standard webpage.
• The Reduction in the Release of Volatile Organic Compounds Regulations (Petroleum Sector) were published in the Canada Gazette, Part II, on November 11, 2020.
• The Benzene in Gasoline Regulations will be addressed as part of ECCC’s Regulatory Stock Review Plan. Further information is available through the Benzene in Gasoline Regulations and Regulatory Stock Review Plan webpages.
• The fourth phase of the Chemicals Management Plan began in April 2021. Comments on chemicals management received during this Review were considered by ECCC and Health Canada as part of efforts to renew the program.
• ECCC and Health Canada jointly administer the New Substances Notification Regulations (Organisms). Both departments are engaged in review and updating these regulations. Proposed regulatory amendments are targeted for publication in the Canada Gazette, Part I, in 2023. Further information is available through the Forward Regulatory Plan webpage.
• Comments on the New Substances Notification Regulations (Chemicals and Polymers) will be considered by ECCC and Health Canada during their review of these regulations as part of Regulatory Stock Review starting in 2022-2023. Further information is available on the Regulatory Stock Review Plan webpage.

Navigating the Federal Regulatory System

In its first four years, the Clean Growth Hub has helped over 2,000 clean technology stakeholders—including small and medium enterprises, clean technology innovators with high potential for disruption, and large adopters in critical, heavy-emitting industries—to navigate the federal ecosystem of supports and services available to them.

The Hub leverages its 16 member departments and agencies, bringing their knowledge, expertise, and networks to provide real-time, tailored advice and information regarding policy, regulation, standards, and procurement issues related to clean technology. Budget 2021 proposes to renew the Clean Growth Hub until fiscal year 2023-24.

Issues covered by the first round of Targeted Regulatory Reviews

During the review process, stakeholders also raised issues that Health Canada is advancing through their regulatory and policy modernization commitments described in the first round of Targeted Regulatory Review Roadmaps: Health and Biosciences and Agri-food and Aquaculture Roadmaps.

Under the Health and Biosciences Roadmap, Health Canada is working to enhance alignment to the Globally Harmonized System of Classification and Labelling of Chemicals. Under the Agri-food and Aquaculture Roadmap, the department is reviewing the pesticide re-evaluation program and examining labelling and packaging requirements to minimize their environmental impact. Through these Roadmaps, Health Canada is committed to delivering a modernization agenda that can be leveraged to promote healthy and safe environments and reduce the harm of environmental contaminants. This work will contribute to addressing stakeholders’ comments from the Clean Technology Roadmap consultations.

Additional health issues raised by stakeholders that are being or have been reviewed as part of other mechanisms include:

• Amendments pertaining to the Patented Medicine Regulations and the Patented Medicine Prices Review Board;
• Enablement of direct-to-consumer sampling of certain low risk personal care products (e.g., sunscreens, anti-dandruff shampoos, toothpastes) classified as a drug in Canada under the Canada United States Mexico Agreement;
• Claims for exemption under the Hazardous Material Information Review Act to keep the identity of ingredients in laboratory samples confidential and update to the public-facing technical guidance; and,
• Use of foreign reviews and/or joint risk assessments for pathogen intervention.

Issues not being addressed for other reasons

Various Health Issues

Some stakeholder comments pertaining to various health issues were referred to Health Canada, which after careful consideration, concluded that they were outside of this review. These comments have nonetheless been examined through other mechanisms by Health Canada:

• Changes to the mandate of Pest Management Regulatory Agency;
• Alignment of Canadian Environmental Protection Act, 1999, with other jurisdictions for nanotechnologies, chemicals and polymers;
• Continued effort to reduce animal testing;
• Changes relating to the cannabis industry (i.e., for separate facilities for edibles, water use by producers, or use of foliar spray); and
• Elimination of gaps in the Canadian supply chain for the use of hemp fibre and oils in the manufacturing sectors (pulp and paper, insulation, construction materials and textiles).

As noted previously, this section aims to highlight the general categories of comments that were not addressed through the Clean Technology Regulatory Review Roadmap. The list of examples included in this section is not exhaustive.

Furthermore, while the COVID-19 pandemic has provided an opportunity to accelerate clean technology in the regulatory space, it has also shifted stakeholder circumstances and priorities, introducing new regulatory challenges. Outreach with federal regulators on further opportunities to support regulatory modernization and responsiveness to stakeholders is encouraged.