Natural Resources Committee on May 28th, 2007

[The Chair, Conservative, Lee Richardson]

Thanks, Mr. Harris.

We're going to move on now. We're going to go with a couple of really quick ones from Mr. Tonks and Madam DeBellefeuille, but if you could, keep it really tight. We have another witness for you.

[Alan Tonks, Liberal, York South—Weston, ON]

Yes, in terms of the question Mr. Ouellet asked with respect to the interface or integration between geothermal and solar, you have spoken to micro-applications on water heating and so on. But on a macro level with respect to the same level of energy sources coming from nuclear and traditional sources, unless you have a geothermal interface or a large hydro interface--and it's not to underestimate these applications--is that not where the research and development should go, in terms of an interface between solar and geothermal? We had Okotoks, which is building subdivisions with 200 homes, and we have applications across the country, but there's always a solid interface with another technology.

So I'd like you to respond to that.

[Christian Vachon]

Yes. I always say myself that solar is always integrated with another technology. If you try to size solar to supply 100% of demand, you're probably over-sizing and you have too much investment for nothing. The best, again, is an energy mix. It could be supplied with extra fossil fuel or a gas-fired system--it's always the case, anyway. You always have to look at doing the first job with solar. It really is where it counts the most.

So if you can preheat your water or your air with solar, that's the way it works best and that's where you have the lowest cost per kilowatt hour. Don't try to have 100% of the system work with solar, because for example, in summer you have overcapacity. That's where Okotoks, for example, is a good example of storage over a longer period.

However, I must say, they've tried district heating like that in many places in Europe, and the industry has not caught on because of the non-financial issues. It's not really an industry that works that much. I wouldn't say there is such an industry in countries like Austria and Germany of district heating; it's more localized, decentralized heating systems that you see.

[Alan Tonks, Liberal, York South—Weston, ON]

We could do more research in that in particular, the commercialization.

[Christian Vachon]

We certainly could.

[Alan Tonks, Liberal, York South—Weston, ON]

Okay, thank you.

[Claude DeBellefeuille, Bloc, Beauharnois—Salaberry, QC]

Thank you for your presentation, Mr. Vachon.

Later on, we will be hearing from the nuclear energy specialists. For the last hour, you have been talking about the benefits and the cost of solar energy.

Why do you think that the discussion about energy at the moment involves a new focus on nuclear, rather than other types of energy such as solar energy? Why is that? Who are the players involved? What are the issues? Why is the emphasis being placed on nuclear rather than on developing solar energy? What is your political analysis of this issue?

[Christian Vachon]

If we compare the solar energy lobby in Canada—if there is such a thing—to the lobbies for conventional sources of energy, you can only burst out laughing. So that is a first point.

Have I taught you anything about solar energy this afternoon? I imagine I have. This option is not being considered by Canada at the moment. We are going to show it off, and people will think it is quite cute. I don't think the solar energy option is being considered widely in Canada.

Nuclear energy, for its part, received a lot of subsidies in the 70s, if I remember correctly. However, I have no figures to prove that. The industry is more well-known throughout the world, and that is why we are hearing about this again. If we stop for a moment to consider the potential offered by solar energy and what could be done, I think this option would be considered.

I do not think that decision-makers are necessarily familiar with solar energy. You have to give us an opportunity to talk to you more about it—and that is what you are doing here this afternoon, and I thank you for that. In Canada, the industry is in the embryonic stage, if we compare it to what exists in other countries. If a trade mission were to be organized, for example, and a number of you went to see Intersolar or other major trade fairs in Germany, I think you would all be surprised to see how far advanced the industry is. It is incredible, I swear. You would be surprised, and you would come back delighted.

It is really an issue about the lobby and the size of the industry. It is like the chicken and the egg. At some point, someone has to make a decision. The cycle has to start somewhere, and then solar energy will grow. The Canadian Solar Industries Association is made up of small industries that really do not have the—

[Claude DeBellefeuille, Bloc, Beauharnois—Salaberry, QC]

—resources of the big lobby groups.

[Christian Vachon]

Exactly.

[Claude DeBellefeuille, Bloc, Beauharnois—Salaberry, QC]

Thank you.

[The Chair, Conservative, Lee Richardson]

Thank you, Madame DeBellefeuille.

Thank you, Monsieur Vachon.

With that, we'll conclude. We are short of time today. I appreciate your coming and your responses to the questions. Thank you very much.

[Christian Vachon]

Thank you very much.

[The Chair, Conservative, Lee Richardson]

We are next going to hear from Atomic Energy of Canada Limited. While we're changing, I want to get the attention of the committee again for one brief discussion regarding logistics and future meetings.

It had been our intention to begin consideration of a draft on Wednesday, two days from now, but I think because of the timing and the translation and getting it to you, it may not even get to you until Wednesday morning. Mr. Holland has suggested we might try to hear a couple more witnesses. We haven't heard from anyone on storage, which might be of interest, and he has a suggestion with regard to an economic viewpoint on this as well, perhaps an environment economist. Because I think Wednesday would be a day when we wouldn't have had time to peruse the draft, I'm thinking that if we can get these witnesses by Wednesday we will table the draft so that everybody has an opportunity to look at it, but we won't begin discussion of it on Wednesday because we really haven't gotten into it. If we can get a couple of witnesses to round it out, I'm going to ask the researcher to do that.

Are there any comments?

Monsieur Ouellet.

[Christian Ouellet, Bloc, Brome—Missisquoi, QC]

Mr. Chairman, would it be possible to consider that this first version provides us with some knowledge about what we have and have not heard?

Our mandate is to look at the future of the grid. It is my impression that we have looked mainly at energy production, not at how this energy can be incorporated into the grid at night, during the day, and so on in the future. In fact, I think this is the first time we have talked about that. No one has talked to us about what the network will look like in the future, with all the new electronic components. I had suggested some names, but these individuals did not agree to come.

We will be making decisions about the grid without really hearing from witnesses on this issue. As I said, we have heard more from witnesses about electricity production, rather than production and distribution.

[The Chair, Conservative, Lee Richardson]

That is a little more than I wanted to get into at this moment. They are very valid points, but I think it would evoke a little longer discussion than I wanted to have right now.

It may be that we have more time in this session of Parliament than we had originally expected. To be safe, we were planning on wrapping up by the first week of June. That is apparently less likely, so we may have an extra meeting. Let us discuss that on Wednesday. I think it's a good point.

In the meantime, so we can carry on here, can we proceed with the thought of trying to get a couple more witnesses for Wednesday and start a report?

Mr. Holland, did you have something?

[Mark Holland, Liberal, Ajax—Pickering, ON]

My office has a number of suggestions for the clerk on witnesses of that type. We haven't dealt with storage of electricity, but it's an important component in dealing with demand and greening supply. There have been a lot of developments, so I think it would make sense to talk to someone there. But whoever we can pull in on short notice--

[The Chair, Conservative, Lee Richardson]

Perhaps you can get those to the researcher.

[Mark Holland, Liberal, Ajax—Pickering, ON]

Yes.

On the environmental economist side, we haven't looked a lot at the economics of this. I think it's important to do that, whether it's with Mark Jaccard or somebody else of that nature.

[The Chair, Conservative, Lee Richardson]

Mr. Harris.

[Dick Harris, Conservative, Cariboo—Prince George, BC]

Mr. Chair, I'm sure you want to get as many witnesses as we require for input to the committee. I have some concerns, given some past experience, about the security of our drafts. I'm wondering whether this committee or you have any suggestions on how we're going to achieve the security that's warranted from this committee on any report we're about to table.

[The Chair, Conservative, Lee Richardson]

I get the point, Mr. Harris. As a matter of fact, the clerk has already come to me with the suggestion that we not e-mail the draft. It will be presented to you in hard copy. I'm sure he'll have it micro-encoded so we can trace any leaks.

Thank you for your input.

I'm pleased to see that our witnesses are now in place. From Atomic Energy of Canada we have David Torgerson, vice-president of technology. Thank you for appearing.

We have Howard Brown and Tom Wallace from the Department of Natural Resources. Thank you, gentlemen, for appearing again.

We are a little tight on time today, so I'm going to ask you to start briefly with opening remarks. We'll get quickly to questions and probably make a little better effort to keep the questions and answers to five minutes each as we proceed.

Mr. Brown, do you have opening statement as well?

[Howard Brown, Assistant Deputy Minister, Energy Policy Sector, Department of Natural Resources]

We have a deck. Mr. Wallace is the brains of the operation, so he's going to take us through it. I'm sure he can do it in five minutes.

[The Chair, Conservative, Lee Richardson]

There's quite a compliment, Tom.

We're going to hear first from Tom Wallace, director general of the electricity resources branch at the Department of Natural Resources.

Mr. Wallace.

[Tom Wallace, Director General, Electricity Resources Branch, Department of Natural Resources]

Thank you.

I have a brief, 10-page deck that I'll try to go through very quickly just to provide members with an overview of the role of nuclear in Canada. First I would like to outline the role and the potential role for nuclear in Canada, what the role of the federal government is, a bit of a broad overview of the policy framework, and then some important developments in the last few years.

Nuclear energy is really part of our history, and we've had really sixty years of leadership and scientific excellence. Nuclear meets about 15% of Canada's electricity supply, and over 50% in Ontario. The industry is very much concentrated in Ontario, as I think members will be aware--at least the power reactor side of the industry--with 22 CANDU reactors in Canada, 20 in Ontario, and one each in Quebec and New Brunswick. The estimates of greenhouse gases displaced annually range from 40 megatonnes to 80 megatonnes, depending on whether you assume coal or natural gas would have been otherwise constructed.

We have six reactors constructed in China, Korea, Romania, and Argentina, and we are a very important supplier of medical isotopes to the world. We have 50% of the world's market, and we're the world's largest uranium producer.

The next slide just shows the three nuclear reactor provinces and the percentage of mix. You can see nuclear represents a big portion in Ontario; a fairly small percentage, with the one reactor in Quebec--which is of course a hydro-dominated province--and then almost 30% of New Brunswick's electricity.

The map shows the concentration of the industry across Canada. Of course the uranium industry is very much concentrated in Saskatchewan. There are very high-quality resources. Ontario is, as I mentioned, the home to 20 of our nuclear plants: eight in the Bruce Peninsula, eight at Pickering, and four at Darlington. Then there are two other reactors: one in Gentilly, Quebec, and one in Point Lepreau.

Our major research facilities are in Whiteshell and Chalk River, but the Whiteshell facility is in the process of being decommissioned, with its activities being transferred to Chalk River as a result of a decision made some years ago.

We see that nuclear power will be an important part of our energy mix for decades to come. It's virtually an emissions-free source of electricity. At the plant, there are emissions associated with uranium mining, which people will point out, but in terms of greenhouse gas emissions, there is virtually zero at the plant. It does enhance our energy security and help to add to a more diverse supply. It's increasingly critical to meeting Ontario's electricity challenges, in particular as the existing fleet ages.

Additional opportunities in western Canada haven't come to fruition yet. It's been talked about on and off in Saskatchewan as a possibility, but the size of the grid in Saskatchewan is such that it's difficult to make nuclear economical without integrating the system more with adjacent provinces. Increasingly there is interest in its possibilities for the Alberta oil sands.

New Brunswick has already made a decision to refurbish one reactor and is now undertaking a feasibility study of the possibility of constructing another one. A lot of that will depend on market opportunities, particularly in the New England market.

Of course, there are major opportunities for uranium production in Saskatchewan with the very recent escalation in prices.

The federal government has quite a dominant role in nuclear, not one that it exercises alone. We establish policies for the nuclear sector. We regulate all activities to ensure health, safety, security, and environmental protection. We support our economic and environmental objectives by advancing nuclear science, and of course we're the sole shareholder of AECL.

The next chart gives you a bit of a picture of the complexity of the industry and how the federal government needs to really work with provincial governments to make it all happen.

The Government of Canada, of course, owns essentially the Canadian Nuclear Safety Commission and AECL. The blue lines are really regulatory lines. The CNSC regulates a broad spectrum of the nuclear industry, and AECL in turn has contractual relations with many of the same entities. The provincial governments, of course, own the universities and hospitals and the public power utilities, and the public power utilities in turn own the Nuclear Waste Management Organization, which has the management and funding responsibilities for dealing with nuclear fuel waste.

So I think you can see that to make all this fairly complex array of relationships work requires a lot of federal-provincial cooperation. It's sort of endemic to nuclear.

Our policy framework is not really written down in one document that says, “This is Canada's nuclear policy”, but it can be distilled, I think, from a series of some formal policy statements, and others can be distilled from observed behaviour.

On the formal side, we do have a very strict non-proliferation policy and sanction nuclear cooperation only with countries that have made a binding commitment to non-proliferation. We have strict and independent regulations through the CNSC. The CNSC reports through our minister to Parliament, and that is in the legislation basically to give the CNSC a degree of independence from the government.

We have a very well-articulated nuclear waste management policy that really is an embodiment of, I guess, polluter pays. It's a policy under which the federal government is responsible for setting the policy and the regulation, but the funding and the management of the solution are the responsibility of the industry that generates the waste. That concept is embodied in pieces of legislation like the Nuclear Fuel Waste Act, which requires the utilities to set up the Nuclear Waste Management Organization to propose options to the government for the long-term management of nuclear fuel waste, once the government makes the decision to get on with the job of funding and managing the solution.

We have a uranium ownership and control policy that reserves new developments for ventures that are 51% Canadian owned or Canadian controlled. Of course, we've supported nuclear research since the inception of nuclear energy through Atomic Energy of Canada Limited. We've historically championed CANDU technology, both in Canada and abroad. Our whole program is developed in cooperation with provincial governments. However, we currently do not have any policies in place to provide direct support for nuclear stations, whether they be refurbished or new builds. In the early days, to get the industry going, we did provide loans for half the cost of the first reactors in a province, but that policy is no longer in existence.

To conclude, there's been a lot of talk about nuclear renaissance recently, both internationally and increasingly in Canada, and there have been some major developments over the last couple of years. First is that the existing CANDU fleet is aging. It's nearing the end of what I would call its half-life. So what we've seen in the past two or three years are a significant number of new major refurbishment contracts. Pickering A was the first, in the last year or year and a half; and in New Brunswick, Point Lepreau and Bruce units 1 and 2, there have been decisions made to refurbish. There are studies under way on Gentilly 2 and Pickering B.

So there's a major wave of investments happening on the refurbishment side.

The second sort of newsworthy event in the last couple of years has been Ontario's decision to set the stage for at least 1,000 megawatts of new nuclear. Pursuant to that policy, the environmental assessments have been launched by Bruce Power and Ontario Power Generation. None of those proponents have yet made a decision on technology.

Finally, one recent development is the Nuclear Waste Management Organization, set up under federal legislation, as I mentioned, to investigate long-term options for the management of nuclear fuel waste. They were required by legislation to study at least continuous storage at the reactor sites, centralized storage, or long-term geological disposal.

In November 2005 they submitted a report to the government, as required by legislation. It's a concept called adaptive phased management, which is essentially a hybrid of the three concepts in the legislation: storage at reactor sites; optional centralized storage, if that makes sense, some decades down the road for either technology reasons or social reasons or economic reasons; and ultimate disposal in a deep geological repository in a willing host community.

There's a lot of activity on the international side. I could probably go on and on, but I thought the committee would find it useful to have just a bit of an overview of the policy framework, the role that nuclear plays and is likely to continue to play, and some of the most important developments in the past couple of years.

Thank you very much.