Natural Resources Committee on Dec. 4th, 2007

[The Chair, Conservative, Leon Benoit]

Thank you.

Mr. Tonks.

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

I'm fine.

[The Chair, Conservative, Leon Benoit]

Okay.

Monsieur Ouellet.

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

Thank you, Mr. Chair. A little earlier, you quite rightly said that this $650 million amount is the principle on which this bill is based.

Mr. McCauley, you said that it was based on the fact that a CANDU reactor could never have such as serious accident as Chernobyl and that, for a CANDU, $650 million is enough. But we know very well that this bill opens the door to international interests who want to come to operate our nuclear power stations. Last Saturday's paper had an article about the French company Areva getting ready to take a 20% interest in a Canadian company, in Canada. They are on their way. Will future nuclear power stations that are not CANDU have enough coverage with $650 million?

[Dave McCauley]

It is difficult to comment on that. My comments about the CANDU were based on a 1990 study done by Mr. Kenneth Hare. That study dealt with regulatory mechanisms in Chernobyl that were not the same as those in Canada. A similar accident could not happen in Canada. We would have to talk to a nuclear technology expert to find out more about other kinds of power stations. If it was western technology, I would say that $650 will probably be enough.

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

I have another question, Mr. Chair.

Companies refuse to put up a billion dollars, but they will put up $650 million. Mr. McCauley, will you concede that the difference between those two amounts is not huge? Is this not because they feel that the nuclear risk is too high? It is not that they cannot find the billion dollars, perhaps they just do not see the risk worth going bankrupt for.

[Dave McCauley]

No. In my opinion, it is because the insurers do not have the capacity to write a policy for two billion dollars. It is not a matter of risk. The insurance companies do not want to put all their capacity in the nuclear industry. That capacity is not unlimited, so they decide to use it in other areas.

[The Chair, Conservative, Leon Benoit]

Merci.

Mr. Harris.

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

Thank you, Mr. Chair, Mr. McCauley, and colleagues.

Let me see if I have this clear. This $650 million is not an arbitrary number that has been arrived at. I would assume it is based on a number of factors, and the most important would probably be the amount of risk the insurance companies were prepared to apportion to the nuclear industry in this case. They're not just insuring nuclear plants, but they're spread over a lot of different types of insurance.

I would think, at this time, that the $650 million is where the insurance companies are prepared to go, and based on the risk assessment that would have been done, the government is satisfied that it would justify the $650 million in coverage.

In reference to Mr. Bevington's concern, should a catastrophic or a larger accident occur, the private insurance companies would be liable for payment of up to $650 million, and if there were an accountable further amount of moneys needed, then Parliament could appropriate those funds to cover that balance, to the extent that it was willing to do that.

Have I got it straight so far?

[Dave McCauley]

Exactly, yes.

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

You gave the example of the European facilities, which I think have a $500 million private insurance cap. There was a number you mentioned of $1 billion, but apparently $500 million is the level the private insurance companies would be liable for.

[Dave McCauley]

That's right. There are international conventions to which the European countries belong, and to get into the conventions they have to have domestic coverage of at least $500 million Canadian—roughly, as an estimate

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

And in response to a question that may come from my colleagues, if the wish of the committee is that we all agree to raise that to $1 billion from private insurance companies, it's just not that simple. First of all, you have to find somebody who is going to carry that $1 billion insurance. So while we may want to have it, the market out there dictates the amount of coverage you can get. So whether we want $1 billion or not, you still have to find somebody who is going to take that risk. At this time, $650 million seems to be the comfort zone between the actual insurers and the government. So that's where we stand.

[The Chair, Conservative, Leon Benoit]

Thank you, Mr. Harris.

Mr. Bevington.

[Dennis Bevington, NDP, Western Arctic, NT]

Thank you, Chair.

The debate is interesting, because of course it points to what we really have to do here, which is to establish what the cost of the nuclear industry is. To me that's one of the prime issues involved with this bill, to put the nuclear industry in a context with other energy sources. And we're not—

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

On a point of order, Mr. Chair, I know where Mr. Bevington is going, and I know his concerns about the nuclear industry in general, but this bill deals specifically with the Nuclear Liability Act or provision. I'm sure we'll have other opportunities to voice our approval or disapproval about nuclear energy. If we could stick to the bill, it would be great; we'll get through it.

[The Chair, Conservative, Leon Benoit]

Thank you, Mr. Harris.

I was noting that, and I was hoping Mr. Bevington would get to a discussion on clause 21 very quickly.

[Dennis Bevington, NDP, Western Arctic, NT]

Well, Mr. Chair, and to the witnesses, clause 21 is a showpiece in this bill in terms of it saying that the limit should be raised from $75 million, which it is today, to $650 million. I think my point is in order, in terms of our dealing with what should be the limit.

When we look at the nature of liability, when we look at other countries, we have the example of Germany, where there's unlimited liability cast towards the nuclear industry. How do they work within their insurance providers to have that situation in place?

[The Chair, Conservative, Leon Benoit]

Mr. McCauley.

[Dave McCauley]

In Germany, the first tier is covered by traditional insurance, and then in the second tier, you're correct, they have this unlimited liability. It's basically based on the assets of the operator. These are very large energy companies, and the scheme is that in the event of an incident those assets would be at risk to compensate victims.

[Dennis Bevington, NDP, Western Arctic, NT]

So the governing ideology is there, that if you want to play in the nuclear game, you had better have the assets to cover the liability and the risk you may engender. That must be the operating philosophy of that particular country.

When we had evidence presented to us about the CANDU reactors and the nature of the CANDU reactors, we were told there were new versions of the CANDU reactor coming forward. Of course, among the issues with the CANDUs over many years has been the great amount of redundancy in the safety systems that led to extreme maintenance costs, shutdowns of plants for lengths of time to allow them to get through the systems in order to fix the ones closer to the source. That's the nature of the CANDU reactor. So it's not a very profitable system, and its safety provisions are extremely high. So I am concerned as well with the potential for that situation to change. We're not necessarily, in this bill, limiting....

When we talk about Chernobyl and catastrophic conditions, if anything like Chernobyl happened in North America today, after people understand the nature of nuclear contamination, I don't think any insurance would cover that. I don't think we could put a limit there. It would have to be unlimited.

My experience with nuclear cleanups is Cosmos 954, which, although it happened over mostly uninhabited country, still cost of fair bit of money to clean up. My community was over 300 miles away from where the object burned up in the atmosphere, and we're talking about a nuclear reactor the size of a thermos bottle.

So when we talk about the costs of cleanup, in the accelerating world of environmental consideration, in the nature of the industry and the liability, all these questions, we look to the future and say, “Is this sufficient?” I'd say that's where a lot of the concern here comes from.

We have a bill here that's going to open the door for things that I'm sure in Belarus were never considered as compensatory items. I don't understand how we can really limit as much as we have and be fair to people in the future, who may make claims for things that can cost an enormous amount of money. As my Liberal colleague pointed out, we may find out under this $650 million that each individual would be severely limited in the amount they could claim.

[The Chair, Conservative, Leon Benoit]

Thank you, Mr. Bevington.

Madame DeBellefeuille.

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

Thank you, Mr. Chair.

Mr. McCauley, to help us understand the bill, let us make up a story. Let us imagine that, in 10 years, reactors are built near tar sands projects. A serious accident happens. The reactors are attacked, and the act now needs to be applied.

Everything needed to extract tar sand costs billions of dollars in infrastructure, facilities and equipment. If an accident happened, the insurance policy would not protect the operator's nuclear facilities. If the power plants and the reactors were demolished, it would not be compensable, but there would be damage to the rest of the area.

Under this bill, could the Government of Canada provide compensation for the oil companies' infrastructures?

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

If it costs more than $650 million.

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

Well, if there are damages in an oil field, for sure it will cost more than $650 million because the equipment is very costly, very expensive.

What would happen if there were a serious nuclear incident in reactors near oil sands projects?