Thank you very much, Mr. Chair.
I thank the committee for the opportunity to outline the government's perspective and agenda in respect of the Canadian nuclear industry. My intervention will be brief and organized along the following key messages.
First, there is an important role for the nuclear industry in meeting energy and environmental needs in Canada and abroad. Moreover, Canada's industry has the track record, the resources, the know-how and the technology to participate in this global market.
Second, the Government of Canada has a critical role in establishing the conditions for the safe, secure and environmentally sound development of this industry in Canada and is ensuring that its regulatory framework fosters such conditions.
Third, the investment and sharing of risks in individual projects and technologies must be founded on merits and developed under solid business cases. Where there is scope to do so, the private sector can bring key resources—risk capital and entrepreneurship—to support the development of the sector on a competitive basis.
Fourth, the restructuring of Atomic Energy of Canada is a key, necessary step toward strengthening Canada's nuclear industry and putting it in a better position to access opportunities at home and abroad.
I would hope that members will find this overview helpful as a backdrop to your meetings and I would of course be pleased to take questions after the presentation.
Briefly again on the role of nuclear energy in Canada and the world, obviously it's a very important industry to Canada and we have a track record to demonstrate this. Our presence in this industry spans uranium mining and refining, fuel fabrication, the generation of nuclear power, the production of medical isotopes, the management of nuclear waste, and research and development. Our industry has developed this presence successfully in Canada and in the export markets.
We are the world's largest uranium producer. It all comes from Saskatchewan at the present time, but there are other promising resources in other parts of the country, notably Nunavut. Our high-grade reserves are the richest in the world--by far.
Nuclear energy provides about 15% of Canada's electricity and 50% in Ontario.
There are nine CANDU 6 reactors operating safely and successfully in Argentina, Korea, China, and Romania. They represent a showcase of Canada as a high-technology country. In fact, there are 48 reactors based on CANDU technology in the world today.
Countries around the world are continuing to look to nuclear as a key source of clean energy for the future. This was reinforced last week at the International Energy Agency meetings, which the Minister of Natural Resources attended. Leaders from around the world restated that without a significant increase in nuclear power, the world will be unable to meet its greenhouse gas reduction targets.
In short, the nuclear industry is an important one for Canada and reflects over 60 years of Canadian leadership in nuclear industries.
Approximately 30,000 people are directly or indirectly employed in this industry and many of them are highly skilled and highly paid.
The annual output of the industry is approximately $6 billion.
It's important to mention as well that nuclear energy in Canada displaces between 40 million and 80 million tonnes of GHG annually relative to producing the same quantity of electricity from gas or coal.
I will now talk about the Government of Canada's role in the nuclear sector.
Of course, decisions respecting uranium mining and exploration and investments in power generation rest with the provinces.
The federal government, however, plays a very important role and has broader responsibilities in terms of nuclear energy, much more so than for other energy sources. The federal government is responsible for the broad policy framework, including policies respecting waste management and exports of nuclear materials and technology. To that end, Canada has put in place a strong and modern legislative framework, which includes the Nuclear Safety and Control Act, the Nuclear Fuel Waste Act and the Canadian Environmental Assessment Act.
And, as you are aware, the government has introduced Bill C-20 to modernize the 1975 Nuclear Liability Act. I understand that the committee plans to continue its review of this bill this fall.
Through the Canadian Nuclear Safety Commission, the federal government regulates all nuclear activities to ensure health, safety, security and environmental protection.
In addition, the government is taking action to remediate waste issues that date back over several decades. I could go over some examples later, but we'll move on in the interest of time.
On the role in the industry of business cases and business merits, including the private sector, nuclear energy is a technology-intensive, capital-intensive, and risk-intensive business. As such, individual projects and investments, whether a mine, a processing plant, a new reactor, or a refurbishment of an existing reactor, will need to be based on a careful assessment of benefits, costs, and risks. Sound business cases will also be the foundation of a globally competitive industry. In this environment the private sector can make, and is making, an important contribution by providing risk capital, entrepreneurship, the pursuit of commercial opportunities, and the creation of jobs.
The Canadian industry includes private sector companies in uranium mining and processing as well as in the operation of nuclear reactors in Ontario. The supply industry also includes more than 150 Canadian firms supplying equipment and engineering services to this industry.
Fifth, in this context the Government of Canada is moving forward with the restructuring of AECL, as announced by the Minister of Natural Resources on May 28.
The restructuring is guided by the following three key objectives: meeting Canada's energy and environmental needs economically, safely, and reliably; maximizing the return on Canada's substantial investment in nuclear energy over the years; and positioning our nuclear energy for growth in domestic and global markets at a time when this industry, worldwide, is expanding.
As you are aware, the initiative followed a study undertaken by Natural Resources Canada with the assistance of outside advisors. The summary report of the review was made public in May, at the same time as the minister's announcement. I have asked that it be distributed to the committee to help with its deliberations.
The review concluded that the current mandate and structure of Atomic Energy of Canada Limited hampers both its success and the development of the nuclear industry in Canada. The review found that the CANDU Reactor Division did not have the critical size to establish a strong presence in high-growth markets.
The structure and business model of Atomic Energy of Canada Limited need to change to provide more opportunities to partner and acquire global scale to leverage AECL's technology, skills, experience and capabilities.
The review also concluded that Chalk River laboratories would benefit from a strong partner to drive innovation and renewal, and that a government-owned, company-operated approach, such as prevails in the U.S. and the U.K. notably, should be considered. Under this model, which is the basis on which many nuclear labs around the world are managed, policy mandate and funding would rest with the government. The operation of facilities would be contracted to one or more third parties through a competitive process.
The government has engaged N M Rothschild & Sons Canada Limited, through a competitive process, to provide advice on the next stage of restructuring. The report from Rothschild will guide the next steps. The minister has also engaged David Leith, former deputy chairman of CIBC World Markets, to act as her adviser on restructuring. I would note that the board of AECL is also actively engaged in the restructuring process.
In conclusion, Mr. Chairman, I hope I have been helpful in providing some context for the role that nuclear energy plays in Canada and in situating recent initiatives. I would be pleased to take questions from the committee.
