Natural Resources Committee on Oct. 21st, 2009

[Serge Dupont]

I think my colleague mentioned $8 billion earlier. That is not necessarily the amount invested, but the total amount spent by the Government of Canada on nuclear energy, over a period of approximately 60 years. Some of that money would have gone to operating costs over the years and would not necessarily translate into capital assets.

As for AECL's current balance sheet, the annual report is available, and the committee could certainly have a look at it. Although the balance sheet does show assets, it also shows significant liabilities over and above those assets, and those liabilities represent the government's recognition of AECL's long-term environmental obligations. I do not have the figures on hand; I apologize. But you could easily consult AECL's balance sheet. I believe it lists $3.5 billion to $4 billion in obligations, representing the long-term cost of managing all AECL waste in the various communities in which it has operated.

[Claude Guimond, Bloc, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Both the government and the industry are talking about a nuclear renaissance. You seem to be saying that we will experience a real boom in the next few years. But the public still seems to have concerns about developing atomic energy.

Do you have an action plan to deal with that? Have you given this matter any thought? People are very concerned about nuclear development, especially in Quebec. What is your view on that?

[Serge Dupont]

Earlier, when I was asked about the challenges facing the industry, I said that the first was public confidence. Decisions cannot be made by the various jurisdictions, be it Ontario, Saskatchewan or Alberta, without some degree of public confidence that things can be done safely and securely. The interesting thing in the polls, Mr. Chair, is that nuclear energy has the most support in jurisdictions where it already exists, especially Ontario, where support is the highest in Canada. That is not quite the case in Quebec, which is so rich in hydroelectric resources that the public has little interest in nuclear energy.

Our role, as Canada's government, is not necessarily to choose one technology over another or to opt for nuclear energy rather than another energy source, but to ensure that we at least have a regulatory framework so that the industry can grow in a safe and secure manner. That is why, in my initial remarks, I mentioned the importance of a regulatory framework and the federal government's responsibility vis-à-vis that framework.

[Claude Guimond, Bloc, Rimouski-Neigette—Témiscouata—Les Basques, QC]

We are talking about public opinion and fear of nuclear energy. You have yet to mention international security, terrorism or the fear associated with that. Have you thought about it? Do you have an action plan to deal with that aspect, which I would argue is a very real concern in today's world?

[Serge Dupont]

Earlier I said that all of the world's CANDU reactors operate in accordance with the rules of the International Atomic Energy Agency. All sharing of nuclear technology and the buying and selling of goods and services adhere to nuclear cooperation agreements, which set out stringent non-proliferation requirements. So, all nuclear activities are undertaken with the utmost concern for non-proliferation, safety and security.

[The Vice-Chair, Liberal, Alan Tonks]

You just have a few seconds left. Do you want to ask your final question? If so, it will have to be short, as well as the answer.

[Claude Guimond, Bloc, Rimouski-Neigette—Témiscouata—Les Basques, QC]

My question is too long.

[The Vice-Chair, Liberal, Alan Tonks]

Okay, thank you.

We'll go to Madam Gallant.

[Cheryl Gallant, Conservative, Renfrew—Nipissing—Pembroke, ON]

Thank you, Mr. Chairman.

Mr. Dupont, in August, when you testified before the committee, you stated in regard to isotopes that “the model used to date is not sustainable. It isn't sustainable from the standpoint of health or for Canadian taxpayers”.

To what extent is the isotope business being subsidized by Canadian taxpayers? And of the total isotope production, what proportion is used by Canadians?

[Serge Dupont]

The proportion of isotopes that we produce and comes back to Canada, as you know, after processing, is about 10%. So 90% of it is really for the export market.

I think AECL would be better placed than me to give you a sense of the details of the numbers relating to revenue, which amounts to roughly $35 million to $40 million a year from the sale of isotopes historically—and not just TC-99, but also others—and then the costs of operating the Chalk River facilities and the NRU reactor; therefore, the cost of production of the isotopes. There's complexity in terms of allocation of the costs to the isotopes versus other functions performed at Chalk River and the NRU reactor.

[Cheryl Gallant, Conservative, Renfrew—Nipissing—Pembroke, ON]

Well, my understanding is that 50% to 60% of the actual cost of the medical isotopes is being subsidized by the Canadian taxpayer. What you are telling me, then, is that only 10% of those medical isotopes are actually being used by Canadians.

How will other countries' waste with respect to the production of isotopes--for example, that of the United States--impact on their ability to supply isotopes and the end-cost to the same end-users?

[Serge Dupont]

By waste, do you mean the production of waste through a production process?

[Cheryl Gallant, Conservative, Renfrew—Nipissing—Pembroke, ON]

The waste from the target material, as well as the fuel.

[Serge Dupont]

Okay.

What is clear—this has come up in the international discussions we're having—is that if somebody were to look today at creating a new production facility, including the cost of the waste and of going from high-enriched uranium to low-enriched uranium—which is what the United States wants to do, and involves burning more uranium, because it's not as enriched, and creates more waste—it does represent a very substantial cost that the market is unlikely to bear initially. That is one of the key obstacles to bringing forth new sources of production globally, including in the United States.

What the U.S. is doing right now is that they're advancing some sums to some parties to see whether there are some concepts that can be realized and can move forward in terms of production.

But you're absolutely right: the waste is a big issue in terms of cost and in terms of responsibility with regard to the production of isotopes.

[Cheryl Gallant, Conservative, Renfrew—Nipissing—Pembroke, ON]

Aside from isotope production, we also have the current NRU as the test bed for the nuclear industry, for this renaissance we're experiencing. Would it be prudent for Canada, in parallel to repairing the NRU, to begin detailed planning for a multi-purpose reactor that could replace the NRU fully—not only for backup on isotopes, but also for supporting research for other medical applications, such as heart valves, stents, coatings for implants, drugs that can cross the blood brain barrier, and as a test bed for the fuel rods that will be required in the ACR, if one eventually is built?

[Serge Dupont]

You're obviously well briefed. Those are all good points.

To your question on whether it would be wise to think about that, yes, I think the question will have to be answered at some point in time as to whether Canada wants to invest in a new research reactor. That will have to be a very critical question at a point in time.

At this point, there are a number of files that the government has been working on in terms of the nuclear envelope. But I think the question of whether or not to invest in a research reactor will have to answered sooner rather than later.

[Cheryl Gallant, Conservative, Renfrew—Nipissing—Pembroke, ON]

Regarding the restructuring--

[The Vice-Chair, Liberal, Alan Tonks]

Sorry, Madam Gallant, you're out of time now.

We'll go to Mr. Regan, and hopefully you'll get a round where you can ask that question.

[Geoff Regan, Liberal, Halifax West, NS]

Thank you, Mr. Chairman.

Mr. Dupont, through you, Mr. Chairman, you may be aware that the Society of Professional Engineers and Associates had a news conference on Monday expressing their concerns about the potential division of AECL.

They said that to design and build a nuclear reactor, you need a comprehensive integrated organization. You also need hands-on technical capability in all aspects of mechanical design, assembly, and construction as well as field experience.

They also talked about the evolution of the science, and said that improvements may stem from the lab but are only realized on the ground. If you separate research from engineering, your ability to design improved fuel is greatly jeopardized. And so on.

There's no doubt in my mind that National Bank Financial may be very good at providing investment advice, but are they better than these engineers at understanding how AECL operates? My sense is that I don't see how they could be.

Why would you ignore these concerns from the people who actually work directly in the industry?

[Serge Dupont]

We certainly do not ignore the concerns of the SPEA. The minister has met with the SPEA. We've had discussions with the SPEA and found those discussions to be constructive and helpful, as, by the way, were those with other unions that are also involved.

They're valid points that there will always be a relationship between the commercial part and the lab. That can be organized in different ways. You can have the same corporate entity, as we do now, or you can have different corporate entities that deal with each other on a contractual basis.

The problem we find with the current arrangement is that the leadership of the entity is split between a commercial mandate and a public policy mandate. A clear accountability structure would be to have one entity pursue a commercial mandate to develop and sell reactors and services, and another part that is focused on the generation of knowledge and the advancement of technologies, with some relationships between the two.

[Geoff Regan, Liberal, Halifax West, NS]

The organization pointed out that in the early 1990s.... In fact, the organization pointed out that AECL was put together, that there were two separate organizations. There was a perceived inefficiency of operating two separate organizations that were both integrally required for a successful nuclear operation.

When you combine that with the story they tell of what happened with Ontario Hydro when it was broken up and the ineffectuality that resulted, doesn't that concern you when you look at what's being proposed for AECL? Or can we simply dismiss this?

[Serge Dupont]

Nothing is dismissed in this debate.

One can look at another international model, AREVA, which is a large French company. It has a company that does mining and so forth, but it also builds and services reactors. The research is done by the Commissariat à l'Énergie Atomique, which is sort of a parent company but really operates very much at arm's length. They have a relationship between the two. The Commissariat à l'Énergie Atomique does research for a number of other parties and part of it is done for the commercial arm of the company.

There are different ways to go about this. Our sense right now is that it would be clear to have two entities with more focused mandates and clear accountabilities.

[The Vice-Chair, Liberal, Alan Tonks]

You have 45 seconds.

[Geoff Regan, Liberal, Halifax West, NS]

Thank you.

The question of whether to divide up the AECL, to sell it or whatever, is very much a question of what's in the public interest. The public has an interest in knowing what's going on here, yet we have the NBF report that was requested in 2007, and I think it was provided to the department in August of last year, and still none of it has been released. All that has been released is some summary done by the department. It doesn't seem to me that we've seen much transparency.

What's going to happen with the Rothschild report? When is it due, and who is going to see it?

You mentioned that the reason you can't release it is that it has things like the estimated value. We see lots of things that are released with things blacked out, the numbers, for example. Why couldn't you release this? Why isn't there more transparency?

[The Vice-Chair, Liberal, Alan Tonks]

You have 15 seconds.