Natural Resources Committee on Oct. 26th, 2009

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

These are billions we're talking about. It isn't--

[Dr. Neil Alexander]

Somebody buying into the product would then create the investment that's needed to go forward.

The solution would be that the parties work together to come to a conclusion--the federal government, the provincial government and the potential investor. That way, the investor would be happy, the value would be liberated to the country, and the province would get the reactor it wants. It is completely incomprehensible to me as to why that is not happening.

[Nathan Cullen, NDP, Skeena—Bulkley Valley, BC]

One of the reasons might be that the government is broke, that any money forwarded in this way is all deficit spending, and it causes an extra concern.

I have a question for Mr. Stensil about the liabilities. We asked this of AECL when they were here in front of us in terms of the off-book liabilities. This is important. I'm sure that when a company is being valued.... You mentioned the $100 million in 2009 and other off-book liabilities. Can you explain them more? Do they factor into the price that Canadians can expect to receive for their investment at the end of the day?

[Shawn-Patrick Stensil]

That's a very good question, and I don't have the answer to it, the final part. That's one of the reasons we asked the question of the Environment Commissioner. The Environment Commissioner can demand that NRCan respond within three months, so we hope this will force them to respond.

In regard to what is referred to in AECL's annual reports, there's an area that I've noticed that is called “off-book liabilities”. What we've seen is the huge growth from $112 million in 2004 to $500 million last year. We don't know the details because they are not released. When you look at when they were signing contracts for Point Lepreau or Bruce A, possibly South Korea as well, that's where we see it going up. This year, this off-book liability became an on-book liability for the Canadian taxpayer.

What we're asking for is some mechanism, one where we could get out on the table what liabilities are there. It will help inform the discussion on privatization, and we need to control these costs. This is effectively a subsidy for provincial nuclear energy operators. Right now, the government would want to support that—Greenpeace wouldn't—but you need to have a policy that rationalizes it, and it's all being improvised right now.

[The Chair, Conservative, Leon Benoit]

Thank you, Mr. Cullen. Your time is up.

We'll now go to the government side, to Mr. Trost for up to seven minutes.

Go ahead, please.

[Bradley Trost, Conservative, Saskatoon—Humboldt, SK]

Thank you, Mr. Chair.

With seven minutes, could you please be succinct in your answers?

Dr. Duguay was pretty clear as to what he thought of the CANDU. It was dangerous, unstable, risky, or whatever you want to state about it.

This is to Mr. Lamarre, in general, and then also to Mr. MacKinnon, slightly differently.

Mr. Lamarre, why would you argue that the CANDU is not dangerous, not risky, that it's stable or practical?

To Mr. MacKinnon afterwards, your members have to work with these things. Do they feel safe working with them or do they feel they're dangerous and risky?

[Patrick Lamarre]

In the first case--why do we think it's safe?--look at the history. Look at the CANDUs that have been built in Canada for the past 30-some years and that are operational. You can look at what's been built in Argentina, in Romania, and even the ones in India. The track record is there. There has never been an incident. They've always been operational and they've always worked safely. Every time they're compared to other technologies, they're in the top performing reactors in the world.

I think the issues that have been brought up are just how comfortable and how safe we should feel as citizens being close to nuclear. It's so well micro-managed, it is so well documented, it is so well exposed that every single thing is known in the industry.

[Don MacKinnon]

With regard to the operation and maintenance of the plants, as Patrick indicated, these plants have been producing power safely in Ontario now for over 40 years. They produce over 52% of our energy currently. Our members are quite comfortable with the operation.

I think it's important to know that, like any mechanical device, there are multiple safety systems. In areas where there's mechanical wear, are they going to wear out? Do you have to replace them? Absolutely. It's just like the brakes on your car, although when you're dealing with a nuclear station there's a significant magnitude involved.

Nonetheless, we have operated these things safely and efficiently for a good long time. We have the CNSC right on sight. They're the monitors. Do they find things from time to time? Absolutely. That's their job. That's what they're there to do. They point that out and those issues are corrected. We're quite comfortable with the CANDU model.

[Bradley Trost, Conservative, Saskatoon—Humboldt, SK]

My second question involves the decision by the Ontario government. When it came to what to do on reactors, they chose to punt and neither to pass nor to run. I'm willing to take more than just one answer on this one. I'm very curious as to how people see this affecting the future of the Canadian industry, both AECL in particular and the broader industry. Who would be interested in fielding that one?

Mr. Alexander and Mr. Stensil, so we will have one from each of the two sides.

[Dr. Neil Alexander]

We come from a circumstance where we understand how Canada works with a federal government and then with very powerful provincial governments that have control over such issues as electricity supply. That's not a model that exists everywhere in the world.

It's fair to say that most of the world does not understand that what is happening in Canada at the moment could actually happen. So they are putting an interpretation on it that says Canada doesn't have confidence in the technology. It's extraordinarily damaging simply because the rest of the world doesn't understand the circumstances that exist.

We've compounded the problem by allowing rumours to circulate with regard to pricing that appear to have no foundation whatsoever. As a result, not just our ability to sell reactors is suffering, but our entire nuclear supply chain has suffered. There's a situation now that we have to recover from, even though we were in good shape before it started.

[Bradley Trost, Conservative, Saskatoon—Humboldt, SK]

Mr. Stensil.

[Shawn-Patrick Stensil]

Thank you. It's a very good question.

Greenpeace has focused quite a bit of work on the development of Ontario's electricity plan. I think if you take two steps back from this debate, the province has the jurisdiction over its developing energy policy. In 2005 it developed a long-term electricity plan that we've heard a lot about. It said we needed to build reactors because at the time they were told, and they assumed, new reactors would cost $6 billion upfront--to build about 2,000 megawatts. Now Moody's and Standard and Poor’s estimate that at about $15 billion. Media reports to build a first-of-a-kind advanced CANDU reactor--and these are just reports, of course--have put that at about $26 billion.

If you're a province developing an electricity plant, of course you're going to punt it back up, because what they've also been learning in the interim, since 2005, is that the cost for renewables--

[Bradley Trost, Conservative, Saskatoon—Humboldt, SK]

What if it did cost that much? Wouldn't they just kill it outright, then? That would be my one thing. To a certain degree, isn't the indecision the problem, not just the yes or the no?

[Shawn-Patrick Stensil]

It's partly to get a bid out. Also, no other activities have been happening in the province, such as the green energy act. The province also paused its electricity plan review and is revising its targets.

The percentage of nuclear and the timing may in fact change, so that's important to keep in mind. Note that they said AECL was the winning bid, but they didn't knock the other vendors out of the bidding. They've kept that competition up so that maybe they can go back later on to AREVA and Westinghouse, even possibly in 2014 when they know those reactors will work.

[Bradley Trost, Conservative, Saskatoon—Humboldt, SK]

I'll just squeeze in one last question.

We've talked a lot about reactors and CANDU reactors today. I'm very curious as to whether anyone has any more comments on other elements in the Canadian industry, niche elements or things such as handling recyclable fuels, waste, things like that. Does anyone have any comments on the niche elements, other than purely CANDU reactors and AECL?

[The Chair, Conservative, Leon Benoit]

There are only about 45 seconds left in which to answer.

Mr. Alexander, go ahead.

[Dr. Neil Alexander]

To answer your question, our industry is much, much broader than just the supply of reactors. As I've said, we have a very substantial uranium mining industry. As a result of our involvement in uranium mining in Canada, some of our Canadian companies own significant mines abroad that bring even more capability and revenue back into Canada.

We also now have a very advanced program for managing used fuel from our stations. Again, it's the Nuclear Waste Management Organization. It's a process that is the envy of the world, and they're gaining a lot of credibility in that, which could put us as a leader in the field in used fuel management as well.

[The Chair, Conservative, Leon Benoit]

We will go to another round of questioning, starting with Mr. Tonks, but it won't be a full five minutes, just one short question.

As chair, I don't ask a question very often, but I do want to ask a question based on an experience I had.

I am chair of the Canadian NATO Parliamentary Association. As a result, I've been to Lithuania, have actually stood on the core of their Soviet-era reactor. As a condition for joining the European Union, they're about 10 years past their deadline for closing that reactor down, but they have to do it. They indicated to me that, really, the reactor they see as a good replacement choice would be the CANDU 6, because then they wouldn't rely on Russia as a fuel source. I've had various people from Lithuania approach me about this. So I'd just like some comments on that in terms of a comment made earlier by one of the presenters on the CANDU 6 being a past reactor, a reactor that's done.

Mr. Alexander, and maybe Mr. Lamarre as well.

[Dr. Neil Alexander]

Absolutely, you're spot-on. It's a very valuable niche market product for people who don't want enriched fuel. It could also be used to run alongside other reactor designs, because the CANDU can actually produce more energy from the fuel that exists, that comes out of the other reactor designs, giving us more energy per amount of uranium used. So it has tremendous niche market opportunities, and we should keep our eye on those as well as the mass market opportunity from the advanced CANDU.

[The Chair, Conservative, Leon Benoit]

Thank you for your brief answer.

Mr. Lamarre, and then I see Mr. Stensil would like to comment, if he could keep it really short as well.

[Patrick Lamarre]

It's a very good point. As part of our international marketing and as part of the prospects we're talking about, if we look at Turkey, Jordan, and other countries such as Poland, they're all very interested exactly for that reason: not to be so dependent on the supply of fuel, which is controlled, basically, by the United States and France.

An additional line of business that the CANDU industry can really work to is the use of thorium as a fuel—instead of uranium—which is much more broadly distributed around the world. It would bring a new source of usage of the fuel.

Another venue that is being discussed is to use some of the spent fuel from other technologies, which would allow the control of waste from the light water reactors, to be used in the fuels of the CANDU technology. So there are other venues to look at in the future; there are other things to be developed. That's why we're standing behind the CANDU technology and process and AECL for the future.

[The Chair, Conservative, Leon Benoit]

Thank you.

Mr. Stensil, for a short reply as well.

[Shawn-Patrick Stensil]

I'll raise a different line of questioning that the committee may want to examine, which is the ethics of what sorts of international safety standards we would be applying in selling a generation II reactor. This is a pre-Chernobyl, pre-September 11 reactor.

Notably, in 2005, the industry in Canada also looked at building the CANDU 6 in Ontario. Linda Keen applied international safety standards to it. It seems to have failed, because Ontario abandoned it at that time. She was subsequently fired.

We should be having a very serious discussion about the ethics of exporting such a design overseas.

[The Chair, Conservative, Leon Benoit]

Thank you.

Mr. Tonks, go ahead, please, with the question.

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

My question is directed to Mr. Lamarre.

Generally speaking, Mr. Lamarre, you've talked about the thousands of projects SNC is undertaking around the world. The paper presented through Mr. Stensil presents the case for the phasing out of nuclear. This suggests to me there's going to be a continuation, with respect to technologies and improvement, of the platform that exists with all the worker expertise and high value-added and so on, but also, during that phasing down, an expansion of sustainable development in renewable energy sources, particularly wind, solar, and so on.

Perhaps you could tell the committee what you think the blend of a strategic approach would be, over the next 25 years, let's say, that would add as much value to the Canadian economy in every particular way, mindful of the safeguards that must always be kept in mind from SNC-Lavalin's perspective of having thousands of projects, some of which must involve other strategic approaches to energy production.