Natural Resources Committee on Dec. 1st, 2016

[Justin Hannah]

It would most likely be EC6. We offered the EC6 in the Ontario government procurement process as a design. AFCR is applicable in Canada. We will have the intellectual property rights to deploy that in Canada. If so, likely the challenge in that regard is availability of recycled uranium. There are hundreds of thousands of tonnes of stockpiles of recycled uranium from recycling of spent nuclear fuel, none of which exists in Canada. We are blessed with abundant resources of natural uranium in the Athabascan basin, and so it makes a lot of sense to use natural uranium.

From a policy perspective, should the decision be made to utilize recycled uranium, whether for costs, or safety, or security reasons, we could procure that, but it would be from outside of Canada.

There are options there with what type of technology we want to use and what type of fuel source we'd like to use.

[Richard Cannings, NDP, South Okanagan—West Kootenay, BC]

Okay. I believe we heard from a witness earlier this morning about ensuring that for the DGR system that was used, we should be able to design that so we could retrieve that spent fuel for future use.

[Justin Hannah]

Absolutely. The chemical and physical compositions of CANDU spent fuel are quite different from light-water reactor spent fuel. There are technologies—I think some colleagues mentioned fast reactor technology—that could use CANDU spent fuel as a waste product, to feed into it as a power reactor. What we are doing with the AFCR is adapting this reactor design to use light-water reactor spent fuel. Light-water reactors constitute 90% of the global fleet of approximately 440 reactors, and so what we're doing is utilizing the spent fuel from there.

You could move to what's known as a three-stage cycle—I don't want to get too technical—to use that. There is still a considerable amount of energy in CANDU spent fuel that could be used in other reactor types, such as the molten salt reactors and the fast reactors that we talked about, but that wouldn't be in a CANDU reuse application, per se.

[Richard Cannings, NDP, South Okanagan—West Kootenay, BC]

Thank you.

[The Chair, Liberal, James Maloney]

Thank you. That's right on time.

Mr. Lemieux.

[Denis Lemieux, Liberal, Chicoutimi—Le Fjord, QC]

Thank you, Mr. Chair.

My first question is for Mr. Hannah, from SNC-Lavalin International.

First of all, do you think that the new CO2 emissions pricing will help you to market CANDU reactors in Canada?

In addition, do you think that this new policy will enhance your international image and help you to sell CANDU reactors?

[Justin Hannah]

That's a very good question.

The seemingly widespread adoption of carbon levies or carbon pricing mechanisms is a big opportunity for the nuclear industry. We think it really levels the playing field for nuclear energy, because we believe it takes into account the full cost of energy production. As you may or may not know, nuclear energy is the only form of electricity generation that, by law, is required to internalize all of its costs, including its waste costs.

We believe that, through the leadership of the federal government and the co-operation of the provinces, a carbon levy or carbon pricing mechanism will alter the economic dynamics, the economic competition, and will create a renewed interest in nuclear technology as carbon prices are applied to coal-fired power generation and natural gas-fired power generation, in Canada firstly, and also in international jurisdictions.

Yes, I believe it's a significant opportunity for nuclear energy.

[Denis Lemieux, Liberal, Chicoutimi—Le Fjord, QC]

I would also like to hear other witnesses' opinion on the same topic.

[Dr. Jonathan Bagger]

I would certainly agree with that. It seems to me that the concern about the carbon footprint of energy is a big boost for the nuclear industry, yes.

[Richard Wiens]

I would also agree. As Justin points out, nuclear is really the only energy source that is accountable for the waste that it creates. Making the other sources of energy accountable as well I think will only stand to provide an opportunity for nuclear once so-called full cost recovery is better understood.

[Denis Lemieux, Liberal, Chicoutimi—Le Fjord, QC]

My next question is also for Mr. Hannah.

I am wondering about this. Some witnesses told us that the future of Canada's nuclear sector lies mostly in exports. You mentioned that you were considering building 5 to 10 power plants elsewhere in the world in the medium and long term.

What are your objectives? Tell us about your figures. What sales do you expect to achieve over the next 5 to 10 years elsewhere in the world? What will be the economic benefits for Canada? What will be the spinoffs in terms of jobs and subcontracts, and on the technical and manufacturing levels?

[Justin Hannah]

It's a very good question. As the discussion with your colleague alluded to, we are looking at the market opportunity in the medium term—we'll say five to 10 years—of approximately five to eight new CANDU reactors to be built internationally. Each one of those contracts or projects is unique and will have various economic spinoff benefits, not only to SNC-Lavalin but to the downstream supply chain, the 200 SMEs I spoke about.

What I can reference is that in 2013 we commissioned the Conference Board of Canada to do an economic modelling study on the economic impact of the export of two new CANDU reactors internationally, in what I'll describe as a standard model. The findings showed that the economic impact was up to 37,000 person-years of employment, with a net GDP increase of approximately $3.8 billion. Now, those are large numbers, and that's not something we would glean from all of the export projects, but you can get an order-of-magnitude understanding of the type of economic impact that would entail in terms of these export opportunities.

I talked about the short-term or medium-term CANDU prospects in the five- to eight-year window period. In Asia alone there will probably be, our estimates show, between 150 to 200 new reactors built. That's driven by economic growth, people moving, and the middle class growing, but is also buttressed by decarbonization pushes within that region.

We see a large opportunity there. I talked about what we're doing in China. We also work very closely with countries like South Korea, as well as Southeast Asian countries such as Malaysia, that are looking at new nuclear.

We think the prospects are quite bright for us, not only in nuclear new build but in services and life extension as well. There's an opportunity for us to life-extend the three remaining CANDU units in South Korea at the Wolsong site. We've already begun discussions with the client there. We've already life-extended one. Those projects alone are multi-billion dollar investments from which the downstream supply chain gleans a large benefit.

[Denis Lemieux, Liberal, Chicoutimi—Le Fjord, QC]

My question is again for Mr. Hannah.

Do you think the Government of Canada is providing sufficient support for your efforts to market the CANDU reactor abroad?

[Justin Hannah]

I would have to say that we are very encouraged at the signs we've gotten, both from this government as well as the previous government to some degree. This new government has been very open-minded and supportive, from a political perspective, in terms of supporting nuclear.

I talked about mission innovation being a sign of this government's being open to nuclear as part of clean technology innovation. So from a political support perspective, having Prime Minister Trudeau witness our signing, and our accompanying Minister McKenna on a mission to China as part of the business delegation there, I would say the support has been quite strong.

Another area the Government of Canada should consider for expanding the Canadian scope or economic impact, we'll call it, is the availability of export credit support for offshore projects. The availability of export credits for offshore projects is critical to maximizing the economic impact. We've had a number of discussions with the ministers' offices, as well as Export Development Canada, on a number of opportunities. We want to ensure that not only SNC-Lavalin but the Canadian supply chain is included to the largest degree possible. Availability of export credit will be a direct correlation to that economic impact, because it allows offshore clients to then procure or purchase Canadian goods and services from Canada, to the benefit of Canadian exporters.

That's something we've had a number of discussions on over the years. All of the CANDU exports, historically, have been supported by export credits. The Government of Canada supported the two-reactor build in China, which happened in the late 1990s and early 2000s, through export credits to the tune of $1.5 billion. That was critical in maximizing the Canadian impact on that.

So I would say that's critical. We're encouraged, as I said, by the signs we've had so far. More is always better. We understand that the government has a number of priorities, but we think we've had very strong signs of support thus far.

[The Chair, Liberal, James Maloney]

Thank you very much.

Unfortunately, we're out of time. Thank you very much to all of you for joining us today. Your evidence, answers, and information have been incredibly helpful. We appreciate your time.

The meeting is adjourned.