Natural Resources Committee on Dec. 13th, 2016

[James Gandhi]

Regarding the nuclear materials for the CANDU industries, we are mostly self-sufficient. We have the materials. We can source this most of the time from Ontario or Canada; however, there are certain types of steel or metal that we have to import from other countries. Nuclear has a very robust program to have complete traceability of that material and have a history docket process to make sure we avoid any counterfeit material. That's one of the very strong points nuclear has developed over the years.

[The Chair, Liberal, James Maloney]

I think we're just about done.

I understand Mr. Harvey has one more question.

[TJ Harvey, Liberal, Tobique—Mactaquac, NB]

Mr. Plummer, I wonder if you could give us a quick answer.

What are the lessons learned from the Point Lepreau refurbishment? Looking back since 2008 on the cost overruns associated with Point Lepreau, and the delays, I understand that a significant amount of that was for the purchase of additional power during that extra downtime. What are the lessons learned from that? How could we use those lessons to ensure that, if there were another nuclear project in New Brunswick, we would be able to contain the cost and by doing so, give stability to ratepayers?

[Brett Plummer]

Concerning the lessons learned from refurbishment, our nuclear industry is a very collaborative industry, and it's very transparent compared with other companies and other nuclear power plants. We share operating experience around the world on a daily basis on the lessons learned.

With something like refurbishment, all those lessons have been tabulated, together with all the data. We use COG, the CANDU Owners Group, as a facilitator in taking some of that operating experience and information and making sure we use it for all the CANDU units across the world that belong to COG, especially in Canada.

As Darlington and Bruce and others go through refurbishment, we've had workshops to take the lessons we've learned to make sure that they've learned those as well. If we ever go through another refurbishment, it would not go like the last one. We've learned those lessons and we share them and we improve. That's what our industry does. It's continually improving and taking those lessons learned and doing better the next time around.

[The Chair, Liberal, James Maloney]

All right, thank you.

Gentlemen, thank you very much for joining us this morning. It's been very helpful, and we appreciate your time.

[Brett Plummer]

Thank you. It was a pleasure.

[James Gandhi]

Thank you.

[The Chair, Liberal, James Maloney]

Good morning.

We will suspend for a few minutes, and then we'll start with our second presentation.

[The Chair, Liberal, James Maloney]

We are ready to resume.

We are joined in the second hour by two representatives from Canadian Nuclear Laboratories, Mr. Mark Lesinski and Lou Riccoboni.

Thank you very much, gentlemen, for joining us this morning. I'm going to turn the floor over to you for your presentation, and then we'll turn it over to committee members for questions.

[Mark Lesinski, President and Chief Executive Officer, Canadian Nuclear Laboratories]

Thank you very much, Mr. Chairman and members of the committee, for the opportunity to appear before you today.

Canadian Nuclear Laboratories, CNL, is Canada's leading nuclear science and technology organization and is world renowned for its role in developing peaceful and innovative applications for nuclear technology.

Atomic Energy of Canada Limited, AECL, has implemented a government-owned contractor-operated, or GOCO, business model. AECL retains ownership of the sites, facilities, assets, intellectual property, and decommissioning liabilities and oversees the contract and CNL's performance.

Canadian Nuclear Laboratories is owned and operated by the Canadian National Energy Alliance, CNEA, whose shareholders include CH2M, Fluor, Atkins, and SNC-Lavalin Inc., the world's leading engineering and technology companies. Together the members of this consortium provide experience in the areas of site management, operations, decommissioning, and waste management.

Our combined experience will come to bear in addressing the Government of Canada's two key missions for Canadian Nuclear Laboratories: reducing the legacy liabilities held by AECL and delivering nuclear science and technology expertise in the areas of energy, health, environment, and safeguards to support federal and commercial missions.

At CNL we've added a third mission, which is capital projects. This mission area is responsible for rebuilding the laboratories' facilities and supporting infrastructure. I assure you that in carrying out these missions, CNL, as the licensee, remains well positioned to meet and exceed all of its nuclear safety and regulatory obligations as required by the Canadian Nuclear Safety Commission.

Our goal over the next 10 years is to create a stronger, resilient, and enduring national laboratory with a revitalized talent pool, facilities, and infrastructure, otherwise known as Vision 2026. CNL's Vision 2026 is an ambitious and achievable plan. By 2026 CNL will be a world-class, right-sized and sustainable nuclear laboratory delivering science and technology, structured to meet current and adapt to changing Canadian federal, commercial, and public priorities.

Achieving CNL's vision for science and technology requires transformation in four areas: understanding current and future potential mission focus areas; seeking out the best talent to carry out targeted R and D missions; site revitalization, which includes refurbishing existing and building new facilities; and developing the commercial acumen to grow profitably.

CNL has adopted a private sector business operating model designed to enable this transformation. This does not mean we will sacrifice safety nor scientific discovery. We need to be more efficient and commercially focused in order to support an enduring entity committed to propelling science. We must strike this balance in order to remain relevant in a competitive world with growing demands for scarce public funds. This provides government, industry, and academia access to CNL's science and technology expertise, facilities, products, services, and technologies in line with their priorities and their needs.

In order to revitalize the lab, we must first license and build a near surface disposal facility to permanently dispose of low-level radioactive waste, allowing us to decommission and retire over 120 structures, making way for new capital projects. In addition, we will close the nuclear power demonstration, NPD, site in Rolphton, Ontario by 2020 and the Whiteshell laboratories in Pinawa, Manitoba by 2024, as well as take care of our obligations within the Port Hope area initiative.

Other established activities continue and are under way. They include decommissioning activities, waste management, and the completion of projects such as the Harriet Brooks Building, our new science and technology complex.

Larger-scale projects such as the near surface disposal facility and the closure of NPD and Whiteshell have been initiated and are subject to a full environmental assessment process, including public review and participation and final CNSC approval.

For the past 60 years at AECL and now at CNL, the women and men, their families and the communities in which they live, work, and play have contributed to a world-class science propelling Canada to the forefront of innovation in the fields of energy, health, environment, and safety and security.

Nobel laureates such as Dr. Art McDonald and Bertram Brockhouse have worked at CNL, and their contributions to science have benefited all Canadians and society as a whole.

Over the next 10 years our mandate is to stand on the shoulders of this storied history and to revitalize the lab so that current and future generations can benefit from responsible progress and the promise of nuclear science for solving some of the world's most important issues, such as climate change, and affordable energy for all.

This brings me to the second half of my presentation: a proposal for siting, licensing, and commissioning a small modular reactor, SMR, or a very small modular reactor by 2026. Today, leading nuclear nations are looking at the potential for small modular reactors to address energy technology gaps and policy needs. At CNL we have been working to understand the potential for SMRs and especially very small modular reactors, vSMRs, and it's in the Canadian context. An SMR produces approximately 300 megawatts or fewer, whereas a vSMR produces approximately 1 to 50 megawatts electric. We see an important opportunity for Canada to take a leadership role in the development of this versatile technology.

Economic and social benefits include low-carbon energy for northern and remote communities; cost-effective, low-carbon, reliable energy for resource development throughout Canada, including the Ring of Fire and the oil sands; reducing Canada's greenhouse gas emissions; meeting Canada's commitments to mission innovation in COP 21; strengthening Canada's science and innovation fabric; and maintaining Canada's position as a groundbreaking nuclear nation and a place for the most influential international discussions on nuclear energy and security. However, time is of the essence if Canada is to fully seize this opportunity.

As you may know, the United States Department of Energy recently announced its commitment to building a prototype SMR at Idaho National Laboratory with an expected commercialization date of 2025. The United Kingdom has announced that it is pursuing a demonstration SMR by investing $350 million U.S. over the next five years in an ambitious nuclear research and development program. With these and other nations pursuing SMRs, the time to act is now if Canada is to seize this opportunity and retain a portion of the economic, scientific, and social benefits that are gained through SMRs.

Canada has a proud history of discovery and innovation and can stand shoulder to shoulder with its international peers. Insulin, the snowmobile, the Canadarm, and cobalt-60 for cancer treatment pioneered at our very own Chalk River labs; our time has come again, and SMRs and vSMRs can live among the annals of great Canadian innovations.

While Canada has a substantial base of experience, skill, and knowledge to bring to bear, it is unlikely that Canada would be able to catch up if it were to fall behind. To seize the opportunity is to establish now a government goal to have a demonstration SMR or vSMR in Canada in fewer than 10 years. It is only this kind of aggressive goal and timeline that will put Canada among the other front-runners. To achieve this, a clear plan from conceptualization to demonstration should be in place today with appropriate resources.

CNL has developed a plan spanning 10 years, with commissioning of the demonstration reactor in year nine, at a total cost of approximately $600 million, although the budget estimate will be refined over time through a selection process based on technology readiness, private sector investment, and alternative financing, among other criteria.

As you have likely heard from other stakeholders, proponents, and opponents of the technology, there are many open questions. The plan as proposed is designed to answer these questions in the most efficient and effective way possible by embedding them within an overall strategy towards a prototype as soon as possible. The efficiencies of the plan are achieved by bringing to bear the deep technical knowledge resident in CNL, with a technical oversight program and policy experience resident in Atomic Energy of Canada Limited, AECL, as Canada's agent of government for nuclear research and development.

The plan is also designed to ensure that at each stage the questions asked and answered are with a view to gathering all that is required to inform and enable the next stages of the path forward towards demonstration. That said, I would emphasize that the plan has all the appropriate stage gates and off-ramps to prompt critical review of the initiative and its value at milestones throughout.

The notional funding profile, which would be further refined if there were interest in pursuing this proposal, calls for modest investment of approximately $15 million in the first two years to conduct a request for expressions of interest, or RFEOI, that would serve to gather concrete information on the following: the level of interest in the private sector; the technologies available, together with their merits and risks; the potential for risk sharing with investors and technology vendors; opportunities for cost sharing and alternative financing arrangements; stakeholder and first nations interest; and potential host communities, among others.

This initiative could be managed and overseen by AECL, with CNL as a service provider, so that AECL, as the government's adviser on nuclear technology could properly assess overall value to Canada.

Information gathered through this process would be used to establish an efficient course to select the right commercial partners to realize an SMR or vSMR demonstration at an AECL site in under 10 years.

In closing, the goal of the initiative is to position Canada to take a leadership role in this emerging nuclear technology and best leverage that position to provide low-carbon, reliable, load-following, scalable, and cost-effective energy options to remote communities, mining, oil sand applications, and to fill other energy gaps and needs that often have unique Canadian interest as well as immense export potential for Canadian industry.

On behalf of the women and men at CNL, I extend an invitation to committee members to visit Canada's premium nuclear science facilities in Chalk River, Ontario.

Finally, I want to reiterate my commitment to the committee members, the CNSC, our workforce and surrounding communities, as well as all Canadians that throughout the coming changes and improvements, our commitment to safety will not waiver. Meanwhile, thank you for the opportunity to appear before the committee today, and I'd be pleased to answer any questions.

[The Chair, Liberal, James Maloney]

Thank you very much for that presentation.

Mr. Tan, you're first up.

[Geng Tan, Liberal, Don Valley North, ON]

Thank you, gentlemen, for being here today.

Mr. Lesinski, you mentioned the science many times in your presentation. Canada is a member of the Generation IV International Forum, which we call GIF. The committee has learned either from witnesses' presentations or from the hand-out materials that there might be some modification for our current CANDU technology for the generation IV design, such as slightly enriched uranium fuel and the use of supercritical water. However, we still use the heavy water technology, so it's quite likely that we're going to be what I call the stand-alone member of GIF in the development of the core part of the generation IV technology.

As the CEO of Chalk River, you take care of the science R and D on the nuclear industry in Canada. What will you do to ensure that Canada will maintain the talent and the capacity when developing our generation IV technology?

[Mark Lesinski]

I hear the question as being as to what we are doing about talent retention so that we can maintain our position here and support the technology that's a bit stand-alone compared to the rest of the country.

We have a very active program right now where we are attracting the best talent we can from universities. As a matter of fact, we're looking at how we're going to refurbish how we attract that talent to the site, to the locale, to be interested in working with us going forward.

One of the things people are going to look at when they are making a decision as to where they want to spend their careers is the facilities we have, the culture we have at the site, and how well we are delivering that science: how much science can they actually do when they're at the site versus how much bureaucratic work they have to do?

We're in the midst right now of a transformation that includes simplifying the work that our scientists have to do in order to move forward with the things they hold near and dear, and to ensure that we have the best facilities for them going forward so they can do the experiments they would like to do.

Finally, we're revitalizing our connection to universities around Canada to ensure that we're doing the right things, the things that we do best at the lab and not duplicating in other areas, and doing it in a more collaborative way, which is how the rest of the world is doing it right now.

[Geng Tan, Liberal, Don Valley North, ON]

SNC-Lavalin purchased AECL Sheridan Park a few years ago. Now it's called Candu Energy. Chalk River has been leased under this so-called GOCO model managed by a consortium led by SNC-Lavalin again. To some extent, SNC-Lavalin or some companies have taken control of our CANDU technology in Canada. I believe this is a new business model since the beginning of the nuclear technology in Canada.

In your view, what will the future of Canadian CANDU technology look like in such areas as R and D, engineering and design, and marketing?

[Mark Lesinski]

We continue to support the CANDU technology either directly to the utilities or through COG. You stated earlier, and you're correct, that SNC-Lavalin owns that technology now. They bought that. We have agreements, and we continue to support and do the research, do life extension experiments, etc., to ensure that COG can get any of the answers they need through us. They use other laboratories as well.

We're in a competition, so to speak, to ensure that we can get a certain amount of that R and D going forward. By our improvements that we're going to have in commercializing ourselves and improving our costs, we believe that we'll get more and more of that work going forward. That's our intent, as well as to expand into other technologies and support the other reactor designs around the world.

[Geng Tan, Liberal, Don Valley North, ON]

You mentioned many times about promoting the idea of SMRs and decommissioning at Chalk River or other places. Is that the future direction of CANDU technology or of the Canadian nuclear industry?

[Mark Lesinski]

I think the jury is still out on that, to be honest with you. There are a lot of thoughts floating around, but in general, the world is looking at the real possibility of using modular reactors. It's a bit of a new approach rather than building and having that huge investment, that initial investment, in putting in a new plant. The size that we normally see is on the grid. The initial investment from a financial standpoint is a bit better, and the new designs as well have a higher inherent safety standard. It also makes operations easier. We can build off of what Henry Ford did once upon a time and truly standardize our reactors so that we have solutions and efficiencies in how we develop those reactors. My feeling is that either a small modular reactor or a very small modular reactor is the wave of the future from a finance perspective, and also a quality perspective, and an inherent safety perspective.

[Geng Tan, Liberal, Don Valley North, ON]

Chalk River has been managed by your team under this GOCO model, but the Chalk River site is still federal property. How do you work with AECL and also the federal government? There are three layers right now.

[Mark Lesinski]

How do we still connect then to...?

[Geng Tan, Liberal, Don Valley North, ON]

How do you work with AECL and the federal government? What is the function of AECL right now?

[Mark Lesinski]

The very simple explanation that we like to say is that AECL tells us the what and then we figure out the how. Although it is in consultation, we all realize that a lot of good thinkers in the room can come up with a better what, but ultimately it is their decision. We put together a strategy document or a plan for the annual work that we're going to be doing, and they approve that. If that fits in with what the Canadian taxpayer and the federal government would want, they approve that, and then we execute that and we figure out how to do that in the most efficient manner. It is iterative. We're in discussions all the time.

[Geng Tan, Liberal, Don Valley North, ON]

After the GOCO model, is there any impact on the researchers or scientists at Chalk River in terms of their job security or the research environment?

[Mark Lesinski]

The ultimate goal for us is to bring more S and T to the site. That's the ultimate goal of this model, for us to improve on efficiencies of delivery, improve the infrastructure so there aren't those frustrations on old equipment and facilities, and think in a more business development perspective, which brings in more revenue, so we have more funds in order for us to do some of the research that we want to do.

The ultimate goal for all of that is to improve on the S and T side. To get there, though, is going to require a lot of transformation and the big “c” word, change. People are going to have to get used to doing things in a bit of a different way. We're just starting that journey right now with them, and there is a bit of uncertainty as to what it is. It is our job to plot the course and allay their fears as to what this change is going to be about. Repeatedly, this is about S and T ultimately. That's what it's about.

[Geng Tan, Liberal, Don Valley North, ON]

Thank you.

[The Chair, Liberal, James Maloney]

Ms. Gallant, I believe you're next.