Natural Resources Committee on Dec. 13th, 2016

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

Welcome to our witnesses.

Mr. Lesinski, you described the role that CNL can fill in the development of SMRs. It's my understanding that work by the skilled trades on-site is in the process of being outsourced. The sheet-metal workers, pipefitters, welders, etc., are being told to apply to companies who have won the requests for proposals or contracts.

Back in the decade of darkness, we saw this kind of workforce reduction in the nuclear industry. AECL ended up contracting and hiring back octogenarians, because it had shortsightedly discarded its institutional memory, and that was due to reductions in federal funding imposed by the government of the day.

Mr. Lesinski, you've been in the nuclear field for decades, and you are highly familiar with the added dimension of knowledge necessary to work on a nuclear licensed site. This involves specialized training and an entirely different culture. How will you be able to conduct the SMR construction for a prototype model if the people who can do the work have scattered to other jobs outside of CNL, and perhaps outside the region?

[Mark Lesinski]

Right. I think, Cheryl, you're talking about what we're doing to divest the manufacturing and machine shops. We have about 40 or 50 people right now whose main task and the vast majority of their work is to maintain the NRU reactor. That reactor is going to be closed down permanently in March 2018. Rather than waiting for that to sneak up on us and then have no work for those individuals, we're taking a proactive approach to see if there is another model out there where work could be done, and it would use their skill sets in machining to be able to support perhaps other industries, such as the aeronautical industry or others that need that high tolerance skill sets that we will no longer need.

We will not have all those people go. We will still maintain the level that we need. This is about rightsizing properly to make sure that we have the right skill sets. We would still retain a certain portion of those individuals, because we have 17 other nuclear facilities on the site that have needs. We would have some of those needs, but the magnitude that we have, to not have to support a reactor the size of the NRU, is because we're thinking ahead.

Right now, we have an RFP out where we're seeing what the outcome would be exactly, because we still need to support what we do have to do off-site. In our RFP, there's a request that the work and whoever would get that work, would establish a shop within our radius. I can't remember the distance. I'd have to get back to you, but I think it's about 30 kilometres within the radius, or 50 kilometres, so it stays within our region where their jobs would be.

We want to see how quickly they'll be able to respond to doing our work that we'd have to have done at the sites, which would remain after that, if it was overflow from the people that we still have. The most important thing is to see how the people would be treated. What would be the conditions? We have not confirmed or we have not decided yet that we are going to do this. We have not decided yet that we are going to absolutely do this. It has to be a win-win for us and it has to be a win-win for the employees.

I have one final point on the SMRs. We would not be the manufacturer of an SMR. That is what our nuclear supply chain—we have one of the best in the world here in Canada—would be providing for us. They're the ones who would be providing it. They would also attract spinoffs in that locale for us to have more work because of the technologies that we would bring and the parts and pieces that we would have that would be assembled at the site. The technology would be brought to us, so it's not us building it and we're losing our capability to do it.

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

There is this growing pall hanging over CNL that once the NRU is mothballed in 2018, the site will turn into no more than a decommissioning spot, once the NRU is finally entombed.

How will the fuel research, the neutron material analysis, the pressure tube testing, and all the many other things the NRU does occur, with the exception of medical isotopes that are currently being taken care of to a certain extent? How will all this continue to occur without a high flux neutron source?

[Mark Lesinski]

This is the classic neutron gap and what are we going to do.

First of all, in our contract when we were established here, there was a clear indication from government—the previous government—that it didn't have an interest at that time in having a new reactor.

The way I portray it with the staff at the site is that first we have to figure out how to do our knitting better. We have to show that we can deliver projects. You were talking to the Point Lepreau people before about how we can execute a project, execute the projects that we have in front of us, in a very efficient way and then maybe in the future there will be potential. Potentially an SMR could be filling part of those needs, so we're pursuing that.

You're saying there's a pall coming over the site because the reactor is coming down. There is no doubt that when we came in there was a lot of nervousness as to what this contract was going to be about, that it was going to be simply cleanup, which is a very important part of our mission, to clean up the liability that we have. Billions of dollars' worth needs to be taken care of. However, we understand that our overall mission in the long term is for more science and technology.

If people start to really look around more and at things such as our new Brockhouse facility, that's a huge investment by government, more than $100 million, with state-of-the-art facilities that will impact not only the nuclear industry, but energy in general around the world. These are world-class and state-of-the-art; you can't see them anywhere else. We want to do similar things in other technologies as well.

Part of the problem has been at the site in the past, that everything revolved around the NRU reactor, and without that, there is no more. I don't agree with that. I think what we do in hydrogen, in biology, in fuel manufacturing, in our examination for post-irradiation materials that we get, all those things are worthy missions that we can do without having a neutron source, that will keep us busy, active, and contributing far into the future.

However, on a personal note, I'd love to have another reactor.

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

I know some of the $800 million that we earmarked before the election has actually culminated in construction, and I will take you up on your offer to see how that's coming along.

One of the problems we had with AECL previously was the funding model.

[The Chair, Liberal, James Maloney]

This is going to have to be very short.

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

Are other departments and the decision-makers in government going to be able to see the benefits that CNL provides to the different departments of government?

[Mark Lesinski]

Do you mean the work that we do for the federal government? Yes, we have ways that we track that, and actually, we're hearing really good reports. A new committee that has been established actually funnels and understands what the different federal needs are in research. Reports are that we're working extremely well with them, so we're getting a better idea early on as to what we need to do so that we can get on with it in the year and provide the answers and the research requested of us. The connection comes through AECL, but our people obviously are very engaged with those groups to understand exactly what we're going to perform over the upcoming years.

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

Thank you.

[The Chair, Liberal, James Maloney]

Mr. Cannings.

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

Thank you for being here today.

We've heard a lot about CNL over the course of this study, so it's nice to have you before us at last.

I'm going to bring up a few issues and comments that previous witnesses have mentioned and get your take on them.

I want to start with SMRs. We heard in testimony last week—I'm trying to remember who it was—that they were skeptical of this vision of using SMRs, for instance, in remote communities to replace diesel, and so on. The comment was that if you can imagine yourself as a northern community, what would you choose, if you had to choose between a small modular reactor with uncertain price and uncertain delivery point, or one of these renewables-driven microgrids that are already in place in many communities in Alaska?

The price of renewables is dropping, and the advancements in technology in renewables is accelerating faster than anyone had imagined. Where is the future of an SMR in that situation?

[Mark Lesinski]

I am not familiar with all of the advancements in other renewables that would be able to support the microgrids. I'll be honest, on just what I said, I have to go back and do a little more research myself.

From what we have seen, and what we read, actually renewables are great. Renewables have to be part of that mix, but the reliability and the steady flow of energy from those still needs a backup. I would guess, and what I have seen in the reports, for example, from the Hatch report that was done for Ontario, a vSMR still would be more cost-effective in those communities than wind backed up by diesel, or solar backed up by diesel. You absolutely still have to have that backup. We know the nights are long and dark, and the wind doesn't blow, and it gets very cold, and so the backup that I have seen in the proposals still relies significantly on diesel, actually to the tune of more like two-thirds of the power going forward on those microgrids.

That's what I know. I'm not sure what was presented earlier, but I'd be curious to see it.

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

I don't know if exact numbers were presented, but again, we have technology. The need for backup is because we don't have the battery technology now, the storage capacity for those renewables, but that technology seems to be advancing very rapidly. It seems to be closer to completion than an SMR would be. I just wanted to put that to you.

There is another concern we heard, and forgive me if I got this wrong, from one of the technology companies. It is that with this new model of the labs, where in the past the Canadian government had the labs working for Canadian companies, we were developing technologies, a lot of them were spun off to various Canadian companies that have been very successful, but they made this criticism that because the new model is profit-driven, you were often doing projects for their competitors abroad, whether it was in the United States or elsewhere. I'm wondering if you could respond to that.

[Mark Lesinski]

The model is not the driver. Set the model aside. If the lab wanted to continue and be successful in nuclear technology going forward, and it still maintained that it was going to stay only with the CANDU technology going forward, I'm afraid that it would not survive without a huge injection from Canadians taxpayers.

The fact of the matter is there are 400-plus other reactors out there that need support and life extension. There are new technologies that are coming on board around the world. We have scientists and technologists who can do all sorts of great stuff that can support them as well. By doing that, you take more of the burden off the Canadian taxpayers. Now bring in the GOCO model. It does not enrich our partners by us going external or outside. That's not how it's constructed. As we said earlier, AECL sets what we have to do, and what we do aligns with what the federal needs are to the taxpayer. It's all aligned. We're all pulling on the rope in the same direction, and that pulling on the rope would still include going external from Canada in the future for us to be successful.

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

Okay.

Another concern that was brought to us last week in testimony was a plan to transport nuclear waste in liquid form to the United States. The witness was very concerned about the safety aspects of this and was suggesting that it would be very prudent to find another way to either transport it or store on-site, rather than carrying it in liquid form. The example he gave was if just one litre of this material found its way into a water system, it would destroy the water supply for a large city. I just want to know if you could give us an update on those plans, and whether there are other options that have been considered, because there were deep concerns suggested.

[Mark Lesinski]

I understand.

Other methods have been looked at. We've looked at whether we could solidify the material and put together a facility at the site and deal with it ourselves. First of all, the cost is much higher, but of course safety is always number one, so if it is going to cost far more, it would also be much safer, so that would probably be the right answer.

The reality is that shipping material, even liquid material, is done all around the world. It's happening right now, and we do it extremely safely. As a matter of fact, we have the safest record for transport of nuclear material. These containers and the processes we use are regulated and approved by our CNSC, one of the best regulators in the world. They take a hard look at this, as does NRC, and these have been approved by both and by the U.S. Department of Transportation as well.

Looking at how high our standards are and seeing that they meet all those standards, I think that to move the material is the right approach to take. It's also great that it's in one location, that it's consolidated right now at a facility in the U.S. that is already protecting this kind of material and processing it and that has better experience.

I think it's better that we do it this way rather than try to reinvent the wheel.

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

Okay.

[The Chair, Liberal, James Maloney]

Mr. Serré.

[Marc Serré, Liberal, Nickel Belt, ON]

Thank you, Mr. Lesinski, for your optimistic and passionate energy for your job. I also want to thank you for outlining information about Art McDonald. I'm glad to see that he worked for CNL, because he's also well acquainted with the SNOLAB in my area.

Earlier I wanted to ask questions about SNC-Lavalin, when they sell CANDU reactors around the world. Could you expand a bit on the benefits this activity has to Canada, to the federal government and the supply chain here?

[Mark Lesinski]

I won't have the full story. Some of the arrangements for the way such sales would be done and for any kind of royalties in all this are beyond my remit, so I don't know it, but whenever we expand the fleet of CANDU reactors and take it to the next generation as well, it helps us at the lab. If I look at it really parochially, there will be questions that need answering, and we can help with those questions and have work for ourselves to make sure that the technology is up to its highest standards and to support it as it goes forward. For us and for the Canadian nuclear laboratories all across, it's a really good opportunity to have a bigger fleet to be part of and to help with answers. That's really the main area.

For the industry as well, for the supply chain, when I look at it from an OCI standpoint, there are obviously going to be certain parts of those reactors which, although they may build the majority of them in a local sense, there is certain expertise and certain pieces of the technology we would be able to produce in Canada to export it to them.

[Marc Serré, Liberal, Nickel Belt, ON]

Thank you.

I want you to clarify something from earlier answers to questions. You mentioned that the previous federal government had no interest in building an NRU.

[Mark Lesinski]

This actually predates my time, so it's rather hearsay, but if you look at the specification we were responding to, there was no hint that we were going to be chasing after that initially. I can understand this. We have a lot of work in front of us, first just in properly transitioning the reactor, closing it down, taking care of the liability, and proving that we can deliver on projects in an economic fashion. First things first: we get that straight. We're on that journey right now, and we're gaining momentum. Then we would certainly be interested in bringing the national lab a neutron source in the future as well.

[Marc Serré, Liberal, Nickel Belt, ON]

I want also to expand a bit on what you mentioned about the oil sands and the Ring of Fire and questions about the SMRs. You indicated the U.S. having, I think you mentioned, 20 or 25. What can the federal government do to encourage and attract private sector investments, so that Canada can be in the game moving forward?

[Mark Lesinski]

That's the intent of the proposal we have submitted. It's exactly that. We lay out those initial stages to first gauge the interest in getting some of these vendors to bring their technology. We can be the host site and do the federal work to answer some of the questions and develop the reactor and site it at one of our locations, realizing that is the first step to bringing a new technology like this on board, so local communities can come to kick the tires, to see how it looks, works, and fits in; to give us input as to what they would expect and need; to train operators; to answer technical problems that we have and just get it ready, so that a manufacturing facility could then be developed in order to make these reactors a reality for the north.

[Marc Serré, Liberal, Nickel Belt, ON]

I also wanted to expand a bit on what was said earlier about the $800 million in federal government investment in Chalk River.

Can you expand a bit on the impact that this has had on the business, on the number of jobs, and also on possible leveraging and attracting new investments?