Natural Resources Committee on March 9th, 2017

[The Chair, Liberal, James Maloney]

You have one minute and 20 seconds. You're free to use it as you see fit.

[Shannon Stubbs, Conservative, Lakeland, AB]

You made a comment about your partnerships with post-secondary institutions. Your organization has done work, I think, on liberalizing incentives for professors aiding in bridging the valley of death, in a report in May 2015. Is that right? Do you want to provide any comments on specific tools or suggestions for bridging that gap between developing new technology and commercialization?

I don't know whether either of you wants to comment on it.

[Louis Thériault]

I'm not sure about that specific.... We produce, I think, 500 reports a year. I wasn't personally involved in that one.

On the whole question of the innovation agenda in Canada and the productivity challenge we have collectively and the way innovation plays into it, we identified through surveys, through round tables, through some original research that it's really in the commercialization aspect that we're missing the boat. We use our current funding and funding mechanisms through from the concept to lab testing to that level of pre-commercialization, at least, and then we need to provide some guarantees and some support.

I think what they're talking about here is not tinkering at the margins; it's really big things. The first example that comes to mind is Hibernia and the way we developed—

[The Chair, Liberal, James Maloney]

Mr. Thériault, unfortunately I'm going to have to stop you there so we can move on to Mr. Cannings.

[Louis Thériault]

—the offshore technology that became a Canadian-made solution. That's starting to be applied to other things, for example, but the government took a risk and the private sector took a risk.

[The Chair, Liberal, James Maloney]

Mr. Cannings, please go ahead.

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

Thank you.

I'd like to start with Mr. Irish. You mentioned how the government could help the nuclear industry through various incentives, tax credits, and loan guarantees. You mentioned that in the United States, they have a $1 billion loan guarantee to get their industry going. How much money do you think the federal government would be investing in the nuclear industry to get these IMSRs of various sorts going and level that playing field? How much money would the taxpayers be shouldering?

[Simon Irish]

Thank you, Mr. Chairman.

My first ask is a very simple ask. It is—when talking about the opportunities in the natural resource sector, the decolonization of the Canadian industrial economy, and the “80 by '50” paradigm that Louis described earlier—simply to include the opportunity for advanced nuclear in the public narrative. It's not included now. That's my first request.

Now, in terms of how much money we actually need to build the first power plant, it will cost about $1.5 billion. That $1.5 billion will be shared by two important constituencies: ourselves as a capital equipment manufacturer, and our partner, being the first customer and the first owner of that capital equipment. That sharing will be a point of commercial discussion, but the total project cost shared by those two participants will be $1.5 billion.

We also will be seeking to reach out to the Canadian government to be a participant in those early projects. Our U.S. affiliate is doing so with respect to its project in the United States with the American government.

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

Okay.

To follow up on Mr. McLeod's questions about small communities in the north, you mentioned some relatively inexpensive electricity costs there. What are the upfront costs for a community that, say, wanted to get out of diesel and move to IMSRs, and how long a period are those costs amortized over to get those prices that you mentioned?

[Simon Irish]

The power plant that we are engineering and seeking and developing is 190 megawatt electrical. I'm sure it would work for some communities in the north, but it would not be a substitute for diesel generation in all communities in the north, because diesel generation usually exists in a single megawatt level.

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

Okay, thanks.

Mr. Thériault, you mentioned a lack of coordination in funding as a big problem. I want to give you the opportunity to expand on that and to describe how we can help.

[Louis Thériault]

As you know, there's a list of agencies. There's SR and ED, which is a tax credit. First of all, by design, you need to make money to save money, and SR and ED has been pointed out as a tool that Canada uses that generates a lot of action but not necessarily a lot of outcome in terms of the ultimate purpose of all of this.

You start thinking about how BDC also plays a role with small and medium-sized enterprises, the ones that will probably be originators of new ideas. EDC plays a role. You have Alberta Innovates, for example, which is also engaged. The innovation file is financed through many agencies. We have our venture trading floor, the TSX venture exchange, which also provides capital. There's a lot of action.

The point is that although there are a lot of possibilities, what we've heard—in fact, in this report it comes out quite clearly—is that from a developer's standpoint, it's not clear how to take advantage of them. It's also not clear that you will be supported on the scale you need to be when you're ready to commercialize on a larger scale. That's coming out quite systematically.

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

I wanted to follow up on comments around the price on carbon tax.

In British Columbia, it's my understanding from reading economic studies that the program was actually having a very positive effect on reducing people's purchase of fuels. B.C. was reducing its GHG footprint while that tax was being increased, as it was first designed to, and it's only since that increase stopped that things have drifted. I wondered if you could comment on that.

[Louis Thériault]

I did look at that. Frankly, I can't draw a causality link. There might have been a correlation in some sectors. I would say, though, that we're tinkering at the margin at $30 a tonne.

Just to give you a sense of proportion, in the work done by the Canadian Academy of Engineering and the David Suzuki Foundation with the McGill researchers, they come in with an implicit carbon tax of $1,200. With the latest fringe technology available, if you were to bring that technology into the market, it would mean that to make that technology financially viable, carbon would have to be taxed at $1,200 a tonne. That's just to give a sense of perspective.

What I would have to give credit to B.C. for is doing something that in fact alleviates some of the pressures on groups that are left behind when you implement such a fiscal tool. It has also been successful in terms of public acceptability, which is a big thing on its own. It's starting to move the needle on the notion that if carbon is something we want to eliminate, we need to price it somehow.

The other thing I'd like to mention, and I think it's really important, is that it's always about the carbon. It's not about the fuel. I'm totally with Simon that the sectors shouldn't be put against each other; every sector should have a fair chance at this.

I would propose that there are some solutions that could be encouraged for oil, gas, and probably even coal. It's not the fuel itself; it's the carbon in it. If we find solutions that get rid of the carbon in it, then we're there. Carbon sequestration is one example, but there could be other solutions we haven't thought through yet.

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

How much do they cost?

[Louis Thériault]

Well, that's part of that cycle. I'm not saying this is the solution. I'm just saying that it's the carbon that's the problem. The technological solution, whatever it is, that could eliminate the carbon in the fuel gets away from one of the problems we have, which is around the industrial fabric of the country right now.

[The Chair, Liberal, James Maloney]

Thank you very much.

We're going to have to move on to Mr. Serré.

[Marc Serré, Liberal, Nickel Belt, ON]

Thank you, Mr. Chair. I'll be sharing my time with Mr. Harvey.

Mr. Irish, over the course of our last study, as you indicated, we looked at the opportunities and challenges of the nuclear sector, especially in the SMR component. Can you explain the difference between your IMSR technology and the SMR technologies and what disadvantages and advantages your technology has compared with the SMRs?

[Simon Irish]

Thank you, Mr. Chair.

The SMR is a small modular reactor; it's a commercial formulation. If you have any reactor design, you can choose to make it small and modular; it's not an expression of the technology that's actually used within it.

Our technology is a molten salt reactor technology. It's fundamentally very different; it uses a liquid fuel rather than a solid fuel. We have also chosen to formulate it as a small modular reactor, a 190-megawatt electrical reactor. That, we believe, gives us the biggest commercial footprint. We can use it in industrial applications, for example, in Alberta, or to drive mining in the far north, or even in traditional grid-based power provision.

[Marc Serré, Liberal, Nickel Belt, ON]

Thank you.

I also want to ask about the question Mr. McLeod asked. You indicated that it will be commercially available in the 2020s. That's a rather broad number. I'm pretty excited about what you indicated in your presentation in talking about the Ring of Fire or looking at northwestern Canada or the oil sands.

There are two things here. What can we do, as a federal government, to help expedite commercialization earlier—say, in the early 2020s rather than the late 2020s?

Also, we haven't heard from the nuclear sector in our previous study concerning the lack of engagement with the first nations. Many of the first nations communities are concerned about nuclear, but only because, it appears, the nuclear sector—and I don't know whether your company has done a better job—hasn't done a good job of hiring first nations, explaining to them the technology, and engaging them.

What have you done on that front?

[Simon Irish]

With respect to your question, I believe we could probably do more. Given where we are in our development program, we have just started siting studies.

Those siting studies are with the actual owners of those sites. They are, I think, much more capable of the communication necessary with the first nations to address those points. We're simply a capital equipment company seeking to develop capital equipment and find our first customer, who also will have a site.

They are much more experienced on these regional matters, these important matters, than we are.

[Marc Serré, Liberal, Nickel Belt, ON]

Mr. Thériault, I asked the previous witnesses this question.

In green energy export markets, China is Canada's biggest competitor. What could the federal government do to help Canadian companies be more competitive with China and the United States in the green energy market?

[Louis Thériault]

That is a fundamental question. Let me give you the Conference Board's and my own perspective on this.

We are in a period of globalization and integration of value chains. Intellectual property is created where the value of the assembly is created. The iPod is a very good example of this. Nearly half of the iPod's value is created in the United States, but it is considered an import from China, even though just 1% of the iPod's value is created in China. I would say the same logic applies here. With the integration of value chains, I would not look at countries in the industry as competitors, but rather as players with whom we can create partnerships.

You are absolutely right about China. For political reasons, we have to work towards the objective of reducing emissions by 80% by 2050, but for China, it is a matter of survival. Pollution is so bad there that China does not have a choice. China wants to be “green” because it has no other choice. Coal is still the greatest source of electricity generation in China.

We can use the solutions coming out of China; we can collaborate. I see this more as a potential opportunity for international trade and international investment.

We have not talked about this here yet, but at the time of Rio and Kyoto, there was talk of joint ventures, with Canada investing abroad. Since climate change is a global problem, if Canada were able to help reduce greenhouse gas emissions elsewhere, that could be credited towards its objectives. There is major stocktaking involved, which is complex, but the idea of encouraging trade and contributing to Canadian solutions aborad is an essential part of the conversation. If you pursue this argument, you will see that this is probably where Canada has the most to gain.

[Marc Serré, Liberal, Nickel Belt, ON]

Thank you.

You have one minute left, Mr. Harvey.

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

I have your press release here. I was wondering if you could elaborate a little bit about your future partnership with UNB and what this next phase will look like. Also, I'd be interested to know if you have some ideas about where you intend to test this reactor.